Tag Archives: rises

Fairfax profit rises on one-off gains

Updated February 21, 2013 15:32:33

Media group Fairfax has reported a huge surge in its half-year profit, but says weak demand in the advertising market is still restricting its earnings.

For the six months to the end of December, Fairfax has made $386.3 million.

That was up almost 300 per cent compared to its profit for the same period the year before.

However, the vast bulk of the profit ($312 million of it) came from discontinued operations, making much of it a one-off gain.

In fact, excluding significant one-off gains and losses, the company’s underlying profit fell from $136 million to $83 million.

Revenue was down from $1.18 billion to $1.1 billion, however the publisher’s expenses also fell by around $80 million as it slashed staff and moved to close major printing presses.

The company says its restructure and slimming down of the business contributed to its profit result, with a 10 per cent reduction in staff and a sell-off of some businesses which reduced debt from a around a billion dollars to $200 million.

Fairfax’s chief executive Greg Hywood says the company now has the strongest balance sheet in the industry, but there are more cost savings to be made.

“We are finding smarter ways to work that deliver us better outcomes and save us money,” he said.

“We are taking a fresh look at territories long considered sacred cows and smashing silos that long seemed untouchable. We are pursuing additional structural initiatives and cost savings beyond those currently envisaged.”

The company has cut its fully-franked interim dividend to 1 cent per share from 2 cents per share.

Fairfax shares were down 2.75 per cent to 53 cents by 10:25am (AEDT).

Topics: business-economics-and-finance, company-news, media, australia

First posted February 21, 2013 10:29:55

Lend Lease profit rises, shares fall

Property developer Lend Lease has reported a significant rise in its half-year profit, boosted by the Barangaroo development in Sydney’s CBD.

In the six months to the end of December, the company made a net profit of $302.3 million after tax, on revenue of $6.25 billion.

That is up almost 39 per cent compared to its profit during the same period a year earlier.

Lend Lease says the result has been boosted by earnings from the first two commercial towers at Barangaroo South on the western edge of Sydney’s CBD.

The company’s Australian division increased its profit by $97 million to $304 million, with Lend Lease also winning work on the proposed new Sydney Convention Centre and Sunshine Coast University Hospital.

The company’s Asian division posted a $4.5 million fall in profit to $24.3 million, European profits were up $17.5 million to $60.5 million, American profits were up nearly $8 million to $26 million, while the group services division posted a loss of $80 million.

The company says it will pay an unfranked dividend of 22 cents per share on March 27, with an ex-dividend date of March 4.

Lend Lease shares were down 2.7 per cent to $10.40 by 12:59pm (AEDT).

Topics: business-economics-and-finance, company-news, building-and-construction, australia, sydney-2000

Kuwait Finance House Q4 net rises but misses estimates

0120KUWAIT: Kuwait’s biggest Islamic lender, Kuwait Finance House (KFH) reported a 24 percent rise in fourth-quarter net profit on Sunday thanks to its restructuring programme but the numbers fell short of analyst estimates.

KFH said last year it was reshuffling its top management and planned to work with advisors to sell, merge or restructure unprofitable subsidiaries after a fall in profits in 2011.

“The growth in KFH’s 2012 financial results confirms the success of KFH’s Transformation Programme,” KFH Chairman Mohammad Al-Khudairi, said in an emailed statement, saying this had put the group on the right track for sustainable profits.

In the fourth quarter of 2012 net profit was 11.8 million Kuwaiti dinars, according to a Reuters calculation based on financial statements, compared to 9.54 million dinars in the same period a year earlier.

Four analysts in a Reuters survey had predicted 32.78 million dinars net profit on average for the quarter to end-December.

The board proposed a 10 percent cash dividend and 10 percent bonus shares for shareholders, KFH said.

Copyright Reuters, 2013

Watchdog warns of energy bill rises

19 February 2013 Last updated at 09:00 GMT Alistair Buchanan: “We will be very tight on power station capacity in three to five years time”

Consumers are being warned they face higher energy bills as the UK becomes more reliant on energy imports.

In a speech, Ofgem chief executive Alistair Buchanan will say that falls in Britain’s power production capacity are likely to lead to more energy imports and customers paying more.

The energy watchdog predicts power station closures could mean a 10% fall in capacity by April alone.

Mr Buchanan has said the UK needs more gas supplies to fill the shortfall.

His warning comes as older power stations close and renewable energy remains in its infancy.

Global market

Existing plans to take ageing and polluting power stations off the UK network over the next few years mean the amount of energy the UK can produce is set to fall.

The BBC’s John Moylan says that, while we have heard such warnings before, the difference with this one is that the process is already underway. Plants are already closing, and although planning permission for new ones is out there, nothing is actually being built.

Continue reading the main story
There isn’t a single person or people to blame. In my view it was a single event – the financial crisis”

End Quote Alistair Buchanan Chief Executive, Ofgem While the shortfall in supply can be filled by increasing gas imports, competing for those supplies on the global market is likely to cost more.

Longer term solutions to the UK’s energy needs, such as new nuclear power stations or tapping domestic shale gas reserves, have yet to be given the final go-ahead by the government.

Mr Buchanan told the BBC that Britain “would be very tight on power station capacity in three to five years time”.

“We’re going to have to go shopping in world markets at a time when they will be very tight (on supplies) themselves.”

“There isn’t a single person or people to blame. In my view it was a single event – the financial crisis. Before the financial crisis the government had backed a a visionary approach to energy on wind, water and nuclear… then came the financial tsunami.”

He said that crisis had a major impact on the government’s ability to pay for such expensive schemes.

Mr Buchanan added that it was very important to resolve “leaky homes” and become more energy efficient in order to avoid the approaching “near crisis”.

He is stepping down as Ofgem chief executive later this year.

Business confidence rises, conditions still weak

Businesses are cautiously confident about an improving global economy, but conditions remain difficult.

National Australia Bank’s monthly business survey’s confidence index rose 1 point to +3 in January, just above the level that means optimists outnumber pessimists and below long-term average levels.

However, business conditions remained at -2, despite a 3-point improvement last month.

Trading conditions jumped to 1 from -5 in December, and profitability also surged by 7 points but remains in negative territory at -1.

However, forward orders (which indicate the likely direction of activity over the next few months) were still stuck at -4, up just 1 point from December, and the employment index fell from-3 to -7, indicating that businesses are more likely to lay-off staff than hire.

The business survey’s price measures show inflation remains well contained, with input cost rises easing for producers, labour costs constrained and retail prices falling.

NAB’s chief economist Alan Oster says interest rate sensitive industries seem to be benefiting somewhat from lower borrowing costs.

“Business conditions were generally better across interest sensitive industries in January, but fell heavily in mining,” he observed.

“Recent surveys have highlighted the gradual deterioration in conditions in recreation and personal services and transport and utilities (previous non-mining strong performers). This trend continued in January. It may well be that continuing weakness elsewhere is now spreading.”

Mr Oster says the low inflation outlook and relatively weak business conditions are likely to prompt further official interest rate cuts.

He is expecting three more 25-basis-point reductions this year, with the next ones in May and June.

A separate quarterly survey by the Australian Chamber of Commerce and Industry has also found a modest improvement in business expectations of future economic conditions.

ACCI’s December quarter business expectations survey of more than 2,700 firms found a slightly higher proportion of businesses expected the economy to improve over the next year than in September.

However, at 43.7, the index is showing more businesses are still pessimistic about the outlook than are optimistic.

The measures for business conditions, sales revenue, selling prices, profits and employment also all continued to ease, but generally at a slower pace.

“The December quarter survey shows while business sentiment has shown early indications of stabilising, actual business trading conditions fell deeper into contractionary territory, with some indicators approaching, if not exceeding, the historic low levels recorded during the height of the global financial crisis,” noted ACCI’s chief economist Greg Evans in the report.

“Given the weakness in business trading conditions are yet to show signs of abating, including continuing lacklustre investment across the mainstream businesses, we still expect the economy will need the stimulus of further rate cuts.”

Topics: business-economics-and-finance, economic-trends, money-and-monetary-policy, australia

First posted February 12, 2013 12:04:19

Euro rises as finance ministers meet

 French Finance Minister Pierre Moscovici has expressed fears about the strength of the euro The euro has jumped against the British pound and the Japanese yen.

The move comes as France prepares to voice concerns about the strength of the euro at a meeting of eurozone finance ministers in Brussels.

French Finance Minister Pierre Moscovici is worried that the rising single currency is making the country’s goods less competitive.

The euro has risen by 6% against a basket of other currencies in the past six months.

But with other countries also wanting to weaken their exchange rates, there are renewed fears of “currency wars”.

Japan has recently moved to force down the value of the yen.

‘Co-ordinated approach’

On Monday, the single currency rose 1.1% against the yen to 125.30. Against the pound, it climbed 1% to 85.41p. It climbed slightly against the dollar to $1.3387.

“We will have a debate about exchange rates,” Mr Moscovici told reporters as he arrived for the meetings.

Continue reading the main story “The euro has appreciated strongly in recent months… for positive reasons, because confidence is coming back in the eurozone.”

He added: “I think that we must, at the international level, argue for a co-ordinated approach that will allow us to have a stable exchange rate… exchange rates should not be subject to moods or speculation,”.

Last week, France called for the European Central Bank (ECB) to consider setting a target for the single currency – steering it lower when the value became too high.

But both Germany and the ECB are against such a move, arguing that the central bank’s mandate is to ensure price stability and not to manage currency markets.

However, ECB President Mario Draghi was widely thought to be trying to talk down the euro at his interest rate press conference last week.

“The exchange rate is not a policy target, but it is important for growth and price stability,” Mr Draghi said in response to a question.

“We will closely monitor money market developments.”

Daragh Maher, a senior currency strategist at HSBC, told the BBC that France was probably more “twitchy” because numbers were showing its competitiveness to be declining.

There are reports that the G7 group of rich countries may release a statement later this week to cool talk about currency markets. It is thought that it will reaffirm its commitment to market-determined exchange rates.

Today’s Eurogroup meeting – attended by eurozone finance ministers – is the first to be hosted by the Netherlands. Financial aid to Greece and Cyprus is also likely to be discussed.

Share markets mixed, yen rises

The yen surged overnight despite the Bank of Japan unveiling aggressive new stimulus measures, by doubling its inflation target to 2 per cent and committing to indefinite asset purchases from next year.

Global stock markets had mixed results; on Wall Street, stocks extended gains after closing at a more than five-year high last week, as corporate earnings season gets into full swing.

Figures showed home sales in the US fell last month, against expectations of a rise.

The Dow Jones closed 0.5 per cent higher at 13,712, the S&P 500 index rose by 0.4 per cent to 1,493, and the Nasdaq Composite Index finished 0.3 per cent stronger at 3,143.

In Europe, stock markets reversed before positive words from the head of the European Central Bank.

During a speech in Germany, Mario Draghi said the “darkest clouds” of the eurozone’s three-year long debt crisis have cleared.

However, Mr Draghi warned that was no alternative to structural change, and urged governments not to slow their drive for reform.

Last year, he vowed to do “whatever it takes” to avoid a break-up of the eurozone.

In London, the FTSE 100 closed relatively flat, down 2 points to 6,179, the DAX in Germany lost 0.7 per cent, and the CAC 40 in France fell 0.6 per cent.

Domestically, futures trade is suggesting a positive start to the session in Australia – the ASX SPI 200 index was 11 points higher at 4,753.

In commodity trade, spot gold was edging up to $US1,692 an ounce, and West Texas crude oil had risen to $US96.10 a barrel.

On currency markets, the Australian dollar was higher against the greenback but down against a stronger yen after that stimulus announcement from Japan’s central bank.

At 8:30am (AEDT), it was buying 105.7 US cents, 79.3 euro cents, 93.8 Japanese yen, 66.7 British pence and $NZ1.267.

Topics: business-economics-and-finance, markets, currency, futures, stockmarket, australia

Transurban profit falls but dividend rises

By finance reporters Justine Parker and Simon FrazerPosted February 05, 2013 12:40:59

Toll road operator Transurban has announced a decline in half-year profits, but its shares have risen on an increased dividend.

Transurban recorded a first-half net profit of $80.9 million, down more than 13 per cent on the same time the year before.

The chief executive of Transurban says there has been disappointing traffic flows on its new US toll road and the 495 Express, linking Virginia to Washington DC, will take time to capture motorists.

“From an operational point of view it’s performing well. The safety issues we’re quite happy with how it’s performed there,” he said.

“We are disappointed with some of the early traffic numbers. It is in that situation because it’s been under construction for five years, and it’s the biggest adjustment to that traffic network since the 1960s.”

Earnings before tax, interest and depreciation rose though, to $417 million.

However, shareholders will get an increased dividend of 15.5 cents per share for the period.

The rise in the dividend had helped Transurban’s shares rise around 1.5 per cent to $6.19 by 12:23pm (AEDT).

The company operates toll roads including the M2 and the Lane Cove tunnel in Sydney, and Melbourne’s Citylink.

Topics: business-economics-and-finance, company-news, road-transport, australia

Adelaide vacant office space rises

The Property Council said a rising office vacancy rate in the Adelaide CBD was a sign of the economic times.

In the past year it said the vacancy rate had risen by almost 2 per cent to 9.5 per cent in the city centre.

It says the vacancy rate was 6.1 per cent on the city fringe, up half a percentage point.

Council executive director Nathan Paine said the newly-opened Australian Tax Office building in Franklin Street had contributed to the rising vacancy rate, but there also were other reasons.

“There’s a slow economy. We don’t have a strong population growth level and really the business community is off of where we were say in 2008 as a consequence of the global financial crisis,” he said.

Mr Paine said a proposed levy on CBD parking spaces would not help.

“The biggest issue with the car parking tax is that with many businesses it’s going to be built into their fringe benefits tax, their payroll tax and their WorkCover payments, so it actually makes it more expensive to do business in the Adelaide CBD than it does anywhere else in the metropolitan area,” he said.

Topics: economic-trends, sa, adelaide-5000

Share market rises despite flood impacts

The local share market is making solid and broad gains, despite some flood-related falls for the insurance sector.

The All Ordinaries index was up 46 points, or around 1 per cent, at 4,905 shortly before 1:00pm (AEDT).

The ASX 200 index was up 48 points to 4,883.

Clothing manufacturer Pacific Brands jumped nearly 4 per cent, while Myer was leading retail gains with a 2.2 per cent rise.

Woolworths was up 0.9 per cent, while Wesfarmers had risen 1.8 per cent.

Westpac had also risen 2.2 per cent, with CBA and ANZ gaining 1.5 per cent, and NAB up by 1.4 per cent.

The local airlines have not fared so well though, with flights disrupted by bad weather along much of the eastern seaboard: Qantas had slipped 1 per cent, and Virgin Australia was losing 1.2 per cent.

Shares in Australian insurance companies have fallen as flood-related claims begin to mount: QBE Insurance had fallen 2.4 per cent; Suncorp was down 2.3 per cent; and Insurance Australia Group had lost 1.7 per cent.

The mining sector has swung to some modest gains, with Rio Tinto up 0.2 per cent and BHP Billiton up 0.3 per cent, while Fortescue Metals Group gained 1.8 per cent.

Telstra was also performing strongly, up 1.4 per cent.

The Australian dollar had risen against the greenback to around 104.38 US cents.

Topics: business-economics-and-finance, markets, currency, stockmarket, australia

China’s key money rate rises on month-end and holiday demand

china-central-bankSHANGHAI: China’s key seven-day money rates rose on Tuesday on expectations of strong cash demand ahead of the Chinese New Year Holiday.

China’s central bank partially sated this demand by injecting a net 27 billion yuan ($4.34 billion) into the market on Tuesday.

Specifically, the bank injected 80 billion yuan through seven-day reverse repos on Tuesday, which has partially offset the 121 billion yuan worth of maturing instruments that are draining cash from the markets this week.

The benchmark weighted-average seven-day bond repurchase rate rose 12 basis points to 3.11 percent from 2.98 percent at the close on Monday.

“Money is not hard to borrow, but given high demand, prices are relatively high,” said a dealer at a Chinese commercial bank in Beijing.

The 14-day repo rate fell slightly to 3.65 percent from 3.64 percent, still hovering around a nearly one-month high level, as financial institutions allocated funds for the Chinese New Year Holiday, starting from Feb. 9.

Dealers said the high level of demand for the 14-day tenor was also because given the closure of markets during the upcoming holiday, those repos would actually mature in 21 days.

China International Capital Corporation Limited (CICC) said in its weekly report that the money conditions will remain tight ahead of holiday, but the situation will be much better than last year because China’s net foreign exchange purchases are expected to rise steadily in the first quarter of the year, which would effectively inject yuan liquidity into the market.

The intensified tempo of short-term liquidity pperations will also enhance stability.

Copyright Reuters, 2013

Share markets mixed, yen rises

The yen surged overnight despite the Bank of Japan unveiling aggressive new stimulus measures, by doubling its inflation target to 2 per cent and committing to indefinite asset purchases from next year.

Global stock markets had mixed results; on Wall Street, stocks extended gains after closing at a more than five-year high last week, as corporate earnings season gets into full swing.

Figures showed home sales in the US fell last month, against expectations of a rise.

The Dow Jones closed 0.5 per cent higher at 13,712, the S&P 500 index rose by 0.4 per cent to 1,493, and the Nasdaq Composite Index finished 0.3 per cent stronger at 3,143.

In Europe, stock markets reversed before positive words from the head of the European Central Bank.

During a speech in Germany, Mario Draghi said the “darkest clouds” of the eurozone’s three-year long debt crisis have cleared.

However, Mr Draghi warned that was no alternative to structural change, and urged governments not to slow their drive for reform.

Last year, he vowed to do “whatever it takes” to avoid a break-up of the eurozone.

In London, the FTSE 100 closed relatively flat, down 2 points to 6,179, the DAX in Germany lost 0.7 per cent, and the CAC 40 in France fell 0.6 per cent.

Domestically, futures trade is suggesting a positive start to the session in Australia – the ASX SPI 200 index was 11 points higher at 4,753.

In commodity trade, spot gold was edging up to $US1,692 an ounce, and West Texas crude oil had risen to $US96.10 a barrel.

On currency markets, the Australian dollar was higher against the greenback but down against a stronger yen after that stimulus announcement from Japan’s central bank.

At 8:30am (AEDT), it was buying 105.7 US cents, 79.3 euro cents, 93.8 Japanese yen, 66.7 British pence and $NZ1.267.

Topics: business-economics-and-finance, markets, currency, futures, stockmarket, australia

More power price rises flagged in Rio gas play

An independent industry analyst says Northern Territorians may face more power cost hikes if gas is diverted to the Rio Tinto alumina refinery on the Gove peninsula.

The Territory and Federal governments are in negotiations with the mining giant about supplying gas and building a pipeline to the refinery.

Rio Tinto wants the Federal Government to underwrite the cost of a $900 million gas pipeline to Nhulunbuy, more than 990 kilometres east of Darwin.

The company wants the Territory Government help arrange a supply of gas from the Blacktip gas field in the Bonaparte Basin of the Timor Sea, about 110 kilometres from the northern Australian coast.

The Blacktip field is wholly owned and operated by the Italian company ENI, which has a 25-year contract to supply the Territory’s Power and Water Corporation.

Power and Water provides power generation, transmission, and electricity retail services throughout the Territory.

The cost of electricity to domestic consumers has already risen by 30 per cent from the start of the year.

Rio Tinto has warned the Gove refinery, operated by its subsidiary Pacific Aluminium, may have to close if a cheaper energy supply can’t be secured.

The refinery now generates its power using diesel fuel.

Gas industry analyst Peter Strachan says a new deal to supply gas to Gove could see power costs rise again.

“I think it is inevitable they will go up,” he said.

“The costs of developing these fields have probably tripled over the last ten years, and getting $4 a gigajoule gas is a thing of the past.”

But Mr Strachan says while the deal may be bad news for consumers, it could prove a boon for gas suppliers.

“It means you’ve got a growing market,” he said.

“You’ve got a very rapidly expanding situation in the Northern Territory, all … wanting gas for industry and for power production.

“When the two meet, the prices will rise to attract more gas into that market.”

Territory Chief Minister Terry Mills, however, says he is determined to prevent power prices from increasing further as a consequence of securing a gas supply for Gove.

He says says the interests of Territory families are his priority in the discussions.

“Make no mistake about that, that is central in my thinking,” he said.

“We cannot disadvantage the Northern Territory in these negotiations.

“I don’t want any result to occur that increases the cost of electricity for Territorians.

“I am there to protect the interests of Territorians.”

Mr Mills has already said he feels he is being held to ransom in the talks with Rio Tinto, because the town of Nhulunbuy is almost totally dependent on the operations of the refinery.

Topics: government-and-politics, mining-industry, oil-and-gas, darwin-0800, nhulunbuy-0880

First posted January 17, 2013 12:56:23

Oman’s Bank Muscat Q4 net profit rises 15.1pc

DUBAI: Bank Muscat, Oman’s largest lender, posted a 15.1 percent increase in fourth-quarter net profit on Thursday, Reuters calculations show, in line with the average estimate of analysts.

The bank made a quarterly net profit of 35 million rials ($90.9 million) in the three months to Dec. 31 compared with 30.4 million rials in the prior-year period, Reuters calculated from previous financial statements.

Six analysts polled by Reuters had on average estimated a fourth-quarter profit of 35 million rials.

Full-year net profits for the bank stood at 139.2 million rials, a 18.5 percent improvement on the 117.5 million rials it reported for 2011, a statement to the Omani bourse said.

The results were boosted by a 13.5 percent increase in non-interest income, which rose to 93.2 million rials, and a 8.6 percent gain in net interest income, which advanced to 230.4 million rials.

Impairments for the final three-month period of 2012 stood at 17 million rials, Reuters calculated, taking them to 57.9 million rials for the full year. This was up 11.1 and 3.2 percent respectively on the corresponding period of 2011.

Loans and advances rose to 5.6 billion rials at the end of 2012, up 16.2 percent from 4.82 billion rials at the same point in 2011.

Deposits increased 10.9 percent in 2012, the bank said, rising to 5.38 billion rials from 4.85 billion rials at the end of 2011.

Earlier this week, Bank Muscat said it had received a licence from the country’s central bank to commence Islamic banking operations under its Meethaq Islamic Banking brand.

Bank Muscat shares rose 0.7 percent in early Muscat trade.

Copyright Reuters, 2013

US industrial output rises in December

WASHINGTON: US industrial production rose for the second consecutive month in December, continuing the recovery from Hurricane Sandy’s devastation, central bank data released Wednesday showed.

Industrial output rose 0.3 percent in December following a revised 1.0 percent increase in November as industries affected by the power storm that struck the Northeast in October rebounded.

The December increase was slightly above the 0.2 percent consensus estimate of analysts.

On a 12-month basis, the Federal Reserve said industrial production rose 2.2 percent in December. That was still a sharp 1.9 points below its level in December 2007, when the economy entered a deep recession that only ended in June 2009.

For the fourth quarter, total output rose at an annual rate of 1.0 percent, including a significant upward revision to the October reading, to minus 0.3 percent from 0.7 percent.

Manufacturing output rose 0.8 percent in December, lifted by motor vehicles production. Mining output was up 0.6 percent; utilities output dived 4.8 percent amid unseasonably warm weather.

“The details were much stronger than the utilities-depressed headline data, and revisions added to the stronger tone,” Jim O’Sullivan, chief US economist at High Frequency Economics, said.

“The rebound in manufacturing in the last two months has gone behind a reversal of hurricane-related weakness in October.”

Copyright AFP (Agence France-Presse), 2013

Share market rises ahead of holiday break

By finance reporter Rebecca Hyam and staffPosted December 24, 2012 11:12:00

Retailers are leading the gains on the Australian share market, with investors hoping for a last minute Christmas shopping surge.

The All Ordinaries index was up 19 points to 4,654 just before 11:00am (AEDT), and the ASX 200 was almost 0.5 per cent higher at 4,644.

Shares in Myer were up almost 2 per cent to $2.09 and JB Hi-Fi was almost 1 per cent higher at $10.25.

The big miners were making reasonable gains – BHP Billiton was up 19 cents to $36.89, and Rio Tinto was 33 cents higher at $65.05.

NAB was the worst of the big four banks with losses of just over 0.1 per cent, while Westpac and Commonwealth Bank shares were gaining 0.6 per cent.

The local share market will close early at 2:10pm (AEDT), ahead of holidays on Christmas Day and Boxing Day.

The Australian dollar was buying 103.98 US cents.

Topics: business-economics-and-finance, markets, currency, stockmarket, australia

Unemployment rises as full-time jobs shed

The unemployment rate has risen from 5.3 to 5.4 per cent, as 5,500 jobs were lost in December.

Bureau of Statistics figures show the fall was centred on full-time positions, with an estimated 13,800 lost, while part-time employment increased by 8,300.

The original jobless rate of 5.2 per cent for November was revised up to 5.3 per cent, meaning last month’s rise to 5.4 per cent was a modest 0.1 percentage point increase.

The more stable trend unemployment number, which smoothes out monthly volatility, remained steady at 5.4 per cent.

The proportion of those aged over 15 in work or looking for it – the participation rate – remained steady at 65.1 per cent.

Due to the rise in joblessness and shift away from full-time to part-time work, aggregate monthly hours worked fell by 1.1 million to 1.624 billion hours in December.

However, CommSec economist Savanth Sebastian says there were some positive revisions to the November data, particularly for hours worked.

“While 5,500 jobs were lost in December, the November result was revised up to show 17,100 job gains rather than a 13,900 lift in jobs,” he wrote in a note on the figures.

“Indeed hours worked was also substantially revised up in November, now showing 0.8 per cent growth rather than 0.1 per cent.”

NSW: Unemployment up from 5 to 5.1 per cent; participation up to 65.3 per cent.Victoria: Unemployment up from 5.5 to 5.6 per cent; participation up to 65.2 per cent.Queensland: Unemployment up from 6.1 to 6.2 per cent; participation down to 66 per cent.SA: Unemployment up from 5.3 to 5.8 per cent; participation up to 63.1 per cent.WA: Unemployment up from 4.1 to 4.3 per cent; participation steady at 69.3 per cent.Tasmania: Unemployment steady at 7 per cent; participation down to 60.3 per cent.NT: Unemployment down from 3.9 to 3.8 per cent; participation up to 74.7 per cent.ACT: Unemployment up from 4.1 to 4.2 per cent; participation steady at 72.5 per cent.All figures seasonally adjusted except for Tasmania, NT and ACT which are trend due to small sample size.

Mr Sebastian says that demonstrates the resilience of the Australian labour market in the face of patchy growth and weakness in particular industries.

“It’s clear that the job market isn’t shooting the lights out but by no means is unemployment soaring. In a big picture sense the job market is in a holding pattern with a modest degree of softening,” he noted.

“But while jobs are being lost in some industries, clearly they are being created in other industries.”

Nearly 150,000 jobs were created last year, but that failed to keep pace with a 185,000 person increase aged over 15.

Only a decline in the proportion of people either in work or looking for it helped keep unemployment relatively steady at 5.4 per cent, up just 0.2 percentage points from a year ago.

Finance reporter David Taylor told PM the unemployment rate “gets interesting” in state-to-state comparisons.

The unemployment rate in NSW is at 5.1 per cent. That’s up just a fraction from 5 per cent. Victoria is flat at 5.6 per cent and Western Australia is starting to unwind from a very strong level. So it’s at 4.3 per cent. It’s very low but it is up from 4.1 per cent.

Queensland is hurting a little bit here. The unemployment rate has risen from 6.1 per cent to 6.2 per cent. The Federal Government is blaming of course the Queensland Liberal Government for the rise in the national jobless rate.

Acting Employment Minister Kate Ellis says the Newman Government has basically presided over thousands of job losses.

So if you’re looking at the deterioration in the coal sector and public sector job losses, that’s what the Federal Government is putting that down to.

And of course Tasmania is probably the worst off – unemployment rate of 7.3 per cent.

Taylor told PM the figures give an indication of how the economy is performing overall.

I think it’s showing more evidence the pillars holding the economy up are starting to show some cracks.

Mining hiring is slowing down. The Western Australian unemployment rate has gone up.

Of course there are fewer people actually exiting the labour force. So look, I think economists are right.

The unemployment rate probably will edge higher as more people stay in the labour force and try and look for work.

TD Securities strategist Alvin Pontoh says he expects that employment will remain soft, but unemployment will not worsen dramatically.

“Those calling for multiple rate cuts probably expect the unemployment rate to continue to rise towards circa 6 per cent, while in contrast we look for a steady rate at 5.5 per cent through 2013, justifying just one more rate cut by mid-year,” he wrote in a note on the data.

“Leading indicators are terrible but we believe that the (lagged) effect of earlier easing of monetary policy should translate to a continuation of the current moderate pace of employment growth rather than a renewed deterioration, just enough to absorb the expected labour force growth.”

The Australian dollar eased modestly on the data, dropping just over 0.1 cents to 105.45 US cents by 11:41am (AEDT).

Topics: money-and-monetary-policy, unemployment, business-economics-and-finance, economic-trends, australia

First posted January 17, 2013 11:36:12

China’s key money rate rises on conservative cash injection

china-central-bankSHANGHAI: China’s key money rates rebounded slightly on Tuesday from one-month lows after the People’s Bank of China injected a mere 10 billion yuan ($1.61 billion) into money markets through open market operations.

China’s central bank issued 10 billion yuan worth of 14-day reverse bond repurchase agreements on Tuesday, but refrained from issuing seven-day reverse repos. Dealers said that adequate market liquidity meant there was little demand for the seven-day tenor.

“Today’s rise is just a small rebound after rates sank yesterday, it doesn’t signify much,” said a dealer at a large state-owned bank in Beijing.

“(Financial) institutions have enough funds on hand. Besides, if we need more, we still have a chance (to take up seven-day reverse repos) on Thursday,” he said.

Despite today’s move, market players expect the central bank to issue more seven-day reverse repos in upcoming weeks to meet growing cash demand for the Spring Festival Holiday, which starts on Feb. 9.

The benchmark weighted-average seven-day bond repurchase rate rose 7 basis points to 2.82 percent on Tuesday up from 2.75 percent at Monday’s close. Dealers consider rates below 3 percent indicative of ample money supply.

The 14-day repo rate gained slightly to 2.81 percent from 2.74 percent, and the one-day repo rate inched up to 2.10 percent from 2.04 percent.

Copyright Reuters, 2013

Inflation gauge rises in December

Higher prices for petrol, rent, holiday travel and accommodation have driven a rise in a key unofficial measure of inflation.

The monthly inflation gauge by TD Securities and the Melbourne Institute rose by 0.4 per cent in December, taking the annual rate to 2.4 per cent.

However, the main rises were in prices that often go up pre-Christmas, such as accommodation and holiday travel, while prices for clothing, footwear, alcohol and tobacco, meat and seafood fell.

The gauge shows that underlying inflation, which is what the Reserve Bank focuses on when setting interest rates, rose by just 0.1 per cent last month.

TD Securities says the figures suggest the RBA will probably wait until the middle of the year before making its next official rate cut.

“We’ve just pencilled in a rate cut for mid-year. The reason why we’re saying ‘pencilled’ is it’s very tough to be definitive on anything in this global environment,” said TD’s head of Asia-Pacific research Annette Beacher. 

“So I think the RBA is in a very good position to wait and see, so I think at least on hold throughout February and March would be rather prudent at this stage.”

Topics: business-economics-and-finance, economic-trends, money-and-monetary-policy, australia

First posted January 14, 2013 10:36:05

Chinese insurer rises on debut

7 December 2012 Last updated at 05:25 GMT As PICC makes its market debut, investors in Hong Kong are in desperate need of good news

Shares in the People’s Insurance Company of China (PICC) were 8% higher on the firm’s debut in Hong Kong despite the tough market conditions.

The state-owned insurer raised $3.1bn (£1.9bn) making it the biggest share sale in Hong Kong in two years.

PICC priced its stock at 3.48 Hong Kong dollars (45 cents; 28p) per share, near the bottom of its indicated range.

Hong Kong has seen fewer and fewer major listings on its once red-hot share market.

PICC, founded in 1949, was the first country-wide insurance company in China.

It has about 130 million individual customers and about 2.4 million institutional clients.

The initial public offering was the biggest in Hong Kong since the $20.5bn listing of AIA Group in 2010.

However, the investment environment has been subdued this year in Hong Kong because of the slowdown in China.

Some companies looking to go public have delayed their planned listings, or dramatically reduced the amount to be raised.

Analysts said the PICC shares were boosted by individual retail investors looking to buy into the insurer after many were shut out of the deal last week.

Scotiabank profit rises 31pc on wholesale banking

TORONTO: Bank of Nova Scotia capped off the fourth-quarter earnings season for Canadian banks with a slightly stronger than expected 31 percent profit gain on Friday, as strong wholesale banking income made up for more sluggish international growth.

Following the trend of most of its peers this quarter, profit gains were driven by trading and investment banking income, while domestic loan growth was steady despite worries that a cooling housing market will dry up demand.

The bank, Canada’s third-largest, earned C$1.52 billion ($1.54 billion), or C$1.18 a share in the fiscal fourth quarter ended Oct. 31. That compared with a year-before profit of C$1.16 billion, or 97 Canadian cents a share.

Excluding a charge for amortization of intangibles, the bank earned C$1.21, coming in slightly ahead of analysts’ expectations of a profit of C$1.18 a share.

The bank’s shares ended the session down 3 Canadian cents at C$55.53 on the Toronto Stock Exchange.

Toronto-based Scotiabank boasts operations in more than 50 countries, with the heaviest weighting in Latin America and a growing presence in Asia.

Scotiabank’s international consumer banking segment posted a 22 percent gain in profit to C$453 million, helped by the acquisition in January of Colombia’s Banco Colpatria.

Compared with the third quarter, however, international profit rose only 2.5 percent and net interest income retreated. The result was also little changed from the second quarter, raising concerns about growth in the bank’s most high-profile segment, said Barclays Capital analyst John Aiken.

“Ultimately, the investment thesis for Bank of Nova Scotia at 30,000 feet is growth in its international segment, and this has not happened for two quarters in a row,” he said.

The bank acknowledged in a statement that economic momentum in major emerging markets is moderating, but said those markets should remain the major drivers of global growth through next year and beyond.


Scotiabank has made dozens of small transactions in the wake of the 2008 financial crisis, the bulk of them international and valued at less than C$1 billion.

Speaking on a conference call, company officials said they plan to make more “tuck-in” acquisitions for the global wealth management division.

However, they could were unable to offer any hints as to when their much-delayed acquisition of a 20 percent stake in China’s Bank of Guangzhou would be finalized.

Scotiabank had initially expected to close the C$719 million deal last year, but the process has dragged on as the bank deals with multiple layers of government approval.

Brian Porter, who was head of the bank’s international banking division before taking over as president last month, noted the municipal government of Guangzhou recently changed, but said he believed the company was in good stead with the local regulator.

“These things take time in China and I can’t forecast whether it’s going to be Q2 or Q4, but we’re making headway,” he said.


Profit at the bank’s global banking and markets division, its wholesale banking unit formerly known as Scotia Capital, jumped 63 percent to C$396 million as trading and investment banking improved from a relatively weak result in the fourth quarter of 2011.

The Canadian banking segment earned C$481 million, up 15 percent, driven by an 8 percent rise in residential mortgages, and largely bucking the trend of narrower loan margins that pinched results at Scotiabank’s rivals.

The bank scored a coup in August when it won a bidding war for the Canadian online banking arm of Dutch lender ING Groep , adding C$40 billion in assets and C$30 billion in deposits in a segment where significant market-share gains are hard to come by.

Copyright Reuters, 2012

Dollar rises despite interest rate cut

Posted December 05, 2012 09:36:21

The Australian dollar remains stubbornly high despite the Reserve Bank’s cut to the cash rate yesterday.

The RBA’s been trying to take the heat out of the dollar and support exporters by cutting the cash rate, and also repeatedly warning that the local currency is overvalued relative to Australia’s economic fundamentals.

However, the Australian dollar actually rose about half a cent yesterday afternoon on the rate cut and accompanying statement, when it would normally be expected to fall in line with rate reductions.

This morning, the Australian dollar was trading around 104.7 US cents at 9:27am (AEDT).

Economists warn the high currency is likely to counter some of the positive effects lower interest rates will have on industry.

Westpac’s senior currency strategist, Sean Callow, says the Reserve Bank will be disappointed.

“They’ve expressed their puzzlement over the resilience of the Australian dollar, given commodity prices aren’t as high as they used to be,” he observed.

The Federal Treasurer, Wayne Swan, says it is up to the Reserve Bank to decide if more interest rate cuts are needed to try to bring down the value of the dollar.

Mr Swan acknowledges the high dollar is hurting many trade exposed industries.

“Well there’s no doubt that, in terms of our economy, the higher dollar does have its impact and is putting some stress and strain on a number of industrial sectors – [the] tourism sector for example – anybody who’s exporting,” he said.

“So it does have an impact, but in terms of future decision of the Reserve Bank that is a matter for them.”

Topics: business-economics-and-finance, economic-trends, money-and-monetary-policy, currency, australia

Brazil industrial output rises 0.9pc in Oct vs Sept

Tuesday, 04 December 2012 17:27 Posted by Shoaib-ur-Rehman Siddiqui

brazil-flagSAO PAULO: Industrial production in Brazil expanded 0.9 percent in October from September, government statistics agency IBGE said on Tuesday.

Production had been expected to rise 1.2 percent, according to the median estimate of 35 analysts in a Reuters survey.

The forecasts for the increase ranged from 0.6 percent to 1.9 percent.

October’s industrial production expanded 2.3 percent from a year earlier, less than the 2.5 percent rise forecast in the Reuters survey. Estimates for the increase in production ranged from 0.4 percent to 3.6 percent.

Copyright Reuters, 2012

Market rises on hopes of interest rate cut

Posted December 03, 2012 18:24:58

The share market made solid gains today on hopes the Reserve Bank (RBA) will cut interest rates tomorrow, while positive Chinese manufacturing figures also helped.

The All Ordinaries added 0.5 per cent to 4,540 and the ASX 200 was up 57 points to 4,532.

A broad gauge of China’s manufacturing activity has risen to a 13-month high, underlining the nation’s economic recovery and helping Australia’s resources sector to gains midway through the session.

They could not be sustained though and the sector ended down a quarter of a per cent.

Rio Tinto did most of the damage, off a third of a per cent, while Newcrest lost 1.5 per cent.

The major banks ended mostly higher; Commonwealth led, up almost 2 per cent while NAB ended flat.

Today kicked off a big week for data and it was not a great start.

Data today revealed job advertisements fell for the eighth straight month in November, down 17 per cent for the year.

Manufacturing activity declined for the ninth straight month and October’s retail sales fell flat.

ABS business indicators shows company profits are down 13 per cent for the September quarter when compared to a year ago.

They have fallen for four straight quarters now.

This all prompted the predictable demands from industry leaders for the Reserve Bank to cut the cash rate tomorrow.

While most economists believe that will happen, some disagree.

TD Securities believes the bad news on the economy is not bad enough to prompt the RBA to move this month, and it is likely to hold its fire until things get worse next year.

Today’s data affected the Australian dollar however, dropping a quarter of a cent against the greenback on expectations the cash rate will be cut, which effectively devalues the dollar in the eyes of investors.

Just before 5:30pm (AEDT) it was buying 104 US cents, 79.8 euro cents, 64.8 British pence and 85.6 Japanese yen.

West Texas crude was worth $US88.50 a barrel, Tapis was up to $US118 a barrel, while spot gold was down to $US1,718 an ounce.

Topics: markets, stockmarket, business-economics-and-finance, australia

Tipped price rises may sandbag PM’s power play

Updated December 03, 2012 20:53:24

It seems Julia Gillard’s plans to save consumers $250 a year on power bills may already have been sandbagged in New South Wales.

There are more price rises in the offing for many consumers in the state which Federal Labor has identified as crucial to its hopes for re-election next year.

One of NSW’s biggest electricity suppliers, Energy Australia, has outlined plans to put prices up by 10.5 per cent over the next three years.

At the weekend, Ms Gillard announced a reform package in which she wants to give more funding to the national energy regulator and set up new consumer groups to keep power prices down.

The Commonwealth wants to put an end to the “perverse incentive” to overinvest in poles and wires, and give consumers more access to information about their electricity usage through the installation of so-called smart meters.

Ms Gillard is hoping to reach an agreement on the plan at a Council of Australian Governments (COAG) meeting of state and territory leaders on Friday.

But state and territory leaders are calling for more details before signing up.

In NSW, the chairman of the state’s Independent Pricing and Regulatory Tribunal (IPART), Peter Boxall, says competition is the best guarantee of lowest possible prices for electricity.

“In our view, effective competition, where retailers strive to offer customers products and services they value, is the best way to ensure that prices are driven towards the efficient cost of supply,” he said.

“However, we expect that the main driver of recent electricity price increases – rising network costs – will ameliorate over the next three years.”

Despite that perspective, the retailers’ outlook is for higher prices across New South Wales.

Energy Australia, which supplies electricity and gas to 1.1 million businesses, is proposing to raise prices by up to 4.5 per cent from next July.

It also predicts a further rise of 3 per cent from 2014, and another 3 per cent the year after that.

Origin Energy, which covers western Sydney, the Illawarra, as well as regional and rural NSW, is also predicting price rises.

“We expect that a reasonable regulated electricity price path across the regulatory period would see price increases above CPI, but nowhere near replicating the recent year-on-year double digit price increases,” said spokesman Frank Calabria.

Business and industry are looking for substance rather than stunts and politicking come Friday.

Innes Willox, from the Australian Industry Group (AIG), says he hoped there can be real outcomes determined in the national interest.

“There are a series of measures that are being put forward that are really important for industry,” he said.

“You’ve got a proposal that would provide incentives to users, including industry, to voluntarily cut their electricity usage during the peak times, times of peak demand and that would be most welcome, because that would drive down costs.

“Our electricity system broadly is focused around those five or six days a year that are either really hot or quite cold where peak demand goes through the roof.

“If we can do important things, sensible things, to reduce demand during those periods of high stress on the network, that should reduce costs for all.

“If we can provide incentives for business to do that, business would be very quick to take that up I’m sure.

“And we’ve got other systems around a more formal role for energy users, including businesses in decision-making processes around electricity network investment.

“That’s really positive because it will get industry involved in the decision-making process.”

Topics: electricity-energy-and-utilities, industry, business-economics-and-finance, consumer-protection, federal-government, federal—state-issues, australia, nsw

First posted December 03, 2012 20:07:40

Lending rises as Bank plan starts

3 December 2012 Last updated at 15:49 GMT Federation of Small Businesses’ Liesl Smith: “It’s going in the right direction but more needs to be done”

Lending to households and businesses increased slightly in the third quarter of the year as a new scheme began.

Banks took up £4.4bn in cheap funding from the Bank of England through the new Funding for Lending scheme, and their total net lending rose by £496m.

However, the Bank of England said it was too early to reach any conclusions on how effective the scheme had been.

The figures showed that lending by four major UK High Street banks in fact fell during the same period.

Lloyds Banking Group, RBS, Santander, and Co-op all reported drops in their lending during the three months to the end of September.

The Bank’s Funding for Lending scheme (FLS) was launched in August to try to encourage more lending to households and businesses.

As the scheme was only launched in August, the Bank said that it might take time for the funding to flow through to the economy, owing to the time lag in applications, approvals, and drawing on loans.

Continue reading the main story Santander: down £3.5bnLloyds Banking Group: down £2.8bnRBS: down £642mBarclays: up £3.8bnNationwide: up £1.8bnLeeds Building Society: up £212m”I am confident that the FLS will help the supply of credit. The incentives in the scheme are for banks and building societies to cut lending rates and hence lend more to get the cheapest funding,” said Paul Fisher, executive director for markets at the Bank of England.

“But it is too early to use these data as a reliable indication of the impact of the FLS on lending volumes.”

Mortgage impact

Some 35 lenders are taking part in the scheme, though not HSBC. The aim is to increase bank lending by roughly £60bn by January 2014.

Under the terms of the scheme, the Bank of England allows commercial banks to borrow funds from it at an interest rate of just 0.25%.

However, only six institutions had taken advantage of this cheap funding by the end of September.

Continue reading the main story Banks and building societies can initially borrow Treasury bills up to 5% of the amount they currently lendThey are charged just 0.25% interest, much lower than the going rateThey can borrow more than 5%, only if they increase their overall lending If they decrease lending, the interest rate will increase up to 1.5%The banks use the Treasury bills as backing to buy money cheaply on the financial markets. It is this money that they then lend outThe Bank of England and taxpayers will be protected from any losses made on the loans agreed by the banks with homes or firms, because the banks will have to provide collateral to the Bank of England of a higher value than the loansLending levels to be monitored by the Bank of EnglandDuring the third quarter – which takes in the first two months of the scheme’s operation – net lending by Barclays increased by £3.8bn, and rose by £1.8bn at Nationwide Building Society.

Stephen Cooper, a director at Barclays bank, said: “People are still choosing to pay down debt and I think confidence needs to improve further, particularly for business owners, before they decide to invest.”

“What I am hoping FLS will do is stimulate that demand, and improve that confidence.”

Andrew Baddeley-Chappell, a senior executive of the Nationwide, said: “We have been actively lending more for some time, though FLS has clearly been helping that, both for first-time buyers and existing customers who are moving home.”

“It is absolutely clear that FLS has had a significant impact on the price of mortgages, and it is hoped by all that the impact of those lower prices will be to encourage increased activity in the market.”

On the other side of the coin, net lending fell by nearly £3.5bn at Santander, by almost £2.8bn at Lloyds Banking Group, and by £642m at RBS, despite all accessing the new supply of funds.

RBS said the scheme had still allowed it to cut the costs faced by small businesses to borrow money. Lloyds said it was planning to apply for another £2bn on the cheaper terms by the end of December, to add to the £1bn already drawn by the end of September.

More competition

The Bank’s figures do not reveal what the level of lending might have been if the Funding for Lending scheme had not been introduced.

The overall increase in the quarter of £496m remains a tiny proportion of the total stock of outstanding loans by the participating banks, accounting for just 0.04%.

“As the scheme embeds in banks, we should continue to see the scheme acting as a driver for competition, benefiting all borrowers and therefore the wider economy,” said the British Bankers’ Association.

But John Walker, national chairman of the Federation of Small Businesses, said: “What is needed is more competition and choice for small businesses to access finance.”

“Our data tells us that around four in 10 small firms were refused loans in the third quarter.”

Andrew Bowyer is a director of a Leicester engineering consultancy called Magna Parva, which specialises in designing equipment for the space industry.

He recently wanted to borrow £25,000 from the firm’s bank to upgrade expensive computer software, but he baulked at its insistence that he and his co-director must put up their own homes as security for the loan.

“We turned the loan down, and many firms will do the same,” he said.

“The knock-on effect is that borrowing will drop, and the economy will just slow down.”

RBC profit rises 22 percent on strong trading

TORONTO: Royal Bank of Canada’s quarterly profit rose 22 percent on a sharp jump in fixed income trading revenue and steady loan growth, suggesting the long-awaited slowdown in Canadian consumer lending has yet to materialize.

RBC, Canada’s largest bank and the first Canadian lender to report year-end results, said on Thursday it earned C$1.9 billion, or C$1.25 a share, in the fourth quarter ended Oct. 31.

That compared with a year-earlier profit of C$1.6 billion, or C$1.02 a share.

Excluding certain items, the bank earned C$1.27 a share, just ahead of analysts’ average estimate of C$1.26, according to Thomson Reuters I/B/E/S.

“It was a solid quarter, but I think we’re characterizing it as unspectacular,” said John Aiken, an analyst at Barclays Capital Markets, noting that credit quality weakened in the quarter, with loan loss provisions rising 31 percent to C$362 million.

Capital markets income more than tripled to C$410 million, benefiting from fixed-income trading results that compared with an abnormally weak quarter a year earlier. Among Canadian banks, RBC has the largest capital markets-related business.

Personal and commercial banking income rose 9 percent to C$1.0 billion, as a 7 percent rise in loan volumes more than offset higher expenses.

The loan growth came despite concerns that lending might slow because of a cooling housing market and record-high Canadian consumer debt levels.


Expectations for a sharp slowdown in mortgage and consumer lending growth have risen over the past year as Canadians have dealt with record debt levels and as government moves to tighten mortgage standards have started to cool the red-hot housing market.

RBC’s results confirm that a slowdown in lending will likely be a 2013 story, said Peter Routledge, an analyst at National Bank Financial.

“We’re still waiting for it. If we do have a real slowdown in the housing market, it’ll come later than anyone expected,” he said.

Speaking on a conference call, RBC Chief Executive Gordon Nixon acknowledged the strong loan growth will be difficult to duplicate going forward.

“While we anticipate that the strong growth in consumer lending that we experienced this year will moderate, we continue to have good momentum in the higher-margin commercial business,” he said.

While loan growth was steady, the interest margins on the loans narrowed to 2.82 percent from 2.97 percent in the third quarter, as expiring loans were renewed at rock-bottom interest rates.

Wealth management income rose 16 percent to C$207 million, while the bank’s insurance segment saw income slip 3 percent to C$194 million.

For the year, the bank earned a record C$7.5 billion, up 17 percent from 2011.

RBC’s results kick off what is expected to be a strong quarterly reporting period for Canadian banks, with year-over-year profit gains of around 15 percent expected, due largely to stronger capital markets-related revenue.

Bank of Montreal, Canada’s No. 4 bank, will report next Tuesday, followed two days later by Toronto-Dominion Bank and Canadian Imperial Bank of Commerce, the country’s No. 2 and No. 5 banks, respectively.

Shares of RBC, which last month agreed to buy the Canadian auto finance arm of Ally Financial in a $4.1 billion deal, closed at C$58.35 on Wednesday.

Aiken said he doubted the results would have much of an impact on the bank’s stock valuation.

Copyright Reuters, 2012

Dubai index rises on Dubai Mall expansion plan

Dubai: The Dubai Financial Market (DFM) index rose 1.21 per cent to close at 1607.90 on news of expansion of the world’s largest mall – Dubai Mall- by Emaar Properties.

The Dubai Mall expansion plan comes after Dubai revealed plans to build Mohammad Bin Rashid City project.

Emaar shares gained 1.62 per cent to Dh3.76, the highest close since October 7.

Among the gainers, DP World rose 5.40 per cent to close at $12.49, followed by Emirates NBD by 4.26 per cent to Dh2.94 and Ekittitab by 3.70 per cent to Dh0.980.

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Among the losers, Depa fell 5.26 per cent to $0.360, followed by Takaful-Em by 3.64 per cent to Dh0.530 and Gulf Navigation by 0.75 per cent to Dh0.264.

Of the 27 companies traded, 17 rose, five declined and five remained unchanged.

About 97.92 million shares worth Dh111.72 million were traded on Thursday.

The index hit a low of 1590.04 during intra trade on Thursday.

The Abu Dhabi Securities market (ADX) index also rose 1.04 per cent to 2674.56 points on Thursday.

Among the gainers, Umm Al Quwain Cement Industries rose 5.41 per cent to Dh0.78, followed by Eshraq by 4.88 per cent to Dh0.44 and National Bank of Abu Dhabi by four per cent to Dh10.50.

Among the losers, Union Cement Company lost 2.25 per cent to Dh0.88, followed by Green Crescent Insurance Company by 2.22 per cent to Dh0.45 and Abu Dhabi Commercial Bank by one per cent to Dh3.01.

“Our Board of Directors will review the company’s three-year strategic plan and budget for 2013 on December 5,” National Bank of Fujairah said on the Abu Dhabi Securities Exchange’s website.

Of the 27 companies traded, 15 rose, three declined and nine closed unchanged.

About 74.65 million shares worth Dh86.28 million were traded on Thursday.

Oil rises on Middle East conflict, Gulf of Mexico fire

New York: Oil rose on Friday as a fire on a Gulf of Mexico platform and the escalating conflict between Israel and Palestinians stoked supply concerns.

News of the fire at a Black Elk platform in morning US activity helped crude extend early gains, although the Coast Guard later said it had not been producing oil at the time of the fire, which helped calm market jitters. Two workers were missing and four others injured by the fire.

“Traders who had been long Brent/short WTI (US crude) on the Middle East fears reversed that when the platform fire news broke,” said Phil Flynn, analyst at Price Futures Group in Chicago.

The market was already on edge after Iraq’s envoy to the Arab League said in Cairo it would invite Arab states to use oil as a weapon to press for a halt to Israeli attacks on Gaza. He later appeared to withdraw the remark, saying Baghdad would make no particular proposal to a League meeting.

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The conflict has gripped oil markets, which have been looking for any signs it could impact Middle East supplies. Israeli ministers were on Friday asked to endorse the call-up of up to 75,000 reservists after Palestinian militants nearly hit Jerusalem with a rocket for the first time in decades and fired at Tel Aviv for a second day.

Trading was volatile with the US December crude contract expiring at the end of Friday’s session, following the Brent December contract’s expiry the day before.

Expiring US December crude traded up $1.22 to settle at $86.67 a barrel. The more heavily traded US January crude gained $1.05 to settle at $86.92 a barrel. Front-month January Brent crude rose 94 cents to settle at $108.95 a barrel.

Data from the US Commodity Futures Trading Commission (CFTC) showed that oil speculators increased their net long positions by 16,312 positions in the week to November 13.

Congressional leaders emerged from a meeting with President Barack Obama on Friday and said they would work to find common ground on taxes and spending.

A deal would keep the economy away from the looming “fiscal cliff” — year-end automatic tax hikes and spending cuts, which could result in another recession and also stifle oil demand.

A report on Friday showing Hurricane Sandy hit US industrial output in October followed other indications of the storm affecting the economy, including a rise in initial jobless last week and a slump in factory activity in the mid-Atlantic region struck by Sandy.

UK public sector borrowing rises

 Analysts now speculate that the chancellor could introduce tax rises and further spending cuts The government borrowed much more than expected in October, reducing the chances that the UK will hit its deficit reduction target in 2012-13.

UK public sector net borrowing, excluding financial interventions, hit £8.6bn in October, the Office for National Statistics (ONS) said.

That marked a sharp rise from the £5.9bn borrowed in October 2011.

This is the last set of borrowing figures before the chancellor’s Autumn Statement on 5 December.

The headline figure was worse than expected – analysts had forecast borrowing of £6bn.

Corporation tax receipts fell nearly 10% in October, a month when there is usually a heavy inflow to boost the public coffers.

A rise in day-to-day departmental spending also contributed to the higher borrowing.

For the seven months of the financial year so far, borrowing has reached £73.3bn, excluding the one-off effects from the transfer of Royal Mail pension assets.

That is £5bn higher than the same time last year.

A spokesperson for the Treasury said: “The economy is healing, but it still faces many challenges.

“These numbers illustrate that, but also show the government’s plans to bring spending under control are on track for the year.”

But Labour’s shadow chief secretary to the Treasury, Rachel Reeves, said the chancellor was borrowing billions more to pay for the cost of his economic failure.

“Having failed on jobs and growth, the government is now failing on the deficit too,” she said.

‘Wrong direction’ Continue reading the main story Use the dropdown for easy-to-understand explanations of key financial terms:AAA-rating The best credit rating that can be given to a borrower’s debts, indicating that the risk of borrowing defaulting is minuscule.Chris Williamson, chief economist at Markit, said the low tax receipts reflected the disappointing performance of the economy, which is experiencing weak growth and weak consumer spending.

He told the BBC that he could see no chance of the government now hitting its deficit target of £120bn for 2012-13. Current projections suggest this year’s deficit would come in closer to £130bn.

“So it’s moving totally in the wrong direction,” he said.

“The longer-term prospects are looking much more disappointing than the Office for Budget Responsibility and the government were hoping when they first set these targets out back in March.”

He added that Chancellor George Osborne was likely to announce increases in taxes, further cuts in spending, or a combination of the two, when he delivers his Autumn Statement.

Chris Williamson, Chief Economist at Markit

However, analysts at Credit Suisse said the figures were disappointing but not disastrous.

“To some extent, this poor reading was mitigated by improvements in last month’s figure, which was around £0.8bn lower (less borrowing) than previously thought.

“In addition, the good news is that the poor figure appears to have been driven by expenditure rather than receipts data. This suggests that the weakness in the numbers may not be due to weaker GDP performance feeding into weaker tax receipts.”

They also pointed out that, overall, central government receipts were up 1.8% on the year to October, while expenditure was up 7.4%.

AirAsia Q3 profit rises, outlook optimistic

KUALA LUMPUR: AirAsia, Asia’s largest low-cost carrier by fleet size, said Wednesday its third-quarter net profit rose 3.6 percent year-on-year thanks to increased usage despite a rise in fuel prices.

Net profit for the quarter ending September 30 was 157.81 million ringgit ($51.56 million) compared with 152.3 million a year earlier, the company said in a statement.

It posted record quarterly revenue of 1.24 billion ringgit, up 14 percent from 1.08 billion.

“The growth was attributed to the increase in the number of passengers carried, which grew nine percent to 4.75 million, and increase in capacity as the number of aircraft operating in Malaysia increased to 59,” the airline said in a statement.

New CEO Aireen Omar said in the statement the airline’s cash position remains strong with 2.2 billion ringgit in cash and bank balances.

“AirAsia continues to outperform each quarter with strong growth in net operating profit, which has increased 18 percent and led to a four percent increase in profit after tax year-on-year,” she said.

Aireen said the airline was expected to post another impressive quarter in October-December.

“The fourth quarter is predominantly our strongest quarter. We will continue to launch more routes and add more frequencies to cater to the high demand,” she said.

AirAsia has set up subsidiary budget carriers in Indonesia, the Philippines, Thailand and Japan.

The discount carrier, one of the biggest customers for European aircraft maker Airbus, has a fleet of 112 A320s and is expecting 266 more aircraft to be delivered up to 2026.

The airline has said it was in discussions to buy an additional 100 aircraft to support its rapid growth in Asia.

Copyright AFP (Agence France-Presse), 2012

US CPI rises on jump in the cost of shelter

Washington: US consumer prices rose in October as the cost of shelter surged by the most in over four years, while gasoline prices fell in a boost for consumer spending power.

The Consumer Price Index increased 0.1 per cent last month, in line with analysts’ expectations, data from the Labour Department showed on Thursday.

The data still pointed to only modest inflation pressures that appear unlikely to derail the US Federal Reserve’s plan to keep interest rates low for an extended period.

Prices for shelter, which include rent, rose 0.3 per cent during the month, the most since 2008, and accounted for over half of the overall increase in the CPI. That could be a hopeful sign for the economy if it is because landlords felt they have more leverage to raise rents. Rents for primary residences rose 0.4 per cent.

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Gasoline prices fell 0.6 per cent in October after climbing 7 per cent the prior month. That was the first drop in gasoline prices since June. Higher costs at the pump have forced many American consumers to cut back on other spending.

A measure of underlying inflation was relatively muted. The core CPI, which excludes food and energy prices, increased 0.2 per cent.

In the 12 months to October overall consumer prices increased 2.2 per cent, up a tenth of a point from September’s reading. Core prices rose 2 per cent in the year through October.

Most economists don’t see inflation threatening the economy in the short or long term.

However, some believe the US Federal Reserve would tolerate prices rising faster than the central bank’s 2 per cent target over the shorter term to allow faster economic growth as the country recovers from the 2007-09 recession.

The Fed targets a separate measure of inflation calculated by the Commerce Department which tends to run cooler than the CPI.

Housing finance rises in September

Updated November 12, 2012 13:38:31

There has been a solid increase in the number of home loans taken out across Australia in September.

Figures from the Australian Bureau of Statistics show almost 46,400 owner-occupied loans were approved in September, a seasonally adjusted rise of 0.9 per cent compared to August.

The figures were marginally better than the 1 per cent median forecast by market economists in a Reuters survey.

Meanwhile, the value of loans approved for investors has jumped by 8.6 per cent from August to September.

The number of loans for the purchase of established dwellings rose 1.4 per cent, while loans for buying new homes jumped 9 per cent.

The proportion of first home buyers also increased, with 19.3 per cent of home loans going to first time purchasers.

Westpac’s economics team says the figures offer a glimmer of hope that the housing market is turning around.

“A modest upward trend in housing finance to owner-occupiers is apparent since the middle of 2012,” the economists wrote in a note.

“New lending trended 0.5 per cent higher in the month, contrasting with trend declines over the initial five months of the year.”

However, the news was not all positive, with the number of loans for the construction of dwellings falling 6.3 per cent.

Topics: business-economics-and-finance, economic-trends, housing-industry, australia

First posted November 12, 2012 13:19:46

Consumer sentiment in US rises to five-year high

Washington: Confidence among US consumers climbed to a five-year high in November, improving the prospects of bigger spending gains that will help spur the expansion.

The Thomson Reuters/University of Michigan preliminary consumer sentiment index rose to 84.9, the fourth straight increase and the highest since July 2007, from 82.6 in October. Economists projected an initial reading of 82.9 for November, according to the median estimate of 71 economists surveyed by Bloomberg.

Stocks climbed as the report showed the employment gains, cheaper gasoline and rising home values that are lifting Americans’ spirits may translate into a pickup in purchases, which account for about 70 per cent of the US economy. For retailers such as Kohl’s Corp., more optimism may lay the foundation for bigger cash register receipts during the coming holiday shopping season.

“This is a slow, uneven economy that continues to mend,” said Joseph LaVorgna, chief US economist at Deutsche Bank Securities in New York, who projected the sentiment gauge would rise to 85. “The confidence numbers reflect a little bit better job growth in the quarter and I think they reflect the news on housing that has really been pretty good.”

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The bigger-than-projected jump, combined with earlier reports showing gains in construction and factory stockpiles and a smaller trade deficit for the month, means the economy may have expanded at a 3.2 per cent annual rate in the third quarter, according to New York-based economists for Barclays Plc and JPMorgan Chase & Co. The Commerce Department’s first estimate, issued last month, came in at 2 per cent.

The 1.2 per centage-point boost would be the biggest upward revision between initial estimates since 2008 and the second- largest since 2001. Nonetheless, the news isn’t all positive as the jump in stockpiles means less need to restock shelves and warehouses this quarter, which will restrain growth, Daniel Silver, a JPMorgan Chase economist, said in a research note.

Estimates for the confidence measure ranged from 74.7 to 86, according to the Bloomberg survey. The index averaged 64.2 during the last recession and 89 in the five years leading up to the 18-month economic slump that began in December 2007.

Fiscal Cliff

Even with the gain in confidence, the so-called fiscal cliff of tax increases and government cutbacks scheduled to take effect next year serves as a reminder to households that the expansion faces hurdles.

“We know that the economy is going to be tough, but we believe that the focus on value and gifting will win over the consumer in what we expect to be, as always, a very competitive holiday season,” Kevin Mansell, chief executive officer of Menomonee Falls, Wisconsin-based retailer Kohl’s, said on a Nov. 8 earnings call.

The Michigan index of consumer expectations six months from now, which more closely projects the direction of consumer spending, increased to 80.8, the best reading since July 2007, from 79 in October. The gauge of current conditions rose to 91.3, the highest since January 2008, from 88.1 the prior month.

The Bloomberg Consumer Comfort Index also climbed last week as Americans’ ratings of the economy reached the highest level in more than four years.

Bloomberg Sentiment

The gauge rose to minus 34.4 in the period ended Nov. 4, the best reading since April, from minus 34.7 the previous week, the report showed yesterday. Twenty per cent of those surveyed had a positive view of the world’s largest economy, the most since March 2008.

“As we look toward the fast approaching holiday season, we are encouraged by the recent strong gains in consumer confidence as lower gas prices, a recovering housing market and improved job reports resonate with the shopper,” Stephen Lebovitz, chief executive officer of Chattanooga, Tennessee-based shopping mall owner CBL & Associates Properties Inc., said on a Nov. 7 earnings teleconference.

Progress in the labor market and cheaper gasoline prices may be helping to shore up consumer sentiment. Employers added 171,000 workers in October, more than forecast, the Labor Department said on Nov. 2.

The average nationwide price for regular gasoline dropped to $3.46 a gallon yesterday, the cheapest since the middle of July, according to AAA, the largest US motoring organization.

Household Spending

The gains in confidence have coincided with a pickup in household spending. Purchases rose 0.8 per cent in September, the biggest gain in seven months, after advancing 0.5 per cent in August, the Commerce Department said on Oct. 29. Retail sales in September and August had the best back-to-back showing since late 2010.

At the same time, income has been slow to pick up. Average hourly earnings climbed 1.6 per cent in October from the same time last year, the smallest gain since comparable year-over- year records began in 2007, the Labor Department said on Nov. 2. Earnings for production workers rose 1.1 per cent in the 12 months to October, the weakest since records began in 1965.

Disposable income, or the money left over after taxes, was little changed in September after falling 0.3 per cent after adjusting for inflation, the Commerce Department said on Oct. 29. The savings rate dropped to 3.3 per cent, the lowest since November, from 3.7 per cent.

Today’s report showed consumers expect limited inflation. They projected prices will rise 3 per cent over the next 12 months, compared with 3.1 per cent in the prior survey. Over the next five years, Americans expected 2.8 per cent rate of inflation, compared with 2.7 per cent in the previous report.

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Farmers reluctant to plant wheat as input cost rises

 “With less-than-required production, the country will need to import the staple, which will be a waste of money,” says Ibrahim Mughal.

LAHORE: As the cost of production rises, wheat farmers in Punjab seem to be undecided whether to cultivate the staple or go for some other crop, and a delay in sowing may affect the production target of 19.2 million tons for the 2012-13 season.

In this peak sowing time, majority of the farmers are in two minds as they believe the cost of cultivation will cross the wheat support price of Rs1,050 per 40 kg. According to farmer bodies, wheat cultivation has so far crossed only 15% of the target in Punjab, with some believing other provinces will also take the cue from the biggest producer.

“We are heading towards a food crisis, as wheat stocks are shrinking and the government’s indifference can hit production estimates for the next crop,” said Ibrahim Mughal, Chairman of Agri Forum Pakistan – a farmer lobby group.

Pakistan needed 26 million tons of wheat annually, but if the harvest even reached 23 million tons next year, then it would be a great achievement, he said.

“With less-than-required production, the country will need to import the staple, which will be a waste of money,” Mughal said.

He said the ideal sowing time for wheat in Punjab was November 20, but out of total estimated area of 16.8 million acres, hardly 15% had been cultivated. “Late sowing will definitely affect the per acre yield, resulting in lower production.”

Sindh has set the harvest target at 3.5 million tons, Khyber-Pakhtunkhwa two million tons and Balochistan one million tons. The highest wheat production the country achieved was 24.2 million tons in 2011.

The Kisan Board of Pakistan, the largest farmer body in the country, also expressed fears that wheat production would drop sharply.

“Majority of the farmers are not sowing wheat this season and the remaining are doing it half-heartedly, as the cost of per acre yield has crossed roughly Rs20,000,” said Kisan Board spokesperson Haji Ramzan.

Prices of fertiliser, diesel and electricity climbed around 35% and many farmers had not been able to pay electricity bills for tube wells, which could lead to disconnection of power supply, he said.

“Water availability is not expected to be satisfactory this season, this along with other aspects is forcing the farmers not to go for wheat cultivation,” he added. “We expect the next crop to fall up to 25% compared to the previous year.”

However, the Punjab food department is unmoved by farmer concerns. “Everything is fine as far as support price is concerned, it is also well above the production cost for farmers,” said Irfan Ali, Food Secretary of Punjab.

As the food department looked to sell wheat in the international market, Ali said sales of Pakistani wheat would increase due to rising demand.

Published in The Express Tribune, November 13th, 2012.

Du third quarter net profit rises 33.8%

Dubai: Telecom operator du recorded a 33.8 per cent year-on-year increase in net profit before royalty to Dh654 million in the third quarter compared to Dh489 million in the corresponding period last year, mainly fuelled by robust growth in mobile data usage.

“Financial performance during the third quarter was stable, with a solid improvement in data usage. This reflects the global trend which indicates a shift of some voice revenues to data. Du is well positioned to take advantage of this shift as we continue to bring relevant and strong data products to the market such as the roaming data bundles we introduced during the third quarter and other value-added services,” Osman Sultan, du’s chief executive officer, said.

Du, formally known as Emirates Integrated Telecommunications Company, made a revenue of Dh2.52 billion, an increase of 12.9 per cent over the Dh2.23 billion during the same period last year.

The operator added 227,800 active mobile customers during the quarter, bringing its total mobile operator base to 5.96 million.

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The operator also added 26,300 post-paid mobile customers and the total fixed line customers reached 554,900  in the quarter.

The company’s quarter-on-quarter overheads rose to Dh752 million from Dh733 million.

“Operationally, we maintained control on overheads although we saw certain costs increase due to seasonality and with the initialisation of outsourcing arrangements. Our focus on efficiency continues as our company continues to mature. As always, our sights remain focused on delivering value to our shareholders,” he said.

Amex profit rises marginally, spending growth muted

Bengaluru/New York: American Express Co’s third-quarter profit rose only marginally as cardmember spending growth remained muted for the second quarter in a row. The slowing growth echoes that of other large credit card issuers. US credit card volume growth decelerated both at Bank of America and U.S. Bancorp, which reported results earlier on Wednesday. Amex’s U.S. cardholders, mostly affluent consumers, reined in their spending in the quarter. Cardmember spending in the United States rose 8 per cent in the quarter. That figure, though up from the second quarter, is still below the double-digit growth the company had posted for the nine preceding quarters.

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UBM operating profit rises

London: Media and marketing services company UBM Plc said adjusted operating profit rose 11 percent so far this year on strong growth in its events business, and reiterated its forecast for the full year. UBM, which organises exhibitions, trade shows and conferences, said adjusted operating profit for the nine months ended September 30 rose to £141.7 million ($229.08 million) from £127.5 million a year earlier. Revenue climbed 4 percent to 734.6 million. Revenue from UBM’s events business, which contributes 46 percent of overall revenue, rose 13 percent to 338.9 million pounds. The company said it was on track to meet its full-year underlying growth target of 4 to 5 percent, with a margin higher than 19.3 percent.

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Cotton spot rate rises by Rs50

KARACHI: Steady trend continued at the local cotton market on Thursday, while spot rate increased by Rs50 per maund, said a dealer.

The spot rate increased to Rs5,700 per maund (37.324kg) and Rs6,109 per 40kg, while ex-Karachi rate rose to Rs5,855 per maund and Rs6,264 per 40kg after addition of Rs155 as upcountry expenses, he said.

Cotton arrivals reached 5.283 million bales by October 15, which are higher by 12.03 percent against the arrivals by the same period last year, he said.

Karachi cotton market recorded active trading of around 22,000 bales from the new crop, while prices remained in the range of Rs5,500 to Rs5,900 per maund.

Shahdadpur’s 600 bales and 400 bales of Tando Adam were each sold at Rs5,700 per maund, 1,000 bales of Mirpurkhas at Rs5,650 to Rs5,700, 3,000 bales of Khairpur and 2,000 bales of upper Sindh at Rs5,900, 400 bales of Chichawatni at Rs5,500 to Rs5,750, 600 bales of Gojra at Rs5,500, 600 bales of Bahawalpur at Rs5,500 to Rs5,800, 400 bales of Garh Maharaja at Rs5,550, 400 bales of Pir Mahal at Rs5,600 and 1,000 bales of Vehari were sold at Rs5,650 to Rs5,800 per maund.

Chistian’s 200 bales, 1,000 bales of Burewala, 200 bales of Kehror Pacca, 400 bales of Kabirwala, 400 bales of Bhakkar and 400 bales of Daranwala were each sold at Rs5,700 per maund, 400 bales of Alipur at Rs5,700 to Rs5,800, 200 bales of Layyah and 100 bales of Qabola at Rs5,750, 200 bales of Pakpattan at Rs5,775 and 1,800 bales of Rajanpur were sold at Rs5,800 to Rs5,900 per maund.

Shujabad’s 1,200 bales, 200 bales of Rahim Yar Khan, 400 bales of Faqirwali, 200 bales of Khichiwala, 400 bales of Haroonabad and 400 bales of Shehar Sultan were each sold at Rs5,800 per maund, 400 bales of Khanewal and 400 bales of Mian Channu at Rs5,850, while 600 bales of Mianwali, 400 bales of Fazilpur, 200 bales of Maroot and 400 bales of Jalalpur were each sold at Rs5,900 per maund.

UAB net profit rises 32% to Dh298m

Sharjah: United Arab Bank (UAB) on Wednesday announced a net profit of Dh298 million for the nine months ended September 30, 2012, an increase of 32 per cent over the same period in 2011 and the highest net profit ever for UAB in the first nine months of the year.

“The bank’s outstanding performance in the first half of the year has successfully continued into the third quarter, delivering a record profit over the nine-month period. The bank continues to grow and deliver excellent financial results while not compromising on its prudent approach to credit or value to its customers,” Paul Trowbridge, the bank’s CEO, said.

In the nine months ended September 30, 2012, customer loans and advances increased by 24 per cent to Dh10 billion from Dh8.1 billion on December 31, 2011. Customer deposits also increased 11 per cent to Dh8.7 billion compared with Dh7.8 billion for the same period in 2011.

The bank has delivered a year-to-date operating profit of Dh382 million, a 36 per cent increase over Dh281 million achieved for the same period in 2011. Total operating income was up 33 per cent to Dh551 million, driven by a 34 per cent increase in net interest income to Dh407 million and 30 per cent growth in non-interest income to Dh145 million, attributable to the growth in both corporate and retail businesses.

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The provision charge for the first nine months of 2012 was Dh85 million compared with Dh57 million for the same period in 2011, and reflects the bank’s prudent approach towards management of its risk and growing asset portfolio.

“UAB’s results continue to be extremely positive. We are building the foundations for further growth and success, supported by regular feedback and recognition that we receive from customers, partners and the financial community. In 2011, we received the award of the ‘UAE Bank of the Year 2011’ from the Financial Times and we will continue to uphold this achievement throughout 2012,” Trowbridge said.

China daily steel output rises 4pc in early October

SHANGHAI: China’s average daily crude steel output rebounded to above 1.9 million tonnes in the first 10 days of October, as rising steel prices prompted mills to lift production even as the demand outlook for the rest of the year remains weak.

Average daily crude steel output in the world’s top steel producer rose to 1.916 million tonnes between October 1-10, up 4 percent from September 21-30, data from the China Iron & Steel Association showed on Wednesday.

Average daily steel production had been below 1.9 million tonnes from mid-August, with the slowing economy in China hitting demand and pushing steel mills to curb output.

The latest round of gains in steel prices has encouraged steel mills to ramp up production, also lifting demand for key ingredient iron ore.

“Steel has rebounded by 300-400 yuan ($48-64) per tonne between mid-September and early October, so mills have restored profits and some have resumed production,” said Qiu Yuecheng, an analyst with Xiben New Line Co Ltd, a spot steel products trading platform in Shanghai.

Chinese steel prices have climbed more than 10 percent from a three-year low hit in early September, with demand picking up due to a seasonal increase in construction activity.

But a lack of factors that could boost demand longer term and the rapid rise in output are expected to curb price gains.

BHP Billiton , the world’s biggest miner, has joined rivals Rio Tinto and Fortescue Metals Group in pressing on with plans to boost iron ore output, though scaling back expansions and spending.

Copyright Reuters, 2012

Cotton spot rate rises by Rs100

KARACHI: Trading activity of cotton remained tight in the local market on Wednesday, which resulted in increase in spot rate by Rs100 per maund, said a dealer.

The spot rate increased to Rs5,650 per maund (37.324kg) and Rs6,055 per 40kg, while ex-Karachi rate rose to Rs5,804 per maund and Rs6,210 per 40kg after addition of Rs155 as upcountry expenses, he said.

An analyst said that the market remained tight and supply of cottonseed to the ginning factories is still slow. Karachi cotton market recorded trading of around 22,000 bales from the new crop, while prices remained in the range of Rs5,450 to Rs5,900 per maund.

Shahdadpur’s 800 bales and 800 bales of Tando Adam were each sold at Rs5,600 to Rs5,650 per maund, 1,000 bales of Sanghar at Rs5,600, 1,000 bales of Mirpurkhas at Rs5,600 to Rs5,650, 3,000 bales of Khairpur and 1,000 bales of upper Sindh at Rs5,800 to Rs5,900, 200 bales of Uch Sharif and 200 bales of Pir Mahal at Rs5,450 and 800 bales of Khanewal were sold at Rs5,550 to Rs5,700 per maund.

Bahawalpur’s 200 bales were traded at Rs5,550, 200 bales of Chichawatni and 400 bales of Dera Ghazi Khan at Rs5,600, 1,400 bales of Burewala and 800 bales of Bahawalnagar at Rs5,600 to Rs5,700, 600 bales of Rahim Yar Khan at Rs5,650 to Rs5,800, 1,800 bales of Haroonabad at Rs5,700 to Rs5,800 and 1,800 bales of Rajanpur were sold at Rs5,800 to Rs5,900 per maund. Chistian’s 400 bales, 200 bales of Bhakkar, 200 bales of Layyah and 400 bales of Hasilpur were each sold at Rs5,600 per maund, 400 bales of Mian Channu and 400 bales of Jalalpur at Rs5,700, 1,200 bales of Faqirwali, 1,000 bales of Fazilpur and 1,600 bales of Fort Abbas were each traded at Rs5,800 per maund, 200 bales of Mianwali were sold at Rs5,850 per maund.

Share market rises following overseas gains

Posted October 17, 2012 13:21:37

The Australian dollar has jumped back above 103 US cents, while the local share market has also made solid gains.

The All Ordinaries index had risen 32 points, or 0.7 per cent, to 4,546 just before 1:00pm (AEDT), and the ASX 200 index was up 31 points to 4,523.

The share market gains have been broadly spread.

The major banks are all trading higher: NAB and ANZ were 0.9 per cent higher, while Westpac and the Commonwealth were up 0.2 per cent.

Qantas shares have risen 0.4 per cent while rival Virgin Australia is up 0.5 per cent.

Construction firm Leighton Holdings is up 4 per cent after confirming a joint venture in the Middle East has been awarded a contract to build a large healthcare facility.

The Ten Network has been one of the biggest losers of the day, falling nearly 7.5 per cent after the company confirmed that a deal to sell its outdoor advertising business had fallen through.

Ten says it remains in discussions to negotiate an amended sale agreement.

Fairfax has slipped 1.3 per cent, but Seven Group is up 1 per cent.

The Australian dollar was buying around 103.13 US cents.

Topics: business-economics-and-finance, markets, currency, stockmarket, australia

Rio production rises despite falling commodity prices

Posted October 16, 2012 15:30:52

Rio Tinto has reported a solid rise in production, despite falling prices for many of its main commodities.

The world’s third biggest miner says it achieved record quarterly iron ore production, despite the spot price of the key steelmaking ingredient plummeting from above $US180 a tonne in September last year to as low as $US86.70 early last month.

Rio’s share of production in its main Pilbara mines was 50 million tonnes in the third quarter, up 5 per cent on the same quarter a year earlier (total production was 63 million tonnes, including the shares belonging to its joint venture partners).

The company said production continued to exceed sales because it was building up stocks ahead of a planned expansion to production of 283 million tonnes per annum.

Rio says its total mined copper production was up 21 per cent in the third quarter of 2012 compared with the same period last year.

The company’s bauxite and alumina production were 13 and 20 per cent higher respectively, while aluminium production was down 10 per cent following a labour dispute.

Rio’s thermal coal production was up 21 per cent, but production of the coking coal used in steel making was down 13 per cent.

The company’s chief executive Tom Albanese says Rio is withstanding falling prices well.

“As we said at our investor seminar last week, markets remain volatile, but our business is resilient and our operations are performing strongly, reflecting our consistent strategy of running large, long-life, cost-competitive operations,” he noted in the report.

Rio says it offloaded several “non-core” businesses during the quarter, including its Specialty Alumina division, the North American part of its Alcan Cable business and Borax Argentina.

Topics: business-economics-and-finance, economic-trends, iron-ore, mining-industry, copper, australia

India inflation rises, dampens rate cut hopes

Indian inflat­ion accele­rated to its highes­t level this year, hittin­g 7.81 percen­t. Indian inflation accelerated to its highest level this year, hitting 7.81 percent. DESIGN: ASAD SALEEM

NEW DELHI: Indian inflation accelerated to its highest level this year, hitting 7.81 percent in September, data showed on Monday, outpacing market forecasts and reducing the chances of an interest rate cut.

The country’s hawkish central bank will meet at the end of the month to consider its interest rate policy as it faces calls from businesses to cut rates to spur economic growth that has slowed dramatically.

The Wholesale Price Index – India’s most widely watched inflation measure – rose 7.81 percent year on year last month – just exceeding market forecasts of 7.7 percent.

The reading was up from 7.55 percent the previous month and 6.87 percent in July, which was close to a three-year low.

Developing countries such as China, South Korea and Brazil have lowered borrowing costs in a bid to protect their economies from the effects of the Eurozone debt crunch.

But India’s central bank still is targeting inflation, which remains stubbornly above its “comfort” level of five percent.

September’s inflation rise comes after the government recently hiked state-controlled diesel prices by some 14 percent in an effort to lower massive fuel subsidies that have contributed a bloated fiscal deficit.

The price hike was hailed by some as a sign of readiness by the government to tackle tough economic reforms and the widening hole in the public accounts.

But critics said it would spur inflation at a time when growth has slowed sharply to around 5.5 percent from near double-digits in recent years.

Most analysts predict the central bank will keep lending rates on hold until inflation shows a decisive downward move. The bank last cut rates in April after raising borrowing costs 13 times.

The central bank will “approach easing with caution, keeping a keen eye on inflation and further policy progress out of Delhi”, said Leif Eskesen, HSBC chief India economist.

The higher inflation comes as the Congress-led government of Premier Manmohan Singh is hoping the economy will pick up as a result of a string of market-opening steps in the past weeks that ended years of policy paralysis.

View the original article here

Housing finance rises more than expected

Updated October 15, 2012 13:26:00

The number of home loans taken out climbed 1.8 per cent in August to reach the highest level since January.

The Bureau of Statistics figures show 45,821 home loans were taken out in August, with a total value of around $13.65 billion, in seasonally adjusted terms.

Economists had generally expected growth of around 1.5 per cent in the number of loans being taken out.

Excluding refinancing, the number of new loans taken out was up 0.6 per cent.

In a positive sign for the struggling construction industry, the number of loans for the purchase of a new dwelling rose 13.9 per cent to 2,341 – the highest reading since September 2009.

However, the number of loans for the construction of dwellings was up just 0.2 per cent.

The value of loans going to investors dipped 0.8 per cent to $6.65 billion, with the $278 million approved for the construction of new dwellings for rent and resale the lowest figure in 11 years.

The proportion of first home buyers in the market also dipped slightly from 19.2 to 18.6 per cent.

However, Westpac’s economics team expects more first home buyers to be lured into the market by lower interest rates.

“A modest upward trend in housing finance to owner-occupiers is now apparent. New lending trended 1.2 per cent higher in August, a turnaround from modest trend declines over the first five months of the year,” they observed in a note on the data.

“A greater number of first home buyers are likely to enter the market over coming months, in what is the “spring season”, encouraged by improved housing affordability underpinned by lower interest rates.”

The chief economist at Master Builders Australia, Peter Jones, is also hopeful that the market for new homes has bottomed and will continue rebounding.

“The positive trend that has emerged in the housing finance figures is a very welcome sign, but does not herald a recovery for the sector just yet,” he noted.

“The figures reveal that housing finance may have found its floor which is encouraging, but also shows that any recovery will be coming from an extremely low base.”

Qld’s unemployment rate rises to 6.3pc

Updated October 12, 2012 09:13:21

Queensland’s jobless rate has risen from 6 per cent to 6.3 per cent in September.

Figures from the Australian Bureau of Statistics show the nation’s unemployment rate has risen by more than expected.

The ABS says national unemployment has risen to 5.4 per cent in seasonally adjusted terms in September, up from 5.1 per cent in August.

Meanwhile, the proportion of Queensland’s working age population in work, or looking for work, fell to 66.3 per cent.

Chamber of Commerce and Industry Queensland (CCIQ) president David Goodwin says the result was not affected by the recent loss of 14,000 Queensland public service positions.

“Our research indicates the number of people who lost their jobs in the State Government is very small as a percentage of the overall workforce that wouldn’t account for that change,” he said.

“That’s the private sector starting to move and big companies changing investment plans in the face of escalating costs.

“We’re seeing mines pull back their activities and I think this is a bit of the response to changing investment plans.

“The Australian dollar is held up and of course the Australian cost of doing business is escalating and that is seeing business shelving investment plans.”

Queensland Council of Social Service (QCOSS) spokesman Mark Henley says demand for help from community groups is also rising.

“Over the past two months there have been some increases in the unemployment rates in Queensland,” he said.

“Clearly it leads to further stresses when we already know that organisations are supporting people because of the increases in the cost of living.”

Topics: unemployment, work, economic-trends, public-sector, federal—state-issues, brisbane-4000, bundaberg-4670, cairns-4870, gladstone-4680, longreach-4730, mackay-4740, maroochydore-4558, mount-isa-4825, rockhampton-4700, southport-4215, toowoomba-4350, townsville-4810

First posted October 11, 2012 14:06:58

LinnCo rises in trading debut

New York: LinnCo LLC, created to help partnership Linn Energy LLC attract more institutional investors, advanced in its debut after raising $1.1 billion (Dh4.03 billion) in an initial public offering priced below the proposed range.

The shares climbed 4.8 per cent to $38.26 at the close in New York. Yesterday LinnCo sold 30.25 million shares at $36.50 each. The company had planned to offer the shares within 5 per cent of Linn’s last price before the sale, regulatory filings show. Linn closed at $40.01 yesterday, making the range $38.01 to $42.01.

Each share of LinnCo represents a unit in Linn Energy, and LinnCo will own 13.2 per cent of the partnership, the Houston-based company said in an October 2 filing. Linn will use the proceeds to pay down debt, according to filings. Barclays Plc, Royal Bank of Canada and Wells Fargo & Co served as lead managers on the sale for LinnCo, whose shares are listed under the ticker LNCO on the Nasdaq Stock Market.

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Linn is an oil-and-natural gas producer focused on buying older fields that still have stable production. Because it is similar to a master-limited partnership, Linn avoids federal income taxes while passing on most of its cash flow to its unitholders. LinnCo is structured as a corporation, which the company said will allow it to attract investment from pension funds and other investors who are sometimes barred from buying partnerships.

LinnCo’s dividends will be based on Linn’s payouts. If Linn maintains its $2.90 annual payment per unit, LinnCo shareholders will earn $2.75 to $2.84 after taxes, according to filings.

Linn has increased production more than fourfold in five years and almost doubled its reserves in 2011, according to data compiled by Bloomberg. Linn agreed to buy gas fields in Kansas and Wyoming from BP Plc this year for $2.23 billion.

Linn and other tax-advantaged partnerships bought 10 per cent of the oil-producing property sold in the US through August and 26 per cent of the gas-producing property.

Anxiety rises as Iran rial keeps falling relentlessly

Tehran: For months, since the imposition of harsh, US-led sanctions over Iran’s nuclear programme, the country’s leaders have sworn they would never succumb to Western pressures, and they scoffed at the idea that the measures were having any serious impact.

But after a week in which the Iranian currency, the rial, fell by a shocking 40 per cent and protests began to rumble through the capital, no one is making light of the mounting costs of confrontation.

In the Iranian capital, all anyone can talk about is the rial, and how lives have been turned upside down in one terrible week. Every elevator ride, office visit or quick run to the supermarket brings new gossip about the currency’s drop and a swirl of speculation about who is to blame.

“Better buy now,” one rice seller advised Abbas Sharabi, a retired factory guard, who had decided to buy 450kg of Iran’s most basic staple in order to feed his extended family for a year. “As I was gathering my money, the man received a phone call,” said Sharabi, smoking cigarette after cigarette on Thursday while waiting for a bus.

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“When he hung up he told me prices had just gone up by 10 per cent. Of course I paid. God knows how much it will cost tomorrow.”

Low value

Related Links Grand Bazaar reopens after currency protests Iran’s currency alley sees rush to dump Iran imposes currency cap

While only a few people actually need to exchange the rial for foreign currency, its value is one of the few clear indicators of the state of the economy, and its fall has sharply raised the prices of most staples.

In Tehran, many residents spend their days calling on money changers and visiting banks, deliberating whether to sell their rials now or wait for a miracle that would restore the rates to old levels, or for even a modest rally from the panic-driven lows of the last week.

“The fluctuations are so large that nobody knows whether it is better to wait or to change now,” said Ahmad, 65, as he shared a taxi to the west Tehran neighbourhood of Sadeghiyeh.

“I am so fed up,” said Ahmad, a garment seller, who like others here did not want to be identified by his full name for fear of retribution from the authorities. “I want to have a normal life, but from breakfast, to lunch to dinner, everybody only nervously talks of hard currency.”

Like many residents of the capital, Ahmad had tuned in to President Mahmoud Ahmadinejad’s  news conference on Tuesday, hoping that he would offer some sort of solution.

Instead, Ahmadinejad attributed most of the rial’s weakness to currency speculators and the sanctions, saying that it is only natural that the currency should suffer when it is possible to sell oil only in small quantities and when it is hard to make international bank transfers. His opponents say he is trying to avoid blame for his own mismanagement of the economy. He even went so far as to threaten to quit.

“He has made a mess, and now he wants to leave us,” Ahmad said of the president. But a passenger in the taxi named Mustafa interrupted. “No,” he said, “most of our leaders are at fault, but they are trying to blame everything on Ahmadinejad.”

Just a day later, on Wednesday, clashes erupted when riot police officers on motorcycles dispersed sidewalk money changers near Tehran’s main bazaar. The government has accused them of deliberately manufacturing the currency crisis.
While life seemingly returned to normal on Thursday, the outburst of public anger exposed the deep feeling of hopelessness that has taken hold among many Iranians.


Experts are divided about whether the crisis has been caused more by Tehran’s longtime mismanagement of the country’s economy or by the US-led sanctions, which have been imposed over Iran’s refusal to halt a nuclear programme that the West suspects is a cover for developing weapons. Whatever the cause, members of the once-vibrant middle class have turned into cynics, many of whom say they might be alive, but are not living.

For Maysam, the son of a man who was killed in the Iran-Iraq war, a decade of relative prosperity and technological innovations had enabled him to travel widely and had turned him into a prominent blogger and critic of the system that his father had died defending.

Instead of hoping to die on a battlefield, he had planned to run his own Internet startup company. But those dreams have been shattered.

“We can’t even think of the future, of tomorrow, the day after, or the next week,” Maysam said.

Foreign trips are out of the question, as even the price of a cup of coffee in Istanbul — favourite destination for Iranians — has tripled when calculated in rials.

Parents of the legions of Iranians studying abroad are calling their children back to Iran, as rents and college fees in countries like the Philippines and Malaysia have become unaffordable.

“I have told my son to come home,” said Shabaz, 60, who owns a printing house. “We are all losing. His future is gone; I won’t ever witness his graduation; and he won’t find a job.”

At Tehran’s currency market, traders quietly started buying and selling again after the raid on Wednesday, though few people were willing to part with dollars. While government officials announced that the rial would strengthen as soon as they had their own foreign currency exchange centre up and running, many traders were sceptical. “It all comes down to this,” said a trader named Akbar.

“As long as sanctions continue, the rial will continue to lose value.”

PrintEmail a friend More from Iran Anxiety rises as rial keeps falling Military action against Iran far off — Romney Iran threat to cut ties with UAE flimsy: experts Drone flight shows Israel is vulnerable

Npower adds to energy bill rises

12 October 2012 Last updated at 16:01 GMT Richard Lloyd of Which? talks about his “shock and disbelief” at the price rises

Npower has joined rival British Gas in announcing it is increasing gas and electricity prices in the UK.

Npower will increase the price of gas by an average of 8.8% and electricity by 9.1% from 26 November.

Earlier, British Gas, the UK’s biggest energy supplier, raised its charges for both types of fuel by an average of 6%, adding £80 a year to the average dual fuel bill.

The firms both blamed the government’s policies as well as wholesale prices.

SSE – which trades as Scottish Hydro, Swalec and Southern Electric – has already said it will raise its prices by an average of 9% from Monday.

“There is never a good time to increase energy bills, particularly when so many people are working hard to make ends meet,” Npower’s chief commercial officer Paul Massara said.

“But the costs of new statutory schemes, increases in distribution charges and the price of gas for the coming winter are all being driven up by external factors, for example government policy.”

British Gas recognised that its increase, which will take effect from 16 November, would be “unwelcome”.

It also warned that the rising cost of government energy policies, including boosting renewable energy, improving households’ energy efficiency and helping the poorest customers, was likely to add even more to household bills next year.

The cost of government policies and the national grid upgrade added £50 to the average household bill this year, and is expected to add another £60 next year, British Gas said.

Rising costs Continue reading the main story

British Gas customers Heather and Gabriel Manzolini are a retired couple from Romford.

We’re already paying £1,750 for council tax while our home fuel bill is nearly £1,200 a year and now it’s just going to go up.

We only renewed our contract with British Gas two weeks ago so we’re not happy at all.

We’ve tried to make our house as energy efficient as possible – there’s nothing more we can do.

We need heat. I am recovering from cancer [and] my husband Gabriel had a stroke.

Gabriel was given a heating allowance aged 60 when he didn’t need it; he was ashamed as he was in a full-time job. But now when we need it, it has halved – everything goes up day-by-day while our pension goes down.

We’ll have to cut back on everything and turn the heating down as low as possible. We’ll have to wear a lot of wool, too, and cut down on our other costs – such as spending on food.

Speaking to the BBC, Richard Lloyd of consumer group Which? criticised the lack of competition in the energy market.

“What we need to see is action from the government and more pressure on… these very big lazy companies who think it’s OK to clobber people with above-inflation price rises at the very time when they can least afford it,” he said.

Watchdog Consumer Focus said two price rises in one day would add to householders’ worries that they were not getting a fair deal.

“Unless they can be reassured about the relationship between costs, prices and profits, consumer distrust will continue,” said Consumer Focus director Audrey Gallacher.

British Gas managing director Phil Bentley claimed that 85% of the price it charged to customers was outside its control.

“Britain’s North Sea gas supplies are running out and British Gas has to pay the going rate for gas in a competitive global marketplace,” said Mr Bentley.

“Furthermore, the investment needed to maintain and upgrade the national grid to deliver energy to our customers’ homes, and the costs of the government’s policies for a clean, energy-efficient Britain, are all going up.”

It said that winter wholesale prices it pays were proving to be some 13% higher this year.

Speaking to the BBC, Mr Bentley pointed out that although wholesale prices are actually currently lower than a year ago, British Gas, like most utilities, fixes the price at which it buys gas well in advance, and these fixed prices had risen.

The company reported £345m profit in the first half of the year, but the chief executive said that he expected profits to be down in the second half.

“Our margins are 5p in the pound,” he told the BBC. “That 5p is going into jobs for Britain, investments in new wind farms, investments in new gasfields.”

Graph showing the typical electricity bill over time Insulation

Despite rising prices, the number of people switching suppliers is falling, which consumer groups suggest is more evidence of lack of trust in the market.

“The recent price increases mean it is more important than ever that consumers are able to shop around for the best deal,” said regulator Ofgem.

“Next week we will be announcing the next steps in introducing major reforms to make the household energy market simpler, clearer and fairer for customers,” it said.

Consumer Focus said that the government and the energy regulator should do more to protect households from the effect of growing energy costs.

Graph showing typical gas bill over time

“From next year, an average of £4bn will be taken from consumer bills in the form of carbon taxes,” Audrey Gallacher said.

“Using a proportion of that revenue to fund a much more ambitious energy efficiency programme could start to tackle fuel poverty and provide a jump start to our energy efficiency industry.”

All the energy utility firms are obliged under the government’s “Certified Emissions Reduction Target” (or “Cert”) programme to cut the carbon dioxide output by households.

British Gas extended its offer of free loft and wall cavity insulation to non-customers earlier this year. Consumer groups suggested the company had done this because it risked missing targets.

British Gas claimed that customers that had already implemented energy saving measures had seen their fuel consumption drop by up to 40%, and as a result the average total fuel bills of its customers had not risen faster than inflation, despite the increases in fuel charge rates.

In addition, under the government’s Warm Home Discount Scheme which began last year, energy suppliers agreed to give discounts on energy bills to older households who receive certain benefits.

Speaking to the BBC, energy minister Greg Barker said the scheme would mean two million of the poorest families would get £130 towards energy bills.

Labour said it would introduce a new energy regulator with powers to force energy companies to pass on savings to consumers and automatically put over-75s on the cheapest deal.

Scottish Power SSE British Gas Npower E.On EDF

Qatar National Bank net profit rises 10%

Dubai: Qatar National Bank, or QNB, reported a near 10 per cent jump in third quarter profit as lending surged, while the Gulf Arab state’s largest lender by market value said it was able to maintain one of the lowest non performing loan ratios in the region.

According to Zawya Dow Jones calculations third quarter net profit increased 9.5 per cent to 2.08 billion Qatari riyals (Dh2.09 billion or $571 million), from 1.90 billion riyals a year ago.

The quarterly result was a touch short of the 2.11 billion riyals that analysts at EFG Hermes had forecast and also missed the 2.22 billion riyals effort that Arqaam Capital had pencilled in.

QNB, the first Qatari bank to issue financial results, is seen as a barometer of health for the overall sector that saw strong government support in the aftermath of the 2008-2009 financial crisis.

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Net profit in the first nine months of the year climbed 15 per cent to 6.2 billion riyals, while earnings per share rose to 8.9 riyals, from 8.3 riyals a year earlier, QNB said in an emailed statement on Sunday.

Loans and advances amounted to 238.6 billion riyals in the nine months to September 30, a 42 per cent surge compared with the year ago period.

Banks in Qatar are vying with regional and international lenders to finance a slew of infrastructure projects being built in time for the 2022 World Cup.

“The bank was able to maintain the ratio of non-performing loans to total loans at 1.2 per cent, a level considered to be the lowest amongst banks in the Middle East and North Africa. Provisions were conservatively managed, as the coverage ratio reached 116 per cent,” the 50 per cent government owned lender said.

The cash-rich Qatari bank has been on an buying spree over the past year, increasing its stake in Iraq’s Mansour Bank to 51 per cent from 23 per cent and also acquiring stakes in a Libyan and Moroccan lender.

Cotton spot rate rises by Rs75

KARACHI: The local cotton market witnessed increased demand for cotton on Wednesday, which resulted in increase in spot rate by Rs75 per maund, said a dealer.

The spot rate improved to Rs5,575 per maund (37.324kg) and Rs5,975 per 40kg, while ex-Karachi rate increased to Rs5,730 per maund and Rs6,130 per 40kg after addition of Rs155 as upcountry expenses, he said.

An analyst said that the rates remained tight in the market, as growers slowed down supply of cottonseed to the mills and ginners had to cut down working hours of their factories.

“There are chances of decline in the crop amid monsoon rains, which have stopped supply of cottonseed to mills,” he said.

New York cotton market recorded an increase on all futures on Tuesday, while China cotton index also reported gain of a few points. October futures at New York cotton market gained 0.06 cents to 70.49 cents per pound and December futures increased by 0.06 cents to 71.84 cents per pound.

Karachi cotton market witnessed active trading of around 20,000 bales from the new crop, while prices remained in the range of Rs5,500 to Rs5,850 per maund.

Shahdadpur’s 2,000 bales and 1,200 bales of Tando Adam were each sold at Rs5,600 per maund, 2,000 bales of Sanghar and 2,000 bales of Mirpurkhas at Rs5,550 to Rs5,600, 1,000 bales of Khairpur at Rs5,800, 1,000 bales of upper Sindh at Rs5,800 to Rs5,850, 200 bales of Chiniot at Rs5,500, 400 bales of Vehari at Rs5,500 to Rs5,600, 1,000 bales of Khanewal at Rs5,600 to Rs5,700, 1,000 bales of Pakpattan at Rs5,575 to Rs5,650 and 200 bales of Chichawatni were sold at Rs5,600 per maund.

Bhakkar’s 600 bales were traded at Rs5,625 to Rs5,700 per maund, 400 bales of Hasilpur at Rs5,650, 1,600 bales of Burewala, 200 bales of Gaggo Mandi and 400 bales of Rahim Yar Khan were each sold at Rs5,700 per maund, 200 bales of Fazilpur at Rs5,750, 400 bales of Fort Abbas at Rs5,700 to Rs5,800, 600 bales of Faqirwali, 800 bales of Haroonabad and 800 bales of Mianwali were each sold at Rs5,800 to Rs5,850 per maund, while 400 bales of Khichiwala and 600 bales of Rajanpur were each sold at Rs5,800 per maund.

Brent rises towards $113

SINGAPORE: Brent crude futures rose towards $113 a barrel on Tuesday after two days of losses, with supply fears due to escalating tensions in the Middle East prevailing over a sluggish outlook for global demand.

Turkish President Abdullah Gul said on Monday that the worst case scenarios between his country and Syria are now playing out, fuelling concerns that the 18-month old conflict in Syria may spread to other countries in the region.

“Right now the market is concerned about the continuing conflict between Syria and Turkey, and the worry is that if it escalates, it may disrupt supplies,” said Ker Chung Yang, senior investment analyst at Phillip Futures in Singapore. Front-month Brent futures had risen 89 cents to $112.71 per barrel by 0618 GMT. US crude gained 85 cents to $90.18, also rebounding after two consecutive sessions of declines. Brent’s premium to US crude jumped to $22.5 per barrel, the most since Oct. 20 last year.

Tensions between Syria and Turkey are at their worst since March after cross-border firing accidentally killed some Turkish civilians last week, causing Istanbul to boost its military presence along the Syrian border.

Cotton spot rate rises by Rs50

KARACHI: Steady trend continued at the Karachi cotton market on Monday, while spot rate increased by Rs50 per maund, said a dealer.

The spot rate improved to Rs5,400 per maund (37.324kg) and Rs5,787 per 40kg, while ex-Karachi rate increased to Rs5,555 per maund and Rs5,942 per 40kg after addition of Rs155 as upcountry expenses.

An analyst said that the market was tight, as arrivals slowed down and ginners reduced working hours of their mills.China cotton index increased by a few points on Monday and New York cotton market report was not available till the filing of this report.Karachi cotton market witnessed active trading of around 17,600 bales from the new crop, while prices remained in the range of Rs5,350 to Rs5,600 per maund.

Shahdadpur’s 3,000 bales were sold at Rs5,450 per maund, 1,000 bales of Sanghar at Rs5,400, 2,000 bales of Tando Adam at Rs5,450 to Rs5,500, 2,000 bales of Tando Adam at Rs5,450 to Rs5,500, 2,000 bales of Mirpurkhas at Rs5,350 to Rs5,400, 2,600 bales of Khairpur and 1,000 bales of upper Sindh were each traded t Rs5,600 per maund, 600 bales of Bahawalpur at Rs5,400, 1,000 bales of Burewala at Rs5,400 to Rs5,500 and 400 bales of Faqirwali were sold at Rs5,500 per maund.

Around 400 bales of Fort Abbas were traded at Rs5,475 to Rs5,500, 1,400 bales of Haroonabad at Rs5,500 to Rs5,600, 200 bales of Hasilpur at Rs5,375, 400 bales of Khanewal at Rs5,400 to Rs5,450, 400 bales of Vehari at Rs5,350 to Rs5,400, 200 bales of Mianwali at Rs5,600, 200 bales of Khanpur, 400 bales of Multan, 200 bales of Yazman Mandi and 200 bales of Sahiwal were each sold at Rs5,400 per maund.

Ghana 91-day bill yield rises to 23.11pc

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Bank-of-GhanaACCRA: The Bank of Ghana said the yield on its 91-day bill rose to 23.11 percent at an Oct. 5 auction from 23.09 percent at the last auction.


The Bank said in a statement issued late on Friday that 255.82 million cedis ($135 million) worth of bids for the 91-day paper were accepted at the auction out of a total 260.97 million cedis of bids tendered.

Petrol price rises up to Rs108.45 per litre

Second increase in 15 days; prices of other petroleum products besides CNG fall.

ISLAMABAD: For the second time in 15 days, petrol prices went up – an increase of Rs1.73 on Sunday means petrol is now a staggering Rs108.45 per litre.

On September 16, petrol prices went up by Rs6.82 – bringing the total increase in 15 days to Rs8.55 per litre.

The prices of compressed natural gas (CNG) has also risen after the increase in the petrol rate, because of a set mechanism under which CNG prices are to be equal to 60% of petrol prices.

The price increase was recommended in a summary submitted by the ministry of petroleum and natural resources to the ministry of finance on Saturday for a weekly revision. The new prices take effect from today.

The government notification also included revised prices for other petroleum products.

Prices of other petroleum products, however, including high-speed diesel (HSD), have decreased for this week.

The price of kerosene oil, another important fuel used in remote areas where liquefied petroleum gas (LPG) is not available, has fallen by Rs3.05 per litre. The new price of kerosene oil will be Rs101.63 per litre. Last week, the kerosene price was increased by 62 paisas per litre.

The price of High Octane Blending Component (HOBC), consumed in luxury vehicles, has witnessed a significant cut of Rs6.06 per litre and the new price will be Rs131.90 per litre, a drop from Rs137.96.

The price of light diesel oil (LDO), which is used for industrial purposes, has fallen by Rs2.10 per litre and its new price will be 97.17 per litre.

Similarly, the price of JP-1 has come down by Rs3.04 per litre from Rs94.25 to Rs91.21 per litre. The price of JP-4 has come down by Rs3.69 per litre from Rs86.37 to Rs82.68 per litre. The price of JP-8 has also decreased by Rs3.04 from Rs93.94 to Rs 90.90 per litre.

CNG price in region-I, comprising Balochistan and Khyber-Pakhtunkhwa, will rise to Rs99.28 per kg from Rs97.69 and in region-II, covering Sindh and Punjab, the price will be increased to Rs90.70 per kg from Rs89.25.

Published in The Express Tribune, September 24th, 2012.

Euro rises in Asia in quiet trade

TOKYO: The euro rose against the dollar and yen in quiet trade in Asia on Friday as investors awaited fresh cues after a string of monetary easing plans unveiled by the US, European and Japanese central banks.

The euro bought $1.2979 and 101.55 yen in Tokyo midday trade, slightly up from $1.2966 and 101.46 yen in New York late Thursday.

The dollar was unchanged at 78.22 yen.

Major currency pairs lack a clear direction for now, said Tsunemasa Tsukada, chief manager of forex and financial products trading at Mitsubishi UFJ Trust and Banking.

But uncertainty surrounding European sovereign debt problems means positions built on riskier trading following the central banks’ stimulus plans may be unwound in coming sessions, he said.

“The US stocks aren’t necessarily firm. All the good news is now consumed,” he told Dow Jones Newswires.

Tsukada said the source of uncertainty was Greece and Spain.

Talks between Greece and its international lenders over the debt-ridden nation’s austerity package have progressed, but there are still gaps to close, he noted.

He also pointed to Moody’s announcement in August that it would hold its review of Spain’s credit rating until late September as it waits for more clarity on the European rescue fund and moves for a eurozone banking union.

Brent rises above $112 after Japan eases policy

SINGAPORE: Brent crude rose above $112 a barrel on Wednesday after Japan’s central bank announced it would boost asset purchases to stimulate the economy of the world’s third biggest oil consumer.

Japan’s move to ease monetary policy in the face of a slowing global economy helped oil prices erase early losses fuelled by concerns over demand and signs that top oil exporter Saudi Arabia was pumping more oil to bring down prices.

“This is bullish for the Japanese economy, the movement in oil prices is a reaction to the BOJ announcement,” said Ken Hasegawa, a commodity sales manager at Newedge Japan.

The Bank of Japan expanded its asset buying and loan programme, currently its primary monetary easing tool, by 10 trillion yen ($127 billion) to 80 trillion yen, with the rise meant for purchases of government bonds and treasury discount


Japan’s action follows similar bond-buying strategies announced earlier by the U.S. Federal Reserve and the European Central Bank, hoping the liquidity boost would help spur economic activity.

Brent November crude rose 55 cents to $112.58 a barrel by 0627 GMT, snapping two straight days of losses.

US October crude was up 62 cents at $95.91 a barrel. The contract expires on Thursday. U.S. November crude rose 58 cents to $96.20 a barrel.

Wednesday’s price gains, if sustained, will worry oil producers, particularly members of OPEC, who are working to boost supply to bring down prices.

Oil rises in Asia on Fed stimulus

SINGAPORE: Oil prices rallied in Asia Friday as traders celebrated a fresh round of quantitative easing announced by the US Federal Reserve, analysts said.

New York’s main contract, light sweet crude for delivery in October surged 65 cents to $98.96 a barrel and Brent North Sea crude for November delivery added 56 cents to $116.44.

Brent crude for delivery in October had late Thursday soared to a four-month high of $116.90 before closing.

Crude markets rose after traders’ hopes for stimulus announcements at the end of a two-day Fed meeting Thursday were met, IG Markets said in a report.

“Never fear, QE3 is here. At long last the markets got what they wanted as (Fed chief Ben) Bernanke finally announced another ambitious bond-buying programme he hopes will lead to a sustainable recovery in the US economy,” the report stated.

“The icing on the cake announced last night was that no defined time limit was announced for QE3.”

The Fed late Thursday announced a new, open-ended $40 billion per month bond-buying program which would remain in place until there was substantial improvement in the jobs market where 8.1 percent of Americans remain unemployed.

“QE3″ — the Fed’s third “quantitative easing” program in less than three years — would take the central bank’s total monthly purchases, including ongoing programs, to $85 billion a month, it said.

In addition, the Fed also pledged to keep its benchmark interest rate at ultra-low levels until at least mid-2015. (AFP)

Euro rises ahead of European Central Bank meeting

TOKYO: The euro strengthened in Asian morning trade on Tuesday ahead of a European Central Bank meeting at which officials were expected to announce fresh measures to battle the eurozone debt crisis.

The common currency bought $1.2616 and 98.88 yen in Tokyo morning trade, compared with $1.2598 and 98.68 yen in London late Monday. The US market was closed Monday for the Labor Day holiday.

The dollar was at 78.37 yen against 78.32 yen in Europe.

The euro saw “sentiment turning slightly bullish” over speculation that an ECB policy meeting Thursday will usher in the restart of a bond-buying programme, said Osao Iizuka, head of forex trading at Sumitomo Mitsui Trust Bank.

The bond purchases were designed to lower public borrowing costs among crisis-hit nations such as Spain and Italy.

But bank chief Mario Draghi has been forced to defend the programme, rejecting claims it amounted to bailing out spendthrift euro members — a charge levelled by many German politicians.

Figures showed Monday that the ECB has not bought government bonds for the past six months after it intervened from 2010 to help debt-wracked countries in the 17-nation eurozone.

However, euro optimism was tempered by new data that showed eurozone manufacturing activity contracted for a seventh month in a row in August.

China’s manufacturing activity fell to its lowest level in more than three years in August as worries grow about the world’s second-largest economy.

Traders were looking to US jobs data later in the week with dollar-yen trade likely to move within a narrow band until then, Iizuka said.

On Tuesday, markets would also be looking to a rate announcement from the Reserve Bank of Australia although no policy change was expected from the central bank, the analyst added.

Euro rises ahead of European Central Bank meeting

TOKYO: The euro strengthened in Asian morning trade on Tuesday ahead of a European Central Bank meeting at which officials were expected to announce fresh measures to battle the eurozone debt crisis.

The common currency bought $1.2616 and 98.88 yen in Tokyo morning trade, compared with $1.2598 and 98.68 yen in London late Monday. The US market was closed Monday for the Labor Day holiday.

The dollar was at 78.37 yen against 78.32 yen in Europe.

The euro saw “sentiment turning slightly bullish” over speculation that an ECB policy meeting Thursday will usher in the restart of a bond-buying programme, said Osao Iizuka, head of forex trading at Sumitomo Mitsui Trust Bank.

The bond purchases were designed to lower public borrowing costs among crisis-hit nations such as Spain and Italy.

But bank chief Mario Draghi has been forced to defend the programme, rejecting claims it amounted to bailing out spendthrift euro members — a charge levelled by many German politicians.

Figures showed Monday that the ECB has not bought government bonds for the past six months after it intervened from 2010 to help debt-wracked countries in the 17-nation eurozone.

However, euro optimism was tempered by new data that showed eurozone manufacturing activity contracted for a seventh month in a row in August.

China’s manufacturing activity fell to its lowest level in more than three years in August as worries grow about the world’s second-largest economy.

Traders were looking to US jobs data later in the week with dollar-yen trade likely to move within a narrow band until then, Iizuka said.

On Tuesday, markets would also be looking to a rate announcement from the Reserve Bank of Australia although no policy change was expected from the central bank, the analyst added.

LPG price rises Rs19 per kg

Retail rate goes up as OGDC increa­ses price by Rs18,836 per ton.  Retail rate goes up as OGDC increases price by Rs18,836 per ton. PHOTO: CREATIVE COMMONS.

ISLAMABAD: Retail price of liquefied petroleum gas (LPG) has gone up by almost Rs19 per kg following an increase in rates announced by state-owned producer Oil and Gas Development Company (OGDC), people associated with LPG marketing say.

The price hike, which came into effect on Monday, comes just three days after a massive increase in prices of petroleum products and compressed natural gas (CNG) by the government from September 1.

The increase in LPG price has been attributed to the Saudi Aramco contract price with which the domestic market is linked. OGDC’s new LPG rate was Rs103,940 per ton.

“Local LPG prices have risen in tandem with the Saudi contract price, which rose by $171 per ton to $946,” said Belal Jabbar, spokesman for the LPG Association of Pakistan – a grouping of LPG marketing companies.

“The increase in Saudi Aramco price is primarily due to strong demand of LPG in Saudi Arabia, leaving little room for export. Stockpiling of LPG by China and other energy-hungry countries has also impacted the prices,” he said.

In Sindh and Balochistan, the retail price of LPG will now be Rs130 per kg, in Punjab Rs140 per kg and in Azad Jammu and Kashmir and northern areas Rs145 per kg.

The price of domestic cylinder (11.8kg) is expected to rise by Rs225 to Rs1,651 and that of commercial cylinder (45.4kg) by Rs855 to Rs6,303.

The government, which is the largest producer of LPG in the country, will be the direct beneficiary of the increase in prices.

Published in The Express Tribune, September 4th, 2012.

Food and clothing: Prices keep rising, but consumption rises faster

Pakist­anis are eating more food and buying more clothe­s, and not caring about inflat­ion.  11% is the increase in per capita volume of clothes bought by Pakistanis over the last nine years. PHOTO: MUHAMMAD JAVAID/EXPRESS


Pakistanis are increasingly spending more and more money on food and clothing, and it is not just because prices are rising: the data now shows that they are buying higher volumes, particularly in food.

In an analysis conducted by The Express Tribune using data generated by the Pakistan Bureau of Statistics, it is becoming increasingly evident that even though prices of food and clothing have skyrocketed over the past decade, the ability of most Pakistanis to keep buying has – for the most part – kept pace (though for some income groups, that has come at the expense of their ability to save).

Between 2002 and 2011, food prices have increased at an average rate of about 11.2%. Spending on food, however, has risen by over 12% per year during that same period. That may not sound like much of a difference, but that means that the average household consumes 6.8% more food than it did a decade ago. Factor in the fact that the average household size has declined during that time and one gets the following statistic: the average Pakistani consumed 17.2% more food in 2011 than they did in 2002.

This massive expansion of food consumption, meanwhile, has fuelled a boom in the sector. Food companies listed on the Karachi Stock Exchange saw their revenues more than double between 2006 and 2010. During that same period, their pre-tax profits more than tripled.

An increased sign of prosperity is also the fact that Pakistanis now buy more meat: expenditure on meat, fish and poultry now constitutes about 10% of all spending on food, up from 9.3% a decade ago. The fastest rise has been in poultry. Pakistanis have increased their per capita consumption of chicken by about 130% during this past decade. This is despite the fact that prices of chicken have shot up 120% during that same period.

It is this dual expansion of per capita consumption and prices that has resulted in the more visible competition among food companies to advertise their products to consumers.

The story in clothing and footwear expenditures is also interesting. The difference in total spending and price rises, at first glance does not appear to be much. Between 2002 and 2011, spending on clothes and footwear rose by 7.4% per year, while prices rose by 7.2% per year. Yet, given the decrease in household size, the per capita volume of clothes bought by Pakistanis increased by nearly 11% during that period.

The fortunes of clothing companies have similarly soared. Between 2006 and 2010, the local sales revenues of clothing manufacturers listed on the Karachi Stock Exchange jumped by an average of 29% per year, much faster than even their own export sales, which rose by about 22% per year during that period. Profits have more than quadrupled during that time.

And those figures precede the recent boom in lawn sales. Sources in the advertising industry say that more than 100 brands of lawn clothing carried out advertising campaigns in 2011 alone.

There has also been a very significant change in buying behaviour: the fastest increase in demand has been for readymade clothing, with a decline in the relative importance of tailored clothes. The average demand for such clothes has increased by an astonishing 81% during the past decade, which suggests that far more Pakistani consumers prefer the convenience of buying off the rack rather than spending time haggling with tailors.

Published in The Express Tribune, July 30th, 2012.

Weekly Review: Stock market rises on foreign interest

KSE’s benchm­ark 100-share index gains 232 points.  KSE’s benchmark 100-share index gains 232 points.


The stock market witnessed a strong week amid foreign buying worth $10.8 million, almost triple the amount bought in the preceding week.

“The kick start of the result season and Securities and Exchange Commission of Pakistan (SECP) announcement regarding CGT rules and demutualisation kept investor interest intact during the week,” said JS Global Capital analyst Naveed Tehsin in a research note.

The market rallied strongly in the first three day while profit selling was witnessed in the last two sessions. The benchmark KSE 100-share index gained 232 points or 1.6% to close at 14,564 points on a weekly basis.

SECP Chairman Muhammad Ali announced that the CGT rules for the stock exchanges would be finalised within the next two weeks and its collection would start after a month. The proposal to allow intraday short selling is also under consideration, however, blank sale will not be allowed.

Moreover, Standard & Poor’s Ratings Services affirmed Pakistan’s sovereign long-term rating and upgraded the short-term rating.

Average daily volumes surged by 28% to 122 million shares. The upcoming week is expected to witness a downfall due to the annual Ramazan affect.

Engro Corporation remained in the limelight on the back of news flow that Engro Fertilizer has approached financial institutions for lengthening maturities of its long-term loans. The local giant has to payoff loans worth Rs22 billion in the current financial year.

MCB Bank remained highly sought after news flow that the bank plans to open three branches in India.

Outlook for the Future

With the onset of the Ramazan, seasonally lower activity could be seen, however, given the jam-packed nature of the upcoming result calendar, the bourse is expected to keep bustling, according to a KASB Securities research note. For politics on the other hand, next week is critical, the initial hearing challenging the passage of the Contempt of Court Bill is scheduled for July 23 followed by Round II of the NRO saga on July 25 where the PM’s stance on writing a letter to Swiss authorities will be put forward.

Published in The Express Tribune, July 22nd, 2012.

Market watch: Bourse rises amid positive triggers

KSE’s benchm­ark 100-share index gains 60 points. KSE’s benchmark 100-share index gains 60 points.

KARACHI: The stock market rose on Tuesday with major blue chips closing in the green.

The Karachi Stock Exchange’s (KSE) benchmark 100-share index gained 0.41 per cent or 59.06 points to end at 14,443.64 point level.

“The day once again belonged to cement stocks with DG Khan Cement gaining 0.6% while Lucky Cement jumped 1.4% over news that China’s Eximp bank will provide $700 million at low interest rates for dam projects,” said JS Global Capital analyst Jawad Khan.

Engro Foods met market expectation on its half early earnings but failed to sustain its levels and fell from its high of Rs72 during the session to close down 3.09% at Rs67.66. Engro Foods profits rose more than four-folds to Rs1.02 billion in the first half of 2012 led by Olpers.

Trade volumes gained to 105 million shares compared with Monday’s tally of 74 million shares.

MCB Bank jumped 2.2% over news that the central bank is considering proposal from the bank to open three branches in India, added Khan.

Foreign institutional investors were buyers of Rs156 million worth of shares, according to data maintained by the National Clearing Company of Pakistan Limited.

Pakistan Oilfields gained 1.4% and was by far the best performing E&P albeit low volumes

Pakistan Petroleum gained 0.7% over expectations of better full year results and payouts.

Shares of 372 companies were traded on Tuesday. At the end of the day 164 stocks closed higher, 106 declined while 102 remained unchanged. The value of shares traded during the day was Rs4.02 billion.

Jahangir Siddiqui and Company was the volume leader with 13.5 million shares gaining Rs0.63 to finish at Rs14.66. It was followed by DG Khan Cement with 12.8 million shares firming Rs0.28 to close at Rs44.92 and Lotte Pakistan PTA with 8.7 million shares increasing Rs0.39 to close at Rs7.56.

Published in The Express Tribune, July 18th, 2012.

Borrowing: Public debt rises by Rs1.3 trillion

Domest­ic borrow­ing accoun­ts for 60% of total debt. Rs12.1trillion was the total public debt at the end of March 2012.

ISLAMABAD: The country’s public debt has risen 12.3% (Rs1.3 trillion) in just nine months of the outgoing fiscal year compared to the corresponding period of last year, indicating fiscal strain.

According to the Economic Survey 2011-12, public debt at the end of March this year stood at Rs12.1 trillion, which was equal to 58.2% of gross domestic product (GDP) compared to 55.5% in the same period last year.

The figure included Rs391 billion consolidated by the government against outstanding subsidies of previous years related to food and energy.

Historically, the public debt showed almost the same burden from domestic and external borrowing, but the government has increasingly focused on domestic sources – central bank and other banks – over the last few years because of a slowdown in external financing.

The share of domestic borrowing in total public debt surged from 46.6% in fiscal year 1990 to 59.9% at the end of March 2012.

Total size of the country’s GDP touched Rs20.6 trillion in the outgoing fiscal year. As a percentage of GDP, domestic debt accounted for 34.9% while foreign debt stood at 23.3%.

In relation to total debt, the share of domestic currency debt was 59.9% and that of foreign currency debt was 40.1%. Foreign currency debt in dollar terms stood at $53.1 billion by March 2012.

According to details, domestic debt increased by Rs1.2 trillion and reached Rs7.2 trillion compared to Rs6 trillion at the end of last fiscal year in June 2011, a rise of 19.8% in nine months.

Foreign debt rose by Rs124 billion and reached Rs4.9 trillion against Rs4.7 trillion in the first nine months of 2010-11.

The survey said total liquid foreign exchange reserves were valued at $16.49 billion by the end of April 2012, compared to $18.24 billion at the end of June 2011.

Published in The Express Tribune, June 1st, 2012.

Money and doctors: Private healthcare spending in Pakistan rises to $7.3 billion

Growin­g popula­tion, income­s credit­ed with increa­sing demand for qualit­y care. The fastest growing segment was medical devices, which saw sales rise 18.1% to Rs35.5 billion. Pharmaceuticals grew a little slower, at 13.1%, to reach Rs173 billion in gross sales in Pakistan.


Pakistanis are increasingly spending more on health, with spending rising to a total of Rs665 billion in 2011, up 14.5% over the previous year, according a to research report released by Business Monitor International (BMI), a UK-based research and consulting firm.

Within the overall sector, the largest in terms of total spending was that of hospitals and other healthcare facilities, which saw their total revenues rise to Rs456 billion in 2011, up 14.1% from the year before. The fastest growing segment was medical devices, which saw sales rise 18.1% to Rs35.5 billion. Pharmaceuticals grew a little slower, at 13.1%, to reach Rs173 billion in gross sales in Pakistan.

There are also several developments taking place within the sector that are likely to allow for even further expansion, according to BMI analysts.

In August 2011, the Drug Registration Board (DRB) approved the registration of 30 medical devices and 210 medicines after a meeting was held at the request of the Prime Minister Yousaf Raza Gilani, who called for the uninterrupted provision of medicines to patients. Products approved for registration included vaccines, biologicals, cancer therapeutics, drugs for the treatment of blood disorders such as thalassaemia, and devices used in cardiac procedures.

BMI points out that there are many reasons why investors, particularly those outside the country may want to consider investing in this sector. “Pakistan has one of the most liberal foreign investment regimes in South Asia, with a commitment to low tariffs and 100% foreign equity permitted,” said BMI analysts in the report.

The analysts also note that Pakistan’s rapidly growing population – currently closing in on 190 million – should also be considered an asset. “A growing population is feeding increased demand for pharmaceuticals.”

There are, nevertheless, several challenges faced by the healthcare sector in Pakistan, which BMI cautions investors to be aware of. For the pharmaceutical sector, in particular, the analysts warn: “Counterfeit medicines, a lack of transparency in the government’s pricing mechanisms and an approval process that is biased towards domestic manufacturers are all factors depressing the market’s attractiveness.”

The opening up of free trade with India is seen as a bit of a mixed bag. On one hand, it would allow Pakistani firms to export their products to India more easily, allowing them access to a large and rapidly growing market which would help many of these firms scale up their capabilities and reduce overall costs for Pakistani consumers. On the other hand, many pharmaceutical manufacturers claim that they will not be able to compete with Indian companies and will likely be forced out of business by cheap Indian imports.

Pakistan’s overall business environment gets a poor rating from BMI, which ranks the economy 16th out of the 18 economies that it tracks in the Asia-Pacific region. The only two economies behind Pakistan are Sri Lanka and Cambodia. “The business environment still suffers from poor infrastructure and, most problematically, an uncertain security situation that has declined considerably since March 2007,” said BMI analysts.

In addition, there are several structural challenges to the Pakistani healthcare industry itself that have little to do with the external environment of Pakistan that they operate in. “Procurement processes are bureaucratic and often lack transparency, raising the risks of corruption,” said BMI in its report.

Published in The Express Tribune, May 27th, 2012.