Stocks close at 6-1/2 month high

KARACHI: A rally in Pakistani banking shares helped lift the bourse to end on a six-and-a-half month high on Tuesday as foreign investors snapped up local stocks on the back of expected strong corporate results, dealers said.

The Karachi Stock Exchange (KSE) benchmark 100-share index gained more than one per cent for a second straight day, closing up 1.22 per cent or 147.70 points, at 12,284.62 points, its highest close since July 26, 2011.

Volume fell to 162.11 million shares, compared with 196.3 million traded on Monday.

“The bullish trend continued on renewed foreign investment led by banking stocks in the earnings announcement session at KSE,” said Ahsan Mehanti, director at Arif Habib Corp Ltd.

Foreign investors bought shares worth a net $3.47 million on Monday. Data for Tuesday will be released later in the day.

Winners on the KSE included Bank Alfalah, which closed 2 per cent higher at 12.75 rupees, and National Bank of Pakistan, which rose 2.85 per cent to 46.58 rupees.

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Islamabad committed to expand economic relations with Tehran

ISLAMABAD: Pakistan is committed to develop relations with Iran in various fields and in particular in field of economy.

This was stated by Advisor to the Prime Minister on finance Abdul Hafeez Shaikh in an interview with Islamic Republic NewsAgency here Monday.

The official said that there is enormous potential to enhance trade ties between Iran and Pakistan.

Abdul Hafeez Sheikh said that Iran and Pakistan are united by the bond of history, faith and culture. He said that officials of Iran and Pakistan had spent a productive day to bring the bilateral ties closer.

The advisor urged the businessmen of the two countries to work together to enhance cooperation in trade sector.

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Urea prices fall

ISLAMABAD: Urea prices have decreased by Rs400 per 50-kg bag due to timely import and distribution of the product, an official of ministry of industries told APP on Monday.

He said the prices eased to Rs1,800 from Rs2,200 in the local market. The prices are likely to ease further after arrival of 500,000 tons of urea in coming days, he added.

He informed that as many as 700,000 tons of urea fertiliser had already been offloaded and distributed across the country to meet requirements of farmers in Rabi season.

Timely import and check on hoarding and black marketing will help maintain sufficient quantity of the fertilisers for Kharif sowing, he remarked.

He said that some local urea manufacturing units were not operating at their optimum level due to gas load management programme which resulted in demand-supply gap and price hike of the commodity in the local market. The imported urea was costing the country about Rs2,600 per 50 kg bag and the government was providing Rs1,300 subsidy per bag to provide relief to the growers to increase crop output, he added.—APP

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Government approves sugar exports for first time since 2009

ISLAMABAD/DUBAI: Pakistan has approved the export of sugar for the first time in nearly three years, spurred by an expected surplus of more than 1 million tonnes, but the move is unlikely to affect the global market, which has priced in rising output in other countries.

Pakistan was forced to import about 1.2 million tonnes of sugar in 2010 after production fell to 3.1 million tonnes from the 2009/10 crop year, when many farmers switched to more profitable crops.

“The government has approved the export of 100,000 tonnes of sugar, but the modalities of export have not been worked out yet,” Khizer Hayat, a spokesman of the state-run Trading Corporation of Pakistan, told Reuters, referring to white sugar.

“We are waiting to see if it will be done through private channels or by government corporations.”

Last year, Pakistani millers sought permission from the government to export up to 500,000 tonnes of refined sugar because of expectations of a bumper crop, which could exceed 5 million tonnes.

“We expect the sugar surplus to be 1.5 million tonnes, given the current domestic consumption,” a Ministry of Commerce official, who wished to remained anonymous, told Reuters.

Trade sources, speaking to Reuters on the sidelines of the Kingsman sugar conference in Dubai, said Pakistan may decide to allow a further 300,000 to 500,000 tonnes of exports later, while most of the 100,000 tonnes of whites would be shipped to Afghanistan.

“It has come as a surprise that Pakistan has so much sugar,” Jonathan Kingsman, Managing Director of consultancy Kingsman SA, told Reuters.

“They (Pakistanis) will be willing to chase sugar prices lower to be able to place that sugar into the export market. If their production is as good as it seems to be, they could export 500,000 tonnes.”

Trade sources at the Kingsman conference estimated that Pakistan’s 2011/12 sugar production was between 4.5 million and 5.1 million tonnes, while annual domestic sugar consumption was seen at 4.2 million tonnes.

But analysts said global sugar prices were expected to be steady at current levels as the market factored in more supply from India, Brazil and Thailand.

India, the world’s number 2 sugar producer after Brazil, has a sugar surplus of 3 million to 4 million tonnes available for export in 2011/12.

India, which had allowed 1.5 million tonnes of exports under a scheme called Open General Licence (OGL) in the 2010/11 crop year ending September, recently issued a formal order for unrestricted exports of 1 million tonnes.

“I think short-term, basically I am looking at sugar to be trading in a range. I mean, for the short term, prices could be pressured because of the (global) surplus, but longer-term, I think, prices should be quite stable,” said Lynette Tan, an analyst with Phillip Futures in Singapore.

“Sugar is a very important commodity. You can see some of the governments probably even going into stockpiling programmes.”

March raw sugar futures on ICE rose 0.46 cent to end at 23.94 cents per lb on Friday after Labor Department data showed the US economy created jobs at the fastest pace in nine months in January, far outstripping analysts’ expectations.

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Stocks rise as U.S. jobs gain outweighs fears over Greece

Asian shares rose on Monday as surprisingly robust U.S. jobs data bolstered investor risk appetite, overshadowing worries about a lack of progress in Greek debt restructuring talks that are vital to containing the euro zone debt crisis.

MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.6 percent to its highest in more than five months, after the index recorded a fifth successive weekly gain last week.

Japan’s Nikkei average opened up 1.2 percent.

Major stock indexes closed on Friday at multi-month highs, as sentiment was bolstered by U.S. job creation which far exceeded expectations last month and a surprise acceleration in the U.S. services sector to its highest in nearly a year.

In the euro zone, the private sector economy expanded in January for the first time since August, raising hopes the region could avoid a recession.

But Greece remained a drag as a number of major conditions demanded by the “Troika”, representing Greece’s European Union, European Central Bank and IMF lenders, were still outstanding.

Athens must tell the EU by Monday whether they accept the stern terms of a new bailout deal. Without the deal, Athens would head for a disorderly default.

“It’s a mixed bag really. Until Greece is resolved, it’s hard to get too unambiguously bullish on the back of better U.S. news and liquidity from Europe,” said Andrew Pease, Sydney-based chief investment strategist at Russell Investments Asia Pacific.

“It’s hard to see any solution to Greece that doesn’t involve some form of default,” he said, adding that while the uncertainty over the Greek issue remains a source of volatility, an event risk would be “a known unknown” and not a surprise.

The euro was down 0.2 percent at $1.3127.

Latest figures dated Jan. 31 showed investors reduced their short positions in the euro last week, after five weeks of selling, but the market is still significantly short of the single currency.

TECHNICALS EYED

EPFR Global data underscored investor appetite for higher returns, with flows into Emerging Market Equity Funds hitting a 43-week high in the week ended Feb. 1. EPFR Global-tracked Bond Funds saw inflows of a net $7.47 billion during the same period for the biggest weekly total since it started tracking them about 10 years ago.

“A strong U.S. employment report fueled the risk rally further, and some investors now wonder whether it is overextended. We think it is advanced, which means selectivity is warranted, but not over,” Barclays Capital said in a note.

“We see value in EM assets, including currencies. EM carry trades are supported by global central banks, growth differentials, the fading risk of a hard landing in China, clean balance sheets and positioning,” it said.

After the rally late last week, many markets were nearing key resistance, which could signal a pullback.

The CBOE Volatility index VIX, which measures expected volatility in the S&P 500 over the next 30 days, closed at a seven-month low of 17.10 on Friday, reflecting improved market sentiment and receding fears of sharp market falls.

A move to the support zone around 14-15 suggested increased volatility in coming sessions.

Spot gold inched up 0.3 percent to $1,730 an ounce after falling 1 percent on Friday when the jobs data dashed hopes for more stimulus from the Federal Reserve, which had been priced into bullion’s recent rally.

Asian credit markets firmed, with spreads on the iTraxx Asia ex-Japan investment grade index tightening sharply by about 10 basis points early on Monday.

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LPG becomes most expensive fuel in country

ISLAMABAD: As the price of Liquefied Petroleum Gas (LPG) is increased by Rs15 per kilogram to reach a new high ever, the industry players have blamed the government for imposing more than Rs11 per kg as petroleum levy on LPG.

The new highest-ever price of Rs109,702 per ton for the locally produced LPG has been notified by the producers including the oil refineries, whereas the LPG distributors have announced to observe strike on February 15 against the increase.

The notification issued by the state-owned LPG producers said the new LPG rates for February will be Rs83,000 per ton and the petroleum levy of Rs11,486 per ton will be added to this amount, whereas the other additions are excise duty of Rs85 per ton and 16 per cent GST.

“The price increase is from Rs93,856 in January to Rs109, 702 per ton for February”, said Bilal Jabbar, spokesman for the LPG Association of Pakistan. “Government is the single largest producer of the LPG in the country and is therefore the direct beneficiary of the increase in prices”, he said.

The LPG prices have also been impacted due to the imposition of petroleum levy as a result of which local prices have far exceeded its international price.

“Pakistan is the only country in the world where a tax has been imposed on local production to facilitate imports”, Jabbar said, adding “The whole exercise has been done to encourage favorites to manipulate imports”.

He said the government policies were causing serious financial loss to the consumers and the LPG industry will also bear serious implications.

On the other hand, the main body of LPG distributors have criticised the government policies which have resulted in LPG prices reaching a new high.

“The local LPG producers have shifted the burden of petroleum levy to 60 million consumers, giving an increase of Rs15,850 per ton to reach a record level of Rs109,700 per ton”, Chairman of FPCCI Standing Committee on LPG Abdul Hadi Khan said. “It was announced by the government that petroleum levy of Rs11,400 per ton was meant for producers and not consumers but now they have transferred it to the consumers”.

He said this has enhanced the price of the 11.8 kg domestic cylinder by Rs188 and the price of the 45.4 kg commercial cylinder has been jacked up by Rs726.

Whereas, chairman of his own faction of the LPG association, Irfan Khokhar has announced a strike on February 15 against passing of the petroleum levy to the consumers which has resulted record high of LPG in country.

“The cost of local LPG is between Rs13,000 and Rs14,000 per ton while it is being sold at Rs109,700 per ton”, Khokhar said adding that there has been a Rs350 billion scam in the LPG affairs during past five years. He urged the government to devise a price control mechanism to bring down the LPG price in the country.

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Indian consortium may bid for Afghan mining blocks: report

MUMBAI: State-run Steel Authority of India Ltd and government-controlled Hindustan Copper Ltd are in talks with India’s Aditya Birla Group and Jindal Steel and Power Ltd to form a consortium to bid for gold and copper deposits in Afghanistan, the Mint newspaper reported.

Afghanistan has invited expressions of interest by March 9 for gold and copper deposits in four provinces.

The consortium partners will be finalised soon, the paper quoted Hindustan Copper Chairman Shakeel Ahmed as saying.

Jindal Steel and Power is also interested in investing in other projects in Afghanistan, Chief Executive V. R. Sharma told the newspaper.

SAIL and Jindal Steel and Power were part of a consortium that won three iron ore blocks in Afghanistan’s Hajigak province in November.

India and China, two of the world’s fastest growing major economies, are vying with each other for access to Afghanistan’s oil and mineral reserves.

The companies could not be reached immediately for comment.

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