Saturday, 27 October, 2012

LONDON

AGENCIES

Tougher measures imposed by the Euro-pean Union and the United States havetightened the screws on Tehran, which relieson its shipping trade for many imports in-cluding food, consumer and industrialgoods. Many foreign companies, includingshipping firms, have pulled out for fear oflosing business in the U.S. and due to thecomplexities of arranging non-sanctioneddeals. Despite the setbacks, industry sourcessay producers in Ukraine are providing Iranwith coking coal, also known as metallurgi-cal coal, and coke - key steel ingredients.

“Iranians used to buy a lot of coking coalfrom Australia to make their own coke butthat has stopped now as the big companiesthere don’t want to do it as they are too ex-posed,” a British-based coal trade sourcesaid. “So Iran went to buy coke fromUkraine,” he added, referring to the concen-trated coal used in blast furnaces.

While coal is not directly targeted as acommodity, the European Union imposed aban on steel sales to Iran last week, makingthe Islamic Republic’s coal needs morepressing because it now must produce moresteel itself.

“Iran is one of the fastest-growing coun-tries in terms of steel production so theyneed more steel raw materials,” a Europeanbased trade source said. “They need to im-port more (metallurgical) coal and coke,” hesaid.

Lured by a trade worth nearly $25 mil-lion a month, suppliers in Ukraine are aim-ing to take advantage.

“The US and EU sanctions programscurrently in place against Iran are complex

and include sanctions against the indispen-sable marine insurances,” said Jakob Larsenwith BIMCO, the world’s largest private shipowners’ association.

“As is often the case, for those who arewilling and able to take the risk, the rewardsare more likely to be high. In such a marketthe risk-taker segment will try to find a wayout.”

Sources say the trade is complex involv-ing often multiple brokers and diverse pay-ment arrangements including a mix ofcurrencies such as Russian roubles.

“We have been approached to sell some(metallurgical) coal to Iran and they havebeen buying more lately,” one Ukrainianmetallurgical coal producer said. “We havedone some business but not directly,through another country — Syria andLebanon,” he said, without providing furtherdetails.

Even those looking to do deals with Iranfrom Ukraine are having to find creativeways to trade, other sources said.

“One of the ways around it being lookedat is barter. We’ve been approached severaltimes but haven’t done any deals yet to dobarter of coal for steel of equivalent value,that way no money needs to change hands,”a raw materials trader said.IRAN’S FLEET: A Black Sea based tradesource also reported receiving multiple en-quiries in recent weeks from Iran. “It isn’teasy, it’s very complicated to deal with Iran,”the source said.

“To do some business there you mustuse a bank with specialist knowledge, not theusual banks or Russian banks. I would use aLebanese bank instead, which has represen-tative offices in Tehran and acts as an agentbetween the mills and suppliers.”

Trade sources said it was unclear whothe ultimate Iranian end-users of importedmaterial were because of the involvement ofagents and middle men and the desire toconceal purchases.

“Anybody who is doing this kind of busi-ness is not going to say who the buyers are,”another Ukrainian coal source said.

Another Black Sea based industrysource familiar with the shipments said car-goes were being routed from the cargo portof Nikolayev, not far from Ukraine’s largerterminal of Odessa.

“Exports have been going on a constantbasis already for two years, and there arearound two to three cargoes a month,” thesource said. “Iranian vessels come into theport, pick up the coal and then head forhome.”

A Nikolayev port spokeswoman said:

“There were no coal shipments to these di-rections (the United Arab Emirates andIran) during the past four weeks,” withoutgiving further details.

Official data from Ukraine’s StatisticsService showed overall exports to Iran in theperiod from January to August of this yearrose 10 percent to $800 million comparedwith the same period last year.

Coal exports in the period reached $421million, just over 20 percent lower than inthe same period last year.

Trade sources say the figures do not re-flect the full extent of the trade and between170,000 to 200,000 metric tonnes a monthof coal are exported from Ukraine, especiallyusing vessels belonging to Iran’s top cargofirm, the Islamic Republic of Iran ShippingLines (IRISL).

“IRISL vessels work out cheaper than

using foreign ship owners, who are chargingmassive premiums for to Iran,” the secondBlack Sea trader said. “IRISL increasingly isfinding it has fewer trade options, so it worksout for Iran well.”

An IRISL official in Tehran said:“Maybe sometimes we have some offers oncoal for factories in Iran.”

IRISL has been on a Western blacklistof sanctioned entities for years, accused oftransporting weapons, which it denies. It hastried to dodge sanctions by using varioustactics including changing its flags, and set-ting up front companies, the U.S. Treasuryand the European Union have said.

Other tactics have included changingownership of ships and flags and falsifyingcargo documents in a bid to become moreinvisible, the U.S. Treasury has said.

IRISL’s chief said this week that if sanc-tions pressure continued the carrier, whichis receiving state help, would face graveproblems. It has already had $50 milliondollars blocked by the central bank — re-flecting the acute shortage of U.S. currencyand underscoring the problems with tradesinvolving Iran’s fleet.

Iranian President Mahmoud Ah-madinejad has faced growing criticism overhis handling of the economy, especially afterthe Iranian currency plunged by more thana third in recent weeks.

“The regime has reason to be concernedabout the budget and being able to supportsubsidies in the long term as its earningsfrom trade continue to diminish,” said An-thony Skinner of risk analysts Maplecroft.

“President Ahmadinejad has received alot of blame for the state of the economy andeconomic mismanagement partly explainsthe dire state of affairs.”

Iran’s coal shipping trade booms despite Western heatUsing shadowy middle men, multiple bank accounts and a fleet of ghost ships, Iran’s coal trade is quietly booming

as the Islamic Republic tries to sidestep Western sanctions and prevent its industrial economy from crashing

ISLAMABAD

ONLINE

Policymakers and bankers needto make a clear commitment toact now and lift the debilitatinguncertainty plaguing the globalfinancial system, InternationalMonetary Fund (IMF) Manag-ing Director (MD) Christine La-garde has said. In a speech tothe Canadian InternationalCouncil in Toronto, Lagardesaid the world’s financial systemremains weak and policies inthe major advanced economieshave not been sufficient to re-build confidence.

Change in the global finan-cial structure is not visible yet,in part because policymakersand bankers have delayed im-plementation of reforms insome places—intentionally orunintentionally—and becausesome reforms are meeting re-sistance.

In setting out the challengesfacing policymakers andbankers, Lagarde said banks arestill weak in many countries. Asa result, many borrowers stillface very tight borrowing condi-tions. This creates a feedbackloop of tight credit that stiflesinvestment and growth.

At its recent Annual Meet-ings in Tokyo, the IMF releasedits latest Global Financial Sta-bility Report which said risks tofinancial stability have in-creased and financial marketsremain volatile as the crisis inEurope continues.

Lagarde urged action on the

financial reform agenda giventhe high price the crisis hastaken on economic growth. “Thefinancial sector?the source ofthis crisis?is holding down therecovery in key parts of theglobal economy,” said Lagarde.“Considering the staggeringeconomic and human costs overthe past six years, we must dowhatever it takes to make surethis does not happen again.”

The IMF recently assessedreform progress as part of theFinancial Stability Report, andfound that reforms are headingin the right direction, but theyhave not yet delivered a safer fi-nancial system.

Also, IMF staff recently con-ducted a study on the costs ofregulatory reform and foundthat the likely long-term in-crease in borrowing costs wouldbe about one quarter of one per-centage point in the UnitedStates, and lower elsewhere.

Lagarde said Canada hasone of the strongest financialsectors in the world. While itfaces its own challenges, thereare important lessons the coun-try can teach the rest of theworld about how to build astronger, safer financial system.

“You can speak with credi-bility based on your own finan-cial sector success, but you arealso regarded as a leading mul-tilateralist,” said Lagarde.“Abroad, Canada is identified byits values of coordination andconsensus building, which havegiven your country influence be-yond its years.”

Let’s revamp thefinancial sector!

BRUSSELS

AGENCIES

Excerpts from the InternationalMonetary Fund (IMF) report werepresented to the EurogroupWorking Group (EWG) – juniorfinance ministers and treasury of-ficials who prepare meetings ofeuro zone finance ministers.

“It is clear that Greece is offtrack and there is no chance theywill cut the debt to 120 percent ofGDP in 2020 as envisaged. It willbe rather 136 percent, and thiswould be under a positive sce-nario of a primary budget sur-plus, a return to economicgrowth, and privatization,” aeuro zone official, who insistedon anonymity, said.

“New prior actions will beneeded, on top of the existing 89,”the official said, referring to a listof already agreed reforms thatneed to be in place before any newtranches of euro zone and IMFemergency loans to Greece can bepaid.

Apart from the debt projec-tions, representatives of the IMF,the European Commission andthe European Central Bank -known as the troika - have beencalculating how much moremoney Athens will need if it isgiven until 2016 rather than 2014

to reach a primary surplus of 4.5percent, as agreed in February.

A primary surplus or deficit isthe budget balance before the gov-ernment services its debt. InGreece’s case, it would mean gov-ernment tax revenues exceedingspending, meaning Athens is be-ginning to get on top of its budget-deficit problems.

The two extra years wouldgive the fast-contracting Greekeconomy some welcome respite,allowing it to return to growthsooner and therefore increasingthe chances the country wouldeventually be able to make its debtsustainable.

“Additional financing needsfor Greece are now seen at around30 billion euros ($39 billion),” theofficial said after the EWG meet-ing. Estimates from various offi-cials since July varied from 13billion to 30 billion and on Thurs-day another official estimated thefinancing needs at 16-20 billioneuros.

The critical question is wherethe additional money would comefrom.

“The IMF is pushing for OSI(Official Sector Involvement) inGreece, Germany is strictlyagainst. And they are not the onlyones,” the euro zone official said.

The IMF has long advocated

that the euro zone should restruc-ture the loans that euro zone gov-ernments extended to Greece, inwhat is called OSI, to reduce thedebt servicing costs for Athens.

The restructuring could takethe form of a further reduction ofthe interest rate on existing loansto Greece and an extension oftheir maturities, but while thatwould reduce financing costs,alone it would not fill the fundinggap.

Another option is to bring for-ward some payments from theIMF that would be granted toGreece at a later date, therebybridging its immediate fundinggap, but again that is not be fullysufficient.

Also under consideration toreduce the Greek debt pile, and itsservicing cost, is a debt buy back,taking advantage of the deep dis-count Greek debt is currentlytrading at.

But more direct funding forGreece from euro zone memberstates looks inevitable.

Any new money would have tocome from the euro zone’s perma-nent bailout fund, the EuropeanStability Mechanism, and is likelyto face opposition from countriessuch as Finland, the Netherlandsand Germany.ECB ASSISTANCE NEEDED:

The euro zone official said thatfurther assistance from the ECB,in the form of new liquidity sup-port to Greek banks, would beneeded. Greece will be further dis-cussed at the next EWG meetingon Monday.

Apart from the funding issue,talks on granting Athens the two-year extension on its primary sur-plus target are hindered by theopposition of some parties in theruling Greek coalition on labormarket reforms, seen as necessaryby the Troika.

Greek Finance Minister Yan-nis Stournaras told parliament onWednesday that Greece had al-ready been granted the two-yearextension, but several top eurozone officials, including EuropeanCentral Bank President MarioDraghi and German Finance min-ister Wolfgang Schaeuble, saidthey were not aware of that.

If an agreement with Athens isreached in time, a decision on theextra money could be taken at thenext meeting of euro zone financeministers in Brussels on Novem-ber 12.

Despite disagreements overhow it will be done, it has becomeclear in recent days that a two-year extension will be granted andtherefore some way will be foundto finance it.

Greek debt to badly misstarget: euro zone officialGreek debt will be above the target of 120 percent of GDP in 2020, a preliminaryreport by the IMF showed on Thursday, and Athens will need more reforms beforeemergency credit from international lenders can start flowing again

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02

Saturday, 27 October, 2012

Major Gainers

COMPANY OPEN HIGH LOW CLOSE CHANGE TURNOVERIsland TextileXD 330.75 347.28 347.00 347.28 16.53 500National FoodsXD 324.78 341.01 308.55 334.05 9.27 36,100Gatron Ind.XD 112.00 117.50 117.00 117.33 5.33 1,500Ismail IndustrXD 122.32 128.43 122.00 127.62 5.30 4,000J.D.W.Sugar 117.33 121.99 116.00 121.77 4.44 2,100

Major LosersSiemens Pakistan 750.00 760.00 713.00 713.00 -37.00 3,300Mithchells Fruit 372.36 356.11 356.11 356.11 -16.25 100Bata (Pak) SPOT 1460.00 1460.00 1387.00 1444.00 -16.00 300Pak Gum & Chemical 239.75 251.25 227.77 227.77 -11.98 3,900Service Industries 170.05 177.50 161.55 162.95 -7.10 30,400

Volume Leaders

D.G.K.CementXD 52.30 52.49 50.77 51.73 -0.57 16,997,000P.T.C.L.A 18.57 18.75 17.57 17.57 -1.00 11,809,000JS Growth Fund 7.65 8.00 7.60 7.82 0.17 5,302,500Engro Corporation 97.09 97.40 93.00 93.27 -3.82 5,180,800Telecard Limited 2.87 2.89 2.45 2.54 -0.33 5,122,000

Interbank RatesUS Dollar 95.8064UK Pound 154.6028Japanese Yen 1.1953Euro 124.7208

Dollar EastBUY SELL

US Dollar 95.00 95.60Euro 122.73 124.40Great Britain Pound 152.12 154.16Japanese Yen 1.1726 1.1883Canadian Dollar 94.82 96.60Hong Kong Dollar 12.07 12.29UAE Dirham 25.75 26.07Saudi Riyal 25.15 25.43Australian Dollar 97.66 100.42

Business

SME BSF inks MoU with Kashf

KARACHI: SME Business Support Fund (BSF)has partnered with Kashf Microfinance Bank Lim-ited for the promotion of sustainable businesssupport model that will utilize business expertiseto provide economic opportunities through self-employment. The MOU was signed at BSF’s headoffice on Thursday, October 25, 2012, the topmanagement of both the organizations were pres-ent at the MOU signing ceremony. The scope ofthe project includes enterprise development andjob creation through provision of entrepreneurialtraining, covering find management, basic saletechniques and record-keeping through innovativemethodology followed by provision of microfi-nance loans to meet working capital requirements.

Chilas airport’s feasibility studied

MIRPUR: On the directive of the president ofPakistan, CAA DG has been tasked to carry outfeasibility study for the construction of all weatherNew International Airport at Chilas to facilitatenorthern area people and to attract tourists.The DG CAA, Capt. Nadeem Khan Yousufzai, alsovisited Mirpur (Azad Kashmir) and had detaileddiscussion with the local administration in devel-oping Mirpur into an international airport. Gov-ernment of Azad Kashmir has promised to providecomplete assistance in accomplishing the task.

KARACHI: Bilal Sheikh, CCO Mobilink, handing over the

keys of a new Honda Civic to Raja Shaukat Mehmood,

winner of Mobilink’s Acquisition Offer Campaign.

LAHORE: UMT student Rashid Rafique receives the

winner’s shield from Rana Iftikhar Ahmad at the

conclusion of the Punjab Youth Festival University-level

Chess Championship.

NBP’s Board of Directors approves

accounts till September 30

KARACHI: After tax profit increased to Rs 11.8billion higher from last year by 4%. Earning pershare stands at Rs. 6.38 compare to Rs. 6.16 ofcorresponding period last year. Pre tax return onequity stands at 20.2% with pre tax return on as-sets at 2.0%. Bank’s net interest income in linewith the banking sector was impacted due to re-duction in discount rate by 200 bps last year, and150 bps in August 2012 as well as increase in mini-mum profit rate on deposits to 6% effective fromMay 2012. Despite this impact was to a certain ex-

tent offset through recoveries and balance sheetgrowth. Non interest markup income increased byRs. 2.7 billion or 20.5% compared to correspon-ding period last year mainly because of higher div-idend and capital gains due to higher portfoliosize. Expenses increased by 14% in line with infla-tion related salary increases and other overheadcosts. Provision charge against advances show areduction of Rs. 929 million or 17% mainly on ac-count of lower fresh accretion and restructuring ofcertain corporate loans. Provision against invest-ments shows reduction compared to correspon-ding period last year by Rs. 1,370 million or 76%mainly due to lower impairment loss againstshares. Deposits compare to September 2011 arehigher by Rs. 91 billion.

KARACHI: Chairman PIA Lt. General (R) Asif Yasin Malik

presiding over the 343 Board of Directors meeting to

approve the Financial accounts of the airline. MD PIA

Muhammad Junaid Yunus, Directors Malik Nazir Ahmad,

Syed Omar Sharif Bokhari and Yousuf Waqar attended.

CORPORATE CORNER

TOKYO

AFP

The dollar eased against the yen Fridayafter posting healthy gains on speculationthe Bank of Japan will usher in a fresheasing measures.

The greenback bought 80.02 yen inTokyo morning trade against 80.26 yenin New York late Thursday, where it hadtouched a four-month high of 80.34 yen.

The euro changed hands at 103.53yen and $1.2934 against 103.78 yen and$1.2930. The dollar had gained groundahead of Friday’s release of US gross do-mestic product data for the third quarter,with expectations of 1.9 percent growth,up from 1.3 percent in the previous threemonths. Citibank Japan chief currencystrategist Osamu Takashima said the dol-lar, which sank to post-war lows around75 yen last year, had room for more gains.

“My view is unchanged that the dollaris on its way to 82.00,” he said.

However much of the yen’s recentweakness came from expectations thatJapan’s central bank will take further pol-icy measures after a meeting next week.

Poor September trade data has un-derlined a stall in Japan’s economic re-covery while policymakers are alsoaiming to tackle the deflation that hashaunted the world’s third-largest econ-omy for years. On Friday, official datashowed consumer prices, excluding thevolatile price of fresh food, edged down0.1 percent year-on-year in September,the fifth consecutive monthly fall.

A survey of 10 analysts by Dow JonesNewswires showed they expected thebank to boost an 80 trillion yen asset-pur-chase programme — its main policy tool— but were split on the size of any in-crease, with estimates ranging from 5.0

trillion yen to 20.0 trillion yen.“It’s a chance for Japan to catch up

with central bankers’ competition to easemonetary policy, in which case the yenwill decline against the dollar,” said Mar-ito Ueda, currency dealer at FX Prime.

The euro has been see-sawing as mar-kets keep a close eye on a possible Span-ish bailout and the situation in Greeceamid continued delays on a revised res-cue plan with Athens’ key internationalcreditors. The dollar was mixed againstother Asia-Pacific currencies.

It eased to 1,097.44 South Koreanwon from 1,101.40 won on Thursday, to41.31 Philippine pesos from 41.34 pesos,to 53.55 Indian rupees from 53.79 rupees,and to 9,605 Indonesian rupiah from9,621 rupiah.

It firmed to 30.72 Thai baht from30.69 baht, to Sg$1.2218 from Sg$1.2214,and to Tw$29.52 from Tw$29.26.

NEW YORK

AGENCIES

THE short and strained reprieveWall Street got may not lastlong, as reflected by the indexfutures, which point to a no-tably lower opening on Friday.With economic data remaining

just lukewarm, sub-par earnings and insipidforward guidance are tricking in thick and fast.Notable among the disappointments of the daywould be Apple (AAPL), which reported below-consensus earnings for the second straightquarter. Traders may also stay tuned to the ad-vance estimate of third quarter GDP due for re-lease before the markets open.

As of 6:15 pm ET, the Dow futures are re-ceding 87 points, the S&P 500 futures are de-clining 10.80 points and the Nasdaq 100futures are receding 16.75 points.

U.S. stocks rebounded on Thursday, al-though the recovery lacked conviction. The DowIndustrials ended up 26.34 points or 0.20 per-cent at 13,104 and the S7P 500 Index gained4.22 points or 0.30 percent before closing at1,413, while the Nasdaq Composite closed at2,986, up 4.42 points or 0.15 percent. The Com-merce Department is due to release its advanceestimate of third quarter GDP report at 8:30 amET. Economists expect sequential GDP growthfor 1.9 percent for the growth compared to 1.3percent growth in the second quarter.

Reuters and the University of Michigan are

due to release the final estimates of the con-sumer sentiment index for October based ontheir survey at 9:55 am ET. Economists expectthe index to be left unrevised at 83.1.

Apple reported fourth quarter earnings of$8.67 per share compared to $7.05 per sharein the year-ago period. The earnings trailed es-timates. However, net sales of $35.97 billionand also exceeded estimates. The company is-sued downbeat guidance for its first quarter.

Amazon (AMZN) reported a loss for itsthird quarter, which was wider than what mostanalysts had expected. Net sales also trailed ex-pectations.

Weyerhaeuser (WY) reported third quarterearnings of 22 cents per share compared to ad-justed earnings of 12 cents per share last year.Net sales rose to $1.78 billion from $1.57 bil-

lion last year. The earnings exceeded estimates,while the net sales were slightly below esti-mates.

Macerich (MAC) announced a 5.5 percentincrease in its quarterly dividend to 58 centsper share. Microsoft (MSFT) announced thatits new PC Microsoft Surface is available forpurchase at all Microsoft retail holiday and on-line stores in the U.S. and Canada.

Asian stocks ended mostly lower as re-gional corporate earnings and Apple’s down-beat earnings dampened investor mood.

Japanese stocks fell sharply as the yen’sbrief rally against the dollar and the eurocaused jittery investors to take some profitsoff the table following recent gains. TheNikkei average ended down 122.14 points or1.35 percent at 8,933.

Wall Street left to grapplewith disappointing earnings

TOKYO

AFP

The euro rose in Asia on Thursday,boosted by speculation Greece will begiven more time to put in place reforms tohelp rein in its huge public debt, while thedollar also rose against the yen.

The single currency bought $1.2975and 103.73 yen in Tokyo morning trade, upfrom $1.2972 and 103.49 yen in New Yorklate Wednesday. On Thursday, the dollarmoved toward the 80 yen level, trading at79.94 yen in Tokyo, up from 79.79 yen inNew York. There are growing expectationsthat the Bank of Japan will take furthereasing steps at a policy meeting next week,which has put pressure on the yen.

But currency markets were likely takea wait-and-see stance owing to a lack offresh trading cues, said a senior dealer at aJapanese bank. “There are no signs of bigmovements as the weekend approaches,”he told Dow Jones Newswires.

Worsening business sentiment in Ger-

many accelerated euro selling in theUnited States, sending it to as low as$1.2921 at one point, but hopes Greece willget an extra two years to get itself back ontrack provided the single currency somesupport. On Wednesday, Greece’s financeminister said he had agreed on a new aus-terity package with Athens’ internationalcreditors and won more time to fix thedebt-crippled nation’s finances.

However the European Union and In-ternational Monetary Fund said only thatthere had been progress but no firm deal,as Greece also looks to unlock its latestbatch of rescue cash. “There is an absenceof hard news on the fate of Greece’s nextbailout tranche” despite its progress withcreditors, National Australia Bank said innote.

The US Federal Reserve’s two-day pol-icy meeting that ended Wednesday offeredno new policy measures, although the cen-tral bank reaffirmed its commitment tokeep its easy policy stance in place until theeconomy was much stronger.

Dollar’s rally against yeneases in Asian trade

Euro gains on hopes for Greece help

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