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Trade deficit widens by 55 percent in July 2017

F.P. Report

KARACHI: Trade deficit in the first month of the new fiscal year widened by 55 percent whereas exports registered an increase of 10.58 percent.

According to the figures released by the Pakistan Bureau of Statistics the July trade deficit widened by 55 percent to 3.204 billion dollars as against 2 billion dollars of the same period of 2016.

Exports in July suffered a fall of 14.71 percent to 1.631 billion dollars compared with June 2017 amounting to 1.912 billion dollars of last year. However, when compared to July 2016, exports recorded a growth of 10.58 percent from the level of 1.475 billion dollars.

The pace of imports showed an upward trajectory and recorded a growth 36.74 percent to 4.835 billion dollars from 3.536 billion of July 2016 level, the data said.

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Pakistan Stock Exchange loses 1500 points this week

Web Desk

KARACHI:  The dark shadows of political fallout rule the Pakistan Stock Exchange during the outgoing week where the index lost more than 1500 points where volume also dipped sharply because of lack interest of seasoned investors and financial institutions.

The week started off on a bearish note with index declining by 3.4 percent on week on week basis to close at 45,288pts. Anxiety over domestic politics heightened as ousted Prime Minister Nawaz Sharif kicked off a populist march while another prominent leader announced to hold sit in and rallies. The activity in local bourse remained dull amidst political noise as evident from a decrease of 46 percent on week on week basis.

Selling witnessed in the oil and exploration stocks as U.S crude futures for September delivery were down 0.76 percent at $48.20 a barrel, the lowest since July 26. Political situation is expected to keep market under pressure for as long as it doesn’t settle, which is why high net worth individuals, some of the mutual funds and banks adopted a cautious approach.

An analyst from BMAA capital said “we do not expect market to pick up its pace in the coming week and anticipate investors to remain cautious as foreign investors have been net sellers throughout the week”.

He added some local players have been net buyers but their quantum has not been able to pull the market in the green zone.

“We believe development on political front and earnings announcement will be the key trigger for market direction, where any positive surprise in earnings announcement will likely cause bulls to provide the much needed support to the index” he elaborated.

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Political tensions depress world stocks

The world’s stock markets slid again Thursday with investors seeking safe havens as President Donald Trump doubled down on his warnings to North Korea over its nuclear program.

Trump, whose threat this week to bring “fire and fury” was dismissed by North Korea, said Thursday his statement might not have been “tough enough.”

European equities indexes were a sea of red at the close, while Wall Street indices suffered their biggest losses in near three months, deepening their fall after Trump’s mid-afternoon remarks further stoked fears of a miscalculation that could lead to catastrophic consequences on the Korean peninsula and beyond.

“Risk aversion is once again the name of the game… as geopolitical tensions mount and investors head for cover in the traditional safe havens,” said Oanda analyst Craig Erlam.

But for now it seems that “traders still believe the prospect of military action is very small but precautions are still being taken nonetheless, as this still has the potential to escalate very quickly and unexpectedly,” he said.

London’s benchmark FTSE 100 index was down 1.4 percent at the closing bell, also driven lower by losses in the commodity sector.

In the eurozone, the Paris CAC 40 lost 0.6 percent and Frankfurt’s DAX 30 shed some 1.2 percent.

All three US indices fell sharply, with the broad-based S&P 500 tumbling 1.5 percent.

But safe havens benefited from the move away from stocks with gold rising by just under one percent after surging 1.3 percent Wednesday.

Potentially catastrophic

The European and American dips followed similar trading in Asia, where equities also were back in the red, snuffing out a nascent recovery.

Markets had taken heart earlier in the day after US Secretary of State Rex Tillerson sought to play down the escalating war of words between Washington and Pyongyang.

But losses soon resumed, with Tokyo edging down as the Nikkei again came under pressure from the strength of the safe-haven yen, which hit eight-week highs Wednesday against the dollar.

Hong Kong shed more than one percent and Shanghai also closed lower, while Seoul shares continued their sell-off after slumping Wednesday, with the won again softening.

On commodities markets, oil advanced initially after figures from the American Petroleum Institute showed a sharp decrease in stockpiles.

But then oil prices succumbed to the overall selling pressure for risky assets, aided by an OPEC report showing crude production by cartel members increased slightly in July, including Saudi Arabia, which had championed efforts by the organization and its allies to extend an output freeze.

In earnings news, retailers were under pressure after Macy’s and Kohl’s each reported lower second-quarter sales, reviving worries about consumer discretionary stocks. Macy’s sank 10.3 percent and Kohl’s lost 5.8 percent.

Key figures around 2045 GMT

New York – Dow: DOWN 0.9 percent at 21,844.01 (close)

New York – S&P 500: DOWN 1.5 percent at 2,438.21 (close)

New York – Nasdaq: DOWN 2.1 percent at 6,216.87 (close)

London – FTSE 100: DOWN 1.4 percent at 7,389.94 points (close)

Frankfurt – DAX 30: DOWN 1.2 percent at 12,014.30 (close)

Paris – CAC 40: DOWN 0.6 percent at 5,115.23 (close)

EURO STOXX 50: DOWN 1.0 percent at 3,433.54

Tokyo – Nikkei 225: DOWN 0.1 percent at 19,729.74 (close)

Hong Kong – Hang Seng: DOWN 1.1 percent at 27,444.0 (close)

Shanghai – Composite: DOWN 0.4 percent at 3,261.75 (close)

Euro/dollar: UP at $1.1777 from $1.1758

Pound/dollar: DOWN at $1.2979 from $1.3003

Dollar/yen: DOWN at 109.21 yen from 110.02 yen

Oil – West Texas Intermediate: DOWN 97 cents at $48.59 per barrel

Oil – Brent North Sea: DOWN 80 cents at $51.90 per barrel

Courtesy: REUTERS

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Overseas Pakistanis remit US $1.54 billion in the first month of FY18

F.P. Report

KARACHI:  Overseas Pakistani workers remitted US $ 1541.67 million in the first month (July) of FY18 as compared with US $ 1328.18 million received during the same period in the preceding year.

During July 2017, the inflow of workers’ remittances amounted to US $ 1541.67 million, which is 16.2% less than June 2017 and 16% more than July 2016. The country wise details for the month of July 2017 show that inflows from Saudi Arabia, UAE, USA, UK, GCC countries (including Bahrain, Kuwait, Qatar and Oman) and EU countries amounted to US $ 408.84 million, US $ 334.63 million, US $ 193.7 million, US $ 199.18 million, US $ 192.02 million and US $ 52.08 million respectively compared with the inflow of US $ 378.69 million, US $ 293.72 million, US $ 169.68 million, US $ 143.61 million, US $ 169.61 million and US $ 35.74 million respectively in July 2016.

Remittances received from Norway, Switzerland, Australia, Canada, Japan and other countries during July 2017 amounted to US $161.22 million together as against US $137.13 million received in July 2016.

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US stocks tumble on North Korea worries

NEW YORK (AFP): Wall Street stocks posted their biggest declines in nearly three months late Thursday as US President Donald Trump doubled down on his warnings to North Korea over its nuclear program.

Trump, whose threat this week to bring “fire and fury” was dismissed by North Korea, said Thursday that statement might not have been “tough enough.”

US stocks deepened their losses following the latest Trump comments, and the S&P 500 volatility index, known unofficially as the “fear index”, rose decisively.

The Dow Jones Industrial Average fell 0.9 percent to end at 21,844.01, the only close below 22,000 since breaking through that level for the first time August 2.

The broad-based S&P 500 was hit even harder, dropping 1.5 percent to close at 2,438.22, while the tech-rich Nasdaq Composite Index lost 2.2 percent 6,216.87.

Despite the drop, analysts said the market seemed to be a bit sceptical that the North Korea situation would grow into a major crisis, noting that the losses were still not that deep.

“If the market truly believed the North Korea reaction was imminent, I think it would be down a lot more than it is,” said Alan Skrainka, chief investment officer at Cornerstone Wealth Management.

High-flying technology names suffered outsized losses on the day, with Apple falling 3.2 percent, Amazon 2.6 percent, and Facebook 2.2 percent.

Biotech companies Celgene and Amgen lost 3.8 percent and 2.6 percent, respectively.

Retailers were all under pressure after Macy’s and Kohl’s each reported lower second-quarter sales, reviving worries about consumer discretionary stocks.

Macy’s sank 10.3 percent and Kohl’s lost 5.8 percent.


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PSO pondering Rs40b investment to expand market share

Web Desk

KARACHI: According to Taurus Securities, Pakistan State Oil (PSO) the state-owned conglomerate is considering investing up to Rs40b for revamping its storage capacity, expand its retail outlets and bolster its downstream capabilities.

PSO’s decision for making such a big investment comes at a time when its market share declined from 55.9pc in June 2016 to 54.8pc by June 30th, 2017.

An analyst at Taurus Securities, Waqas Ahmed commented as the demand of petroleum products rises, PSO intends to invest $500m in Pakistan Refinery Limited (PRL) and double its capacity over the course of next 3-4 years.

Out of the proposed Rs40b investment planned, Rs25 to Rs30b will be equity financed, said Ahmed.

On Monday, PSO had reported its results for the financial year 2016-17, registering a 77pc increase in net profits which reached Rs18.22b. Gross profits registered a growth of 39.44pc YoY to reach Rs37.198b from Rs22.525b in SPLY. Gross profit margin for FY 2017 was reported at 42.3pc compared to 33.2pc last year.

Finance cost also decreased by 25pc to Rs1.6bn, while operating expenses stayed in check, growing by 6pc YoY.

PSO’s sales of furnace oil was reported to have risen by 11pc in last FY, lubes increasing 28pc, jet fuel by 18pc and motorline gas by 9pc.


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FPCCI urges FBR to mirror its property valuation rates with open market prices

Web Desk

KARACHI: Federation of Pakistan Chambers of Commerce and Industry (FPCCI) on Wednesday requested the government that property valuation rates should match market values, which will ensure in checking tax evasion worth of Rs7t in the real estate sector.

Head of FPCCI Standing Committee on FBR affairs, Shakeel Dhingrah said the current property valuation rates weren’t a reflection of open-market rates.

According to Dhingrah, even if the Federal Board of Revenue (FBR) raises its valuation by a 100pc the real valuation would be less even then, he said.

As per estimates, almost Rs8t is said to have been invested in the real-estate sector, which accounts for almost ¼ of the country’s Rs33.5t GDP.

In June, it had been reported FBR had been successful in collecting Rs 2b in taxes on property transactions under an amnesty scheme introduced for real estate sector last December. This amnesty scheme was said to be an opportunity for individuals to convert their black money into white.

The Income Tax (Fourth Amendment) Act, 2016 was enacted last year on the 2nd of December, which provides people reprieve from their source of funds being questioned through the aforementioned act.

Dhingrah urged FBR to work on measures for industrial growth instead of making fruitless investments in the real-estate sector. At the moment, three valuation tables exist for immovable property in the country which are namely provincial deputy collector (DC) rate, FBR tables and open market rates.

He added that DC and FBR property valuation rates should be equal to open market prices and recommended the FBR to look into property advertisements before final evaluation of the property valuation prices it intends to fix.


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PM directs power and finance ministry to formulate strategy for reducing circular debt

F.P. Report

ISLAMABAD: The relevant stakeholders in the power industry on Wednesday were directed by PM Shahid Khaqan Abbasi to investigation the reasons for the distribution and technical losses that were affecting the power sector.

In a meeting chaired by the PM, which was also attended by the Finance Minister Ishaq Dar and Petroleum Minister Jam Kamal Khan, he asked the officials to formulate a strategy for reducing the circular debt in the energy supply chain which was crippling the power sector.

Both the power and finance divisions were instructed to work in tandem on improving efficiencies affecting the power sector and devise out of the box strategy to fix this issue, said the PM.

Abbasi added that conversion of agricultural tube-wells to solar energy was a necessity as it would help in reducing the burden of subsidy and needs to be implemented on priority in Balochistan province. He said that it was the government’s prerogative to ensure energy security and supply clean and affordable power to consumers.

As reported on Monday, circular debt in the power sector had crossed the Rs800b mark according to Pakistan Electric Power Company (PEPCO).

It had been shared in a recent meeting of the Economic Coordination Committee (ECC), that recoveries had improved from 88-89pc in 2014 to 93pc for 2015 and 2016. Line-losses also went down from 19pc in 2014 to 17.8pc by December 2016.

Water and Power Secretary, Yousaf Naseem Khokhar also had commented that due to fall in line-losses and improvement in recovery had helped the power sector to generate a positive inflow of Rs116b in last two years.

Lower global oil prices contributed to the restriction of the circular debt within levels of Rs320-330b from December 2014-June 2016, the ECC was told. Power generation companies were able to generate a profit of Rs5.77b during 2015-16 from total losses of Rs7.78b in 2013-14

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K-Electric gets approval for setting up a 900MW R-LNG power plant at Bin Qasim

Web Desk

KARACHI: In a notification sent to the bourse on Thursday, K-Electric (KEL) announced that in a board meeting held on August 9th, its Board of Directors had given the approval for development of 900MW (450MW x 2) Regasified Liquefied Natural Gas based Combined Cycle power plant at Bin Qasim Power Station Complex (BQPS-III).

The notification from KEL said this power project stays subject to completion of all statutory and regulatory requirements. The BOD of the company also shared their concern that a favorable result of their review petition lying pending in regard to Multi-Year Tariff determination with National Electric Power Regulatory Authority (NEPRA) was key to this mega-projects financing and development.

On Wednesday, K-Electric had reported an increase in profits of 15.53pc for financial year 2016. It also recorded an increase in sales of 10.93pc to reach Rs166.47b in comparison to Rs148.514b in SPLY.

At the time of filing this report, K-Electrics shares were trading at Rs7.09, up 0.57pc from its close on Wednesday. And KSE-100 index was trading at 45,906.89 points, down by 91.92 points from its close on Wednesday.

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Google’s Belgian unit in tax probe: report

Google’s Belgian unit faces a tax probe, a report said Wednesday, after the US internet giant had to cough up hundreds of millions of euros in back taxes in Britain and Italy.

Many US and other multinational companies channel their European profits through low-tax jurisdictions such as Ireland to avoid massive bills running potentially into the billions.

Le Soir daily said that in its latest annual report, Google Belgium had informed shareholders that the authorities began an investigation last year into the company’s 2014 and 2015 accounts.

“Google Belgium is negotiating with the Belgian tax authorities so as to reach an accord,” the annual report reads.

The Belgian finance ministry said it could not comment on the matter as all tax matters were private, and gave no indication if the probe was routine or more serious.

For its part, Google Belgium said: “We pay all of the taxes due and comply with the tax laws in every country we operate in around the world.”

“We remain committed to Belgium and helping grow the online ecosystem.”

A source close to the matter said the two sides were talking about a regular audit but nothing more.

Google Belgium said in its annual report it had sales of 32 million euros ($38 million) last year, making a profit of 1.92 million euros and paying tax of 740,000 euros.

Alphabet, Google’s parent company, reported 2016 sales of nearly $90 billion.

In May, Google agreed to pay 306 million euros to the Italian authorities to settle a probe into how it booked profits generated in Italy through Ireland, its European headquarters.

In contrast however, a French court ruled in July that Google did not have to pay 1.12 billion euros in back taxes because its Irish subsidiary was not tax liable in France.

Google, along with peers Apple, Facebook and Amazon have all come under pressure in Europe Union over their business and tax practices.

The European Union hit Google with a record 2.4 billion euro fine in June for abusing its dominant position in the search engine business while Apple was ordered last year to repay 13 billion euros in back taxes in Ireland.

Courtesy: AFP