Category: Business

Monitoring Desk

ISLAMABAD: Liquefied natural gas (LNG) imports have been called a game changer for Pakistan’s economy and plans are underway to make more long-term supply arrangements through government-to-government deals and tenders.

Pakistan LNG Limited (PLL), which deals with gas imports, is voicing hope that in future deals, prices will come down, leading to savings of billions of rupees. At present, Pakistan State Oil (PSO) is importing six LNG cargoes per month whereas PLL has also been allowed to bring six more cargoes based on demand from power producers or Sui Northern Gas Pipelines.

So far, PLL has struck mid- to long-term contracts for two LNG cargoes per month and is in the process of booking the remaining four cargoes.

A senior government official said efforts were underway to enter into deals at old or better prices, which may save $300-400 million annually or $3.5-4 billion over the next decade in oil imports as well as bring down average LNG prices in Pakistan.

With LNG replacing furnace oil in power plants, Pakistan is anticipating savings of around $2 billion annually through more efficient power generation at 62% efficiency, at a lower tariff of Rs7-8 per kilowatt-hour.

They said Pakistan’s fertilizer industry had also got a boost from LNG supplies as it had got an exportable surplus compared to imports worth billions of dollars earlier. Apart from this industry, most of the closed textile units and compressed natural gas (CNG) stations are also back online.

Now, according to officials, the Ministry of Energy is pushing ahead with a plan to merge PLL and Pakistan LNG Terminals Limited – with the former dealing with the supply chain and the latter taking care of matters pertaining to LNG terminals. A meeting in this regard will be held soon.

The analysis by two companies reflects, the merger will save Rs1-2 billion annually through more efficient human resources, financial, credit, and operational management.

 

Monitoring Desk

KARACHI: The US dollar surged to its all-time high of Rs125 in the open market on Wednesday after gaining by a further Rs0.5 from yesterday, as the Pakistani rupee continued its slide in an apparent sign of vulnerability in the country’s economy.

In the interbank market, however, the dollar has weakened by Rs0.33 and was being traded at Rs121.40, after climbing to Rs121.73 earlier, forex dealers said.

The rupee drop threatens to squeeze consumers ahead of the general election set for July 25. The dwindling foreign reserves and a widening current account deficit have triggered speculation about going back to the International Monetary Fund for loans for the second time since 2013 – a possibility that was vehemently rejected by interim finance minister Dr Shamshad Akhtar earlier this month.

In December and in March, the rupee was devalued, each time by about 5 percent, by the State Bank of Pakistan.

Since December, the rupee has depreciated by about 14 percent.

 

ZURICH (Reuters): Only around half of millionaires are in tune with their wealth managers and the very rich are increasingly interested in cryptocurrency investments, a survey released on Tuesday found.

High net worth individuals (HNWIs)- defined in the Capgemini poll as having at least $1 million to invest excluding their main homes and things such as art collections and cars — saw investment returns above 20 per cent in 2017 for the second year in a row.

That helped take their collective wealth above $70 trillion for the first time and put them on track to have amassed $100 trillion by 2025, the Capgemini World Wealth Report 2018 found.

But it did not boost their satisfaction with the people managing their fortunes.

Only around 56 per cent of millionaires say they are connected “very well” with their wealth managers, short of the 70 percent level the French business consulting group calls a passing grade.

Rich people’s enthusiasm for digital currencies swelled last year, with 29 per cent of millionaires expressing a high degree of interest in buying or holding cryptocurrencies and nearly 27 per cent somewhat interested, the survey found.

Still, only around a third said they had got information about cryptocurrencies from their wealth managers.

“Although regulatory uncertainty and firm caution have prevented cryptocurrencies from penetrating the wealth management industry, the strong demand for information on cryptocurrencies from younger HNWIs is likely to force wealth management firms to at least develop and offer a point of view during the months ahead,” it said.

 

LONDON (BBC News): Debenhams said full-year profits will be lower than expected – the third time it has issued a profit warning this year. The department store blamed “increased competitor discounting and weakness in key markets” for the profit shortfall.

It said annual pre-tax profits would come in between £35m and £40m, below previous estimates of £50.3m.

Debenhams’ latest profit warning comes despite a turnaround plan designed to cut costs and boost sales.

Chief executive Sergio Bucher pointed to “exceptionally difficult times in UK retail”. Shares in Debenhams fell as much as 16% in early trading before recovering slightly. Debenhams runs 182 stores in the UK, Republic of Ireland and in Denmark, where it operates under the Magasin du Nord name.

Retail rout

Debenhams’ latest warning adds to a chorus of recent woes on the UK High Street.

House of Fraser, Marks & Spencer, New Look and Mothercare have all announced store closures this year.

Competition from online retailers, higher import costs due to the weaker pound, a rise in business rates and squeezed household incomes have all combined to make times tough for High Street stores.

Debenhams said sales had fallen in May and June thanks to rivals’ discounting and weak consumer spending.

Like-for-like sales, which reflect sales at stores open for more than a year, fell by 1.7% in the 15 weeks to 16 June. Digital sales grew 16% over the same period. Mr Bucher who joined Debenhams in 2016, has launched a turnaround plan, putting more emphasis on food and beauty and improving the firm’s online platform.

However, in January the chain warned profits would be lower this year after a disappointing Christmas trading period. In April, the retailer warned that the cold weather in late February would eat further into profits.

Nicholas Hyett, analyst at Hargreaves Lansdown, said: “Half a decade of falling sales and heavy discounting has trashed margins and left the group struggling to make ends meet. Unfortunately it all feels like Debenhams is playing catch-up with an industry that’s left it behind.”

There was more bad news for the retail sector as shares sportswear retailer Footasylum nearly halved after it reported a slowdown in sales growth and said profits would be lower in the coming year.

In its first results since floating on the stock market in November, revenues rose 33% to £194.8m in the year to 24 February with underlying profits up 4% at £8.4m.

However, chief executive Clare Nesbitt said trading since the start of the new financial year had been affected by weak consumer confidence, meaning profits would show “more modest growth”.

Footasylum aims to more than double its 65 stores in the UK.

Stockbroker Peel Hunt said there were also longer-term concerns over Footasylum, as major brands such as Nike and Adidas focus on selling directly to consumers and limiting the number of retailers they use: “Footasylum may find that its access to the cool product files is restricted over time.”

 

 

NEW YORK (Reuters): US stocks slumped on Tuesday, with the Dow Jones Industrial Average erasing its gains for the year, as markets were rattled by a sharp escalation of the trade dispute between the US and China.

US President Donald Trump, in an unexpectedly swift and sharp move, threatened to impose a 10 percent tariff on $200 billion of Chinese goods and Beijing warned it would retaliate.

Trump said his move followed China’s decision to raise tariffs on $50 billion in US goods, which came after US announced similar tariffs on Chinese goods on Friday.

“From a negotiation perspective, it’s a powerful tool. From a market perspective, it leads to increased uncertainty. In the near-term, we would expect to see volatility in markets as they attempt to price in the net impact of tariffs,” said Michael Olivia, a financial planner with Westpac Wealth Partners.

ET, the Dow Jones Industrial Average was down 300.90 points, or 1.20 percent, at 24,686.57. The S&P 500 was down 20.32 points, or 0.73%, at 2,753.43 and the Nasdaq Composite was down 57.32 points, or 0.74%, at 7,689.70. The sell-off was broad-based, with 29 of the 30 Dow components in the red and eight of the 11 major S&P sectors lower. Volatility returned with a bang. CBOE Volatility Index, commonly known as Wall Street’s fear gauge as it measures expected near-term volatility in the S&P 500, hit a near three-week high of 14.68 points, before easing to 13.74.

Demand for safe havens saw yield on the 10-year benchmark US Treasury drop to its lowest in more than two weeks, while gold prices edged higher.

The small-cap Russell 2000 index was down 0.5 percent, a smaller drop than its large-cap peers, as its components are relatively more insulated to a global trade war.

“Everybody will have their eyes on the Russell 2000 because people begin to think small-cap US companies, that aren’t subject to the winds of international trade negotiations, is the right place to hide out,” said Michael Antonelli, managing director, institutional sales trading at Robert W. Baird in Milwaukee.

The S&P materials index declined 1.8 percent and the industrials index fell 1.5 percent. The tech and energy were down more than 1 percent.

Shares of Boeing, which has acted as a proxy for trade war tensions with China as it is the single largest US exporter to the country, fell 3 percent, weighing the most on the Dow. It was followed by construction equipment maker Caterpillar, which dropped 2.8 percent.

Chipmakers, which depend on China for a large portion of their revenue, also slipped, with Intel down 1.7 percent.

US-listed shares of Chinese companies tumbled, with e-commerce giant Alibaba down 2.3 percent and JD.com off 4 percent.

Declining issues outnumbered advancers for a 3.22-to-1 ratio on the NYSE and a 2.39-to-1 ratio on the Nasdaq.

The S&P index recorded two new 52-week highs and three new lows, while the Nasdaq recorded 28 new highs and 22 new lows.

 

 

LONDON (BBC News): Energy giant E.On has said its standard tariff prices will rise by an average of 4.8% for those customers who take both gas and electricity.

Customers will face an average annual price rise of £55 from 16 August.

“A number of costs have risen quite sharply and we’ve experienced a hike in the price we have to pay for the energy our customers need,” E.On said. In March, the company made changes to its bills which added £22 to its average standard variable tariff rate.

An E.On spokeswoman told the BBC: “Those changes led to the removal of discounts and a change to the standing charge for people who pay on demand by cash or cheque. “This is an increase in unit price, which makes us the fourth cheapest of the big six suppliers.”

For E.On’s electricity-only customers the standard variable rate will rise by 6.2%, an average of £36 a year, while gas-only customers will see a 3.3% increase, an average of £19. She added that the company had been hit by a 22% increase in wholesale costs since March.

The rest of the big six have all announced prices rises recently.

SSE bills rose an average 6.78% or £76 a year

British Gas bills went up by 5.5% or £60

Scottish Power’s increase was 5.5% or £63 on average

EDF raised electricity prices by 2.7% or £16

Npower’s 5.3% increase, an average of £64, came into effect at the weekend.

In a statement, E.On said it was its second unit price increase in more than four-and-a-half years, and during this period it had also cut prices on two occasions.

E.On chief executive Michael Lewis said: “We’ll continue proactively to tell customers about the different tariffs on offer and encourage them to move to those tariffs, as well as promoting the different services that can potentially help bring their bills down such as a smart meter, a more efficient boiler or better insulation.”

Victoria Arrington, from price comparison service Energyhelpline, said: “This new rise is a bitter and expensive pill to swallow. The cost of sticking to a big-name energy supplier is quickly outstripping the feeling of safety it gives customers.”

 

 

F.P. Report

ISLAMABAD: Federation of Pakistan Chambers of Commerce and Industry (FPCCI) has welcomed the induction of five prominent businessmen as ministers in the caretaker setup terming it a positive move.

In a joint statement issued here on Tuesday, the President of FPCCI Ghazanfar Bilour hoped that the newly-appointed ministers will serve with full dedication.

Those who have become ministers include Sardar Tanveer Ilyas, Faisal Mushtaq, Fazal Elahi, Naveed Jan Baloch, and Mian Anjum Nisar who are respected businessmen that enjoy the confidence of the business community.

The decision will infuse confidence in the business community reeling under problems and bring it closer to the government which is good for the economy, said President of the FPCCI Ghazanfar Bilour.

Businessmen can make great politicians and a majority of them have proved that they can make a difference as most of them are motivated by a genuine will to do good, they said.

ThE FPCCI Chief said that those who want to give, and not take, means that they are likely to be the better politicians. They are not careerist and not desperate to make money by stealing from the public purse.

Many businessmen who become politicians can bring fresh energy into the system as they represent an ecosystem that is driven by the urgency to produce results, he added.

The president of the Apex chamber said that businessmen know how to harness human capability and their businesses thrive when leaders have an eye for talent and can create conditions that are conducive for creativity and productivity.

Pakistan is a great country with a powerful combination of all the ingredient to become an economic power and all it needs is someone to harness its energy and guide it to greatness.

 

 

 

Monitoring Desk

NEW YORK: A range of Pakistani products, both food and merchandise, were on display “and for sale” on Monday at the annual United Nations International Bazaar in New York.

Despite warm temperatures, a large number of people visited the bazaar which was organised by the UN Women’s Guild in collaboration with permanent missions accredited to the UN. The mega event featured food from around the world as well as fine arts and handicrafts.

A new addition this year was a stall titled “One Belt, One Road” which was set up by the Chinese mission.

Pakistan had two stalls — one for food and the other for variety of items, including textiles, apparel, salt lamps and handicraft.

The Pakistani stalls attracted large crowds and the food stall was such a hit that the items, including biryani, seek kebabs and samosas, were sold out more than an hour before closing time.

The wife of UN secretary-general, Catarina Vaz Pinto, who is a patron of the bazaar visited the Pakistani merchandise stall and was greeted by Pakistan’s ambassador to the UN Maleeha Lodhi.

Vaz Pinto praised the quality and sophistication of the Pakistani products and purchased a digital print shawl as well as a salt lamp.

Maleeha Lodhi tweeted that Madame Catarina Vaz Pinto, wife of the UN Secretary General visited our stall and also picked up a salt tea light product from Pakistan

“These occasions are an excellent opportunity for public diplomacy and to showcase our products as well introduce our cuisine to an international audience,” Ambassador Lodhi said.

“The UN annual bazaar is a truly international event and we were delighted to be part of it and ensure that Pakistan’s presence was felt in such a uniquely cosmopolitan setting,” she added.

The money raised at the bazaar will be donated to victims of conflicts across the world and to UNWG-administered projects to help children and women in different countries.

 

 

Monitoring Desk

BEIJING: Asian stocks tumbled Tuesday after U.S. President Donald Trump escalated a dispute with Beijing over technology policy by threatening a tariff hike on additional Chinese goods.

KEEPING SCORE: The Shanghai Composite Index fell 2.3 percent to 2,953.54 points and Hong Kong’s Hang Seng lost 2 percent to 29,685.28. Tokyo’s Nikkei 225 retreated 0.9 percent to 22,482.89 and Seoul’s Kospi lost 0.8 percent to 2,356.57. Markets in Taiwan, New Zealand and Southeast Asia also declined. Sydney’s S&P-ASX 200 gained 0.3 percent to 6,123.00.

TRADE TENSIONS: Trump directed the U.S. Trade Representative to prepare new tariffs on $200 billion in Chinese imports, stepping up a dispute companies and investors worry could drag down global trade and economic growth. Trump accused Beijing of being unwilling to resolve the dispute over complaints it steals or pressures foreign companies to hand over technology. China’s Commerce Ministry criticized the White House action as blackmail and said Beijing was ready to retaliate.

WALL STREET: U.S. stocks finished mixed in trading that ended before Trump issued his latest tariff threat. Household goods companies took some of the worst losses as the Standard & Poor’s 500 index fell for the third time in four days. The S&P 500 fell 0.2 percent to 2,773.75. The Dow Jones industrial average dropped 0.4 percent to 24,987.47. The Nasdaq composite edged up 0.65 points to 7,747.03. The Russell 2000 index of small-cap stocks rose 0.5 percent to a record 1,692.46. Many investors feel smaller and more U.S.-focused companies are less vulnerable in the event of a major trade dispute.