Banks shift to invest in T-bills

Banks shift to invest in T-bills

In the auction yesterday, SBP was able to sell treasury bills worth Rs70.543 billion while the target was set for Rs70 billion which means the SBP succeeded in attracting banks’ investment. The Banks, however, were still investing for short-term paper of three-month tenure. They bought three-month t-bills for Rs66.337 billion while the rest was invested for six months. No bid was offered for 12 months. Banks are investing in lower maturity instruments so that they can reinvest in case of further policy rate hike by the Central Bank. The shift in banks investment to T-bills which are offering attractive cut-off yield of 13.85% p/a (3 months) will help the government to meet its budgetary requirement from the banking system rather than the inflationary borrowing which it makes from the Central Bank. However shift in banking strategy to invest in government securities or other security papers will result in lower private sector credit flow.

Oil producers pull lever for huge output cut

Oil producers pull lever for huge output cut


OPEC, supplier of more than 40% of the world’s oil, agreed to cut production quotas by a larger- than-expected 9% from current output quota of 27.3 million barrels a day to revive prices as a global recession reduces demand for crude. Opec and non-Opec oil exporters took action on Wednesday that could remove up to 2.6 million barrels of oil from the market in a bold bid to boost prices and producers' incomes. Crude oil fell as low as US$39.88 a barrel in New York , the lowest since July 2004, on skepticism OPEC will adhere to its new agreement and after a government report showed rising U.S. crude stockpiles. Russia , the biggest oil exporter outside of OPEC, has also pledged to curb exports too, as it did a decade ago when oil sank toward $10 a barrel. Despite the cut in oil production the crude oil prices could not be revived thus sending a signal of economic slow down in major oil importing countries.

Pakistan to be dropped from MSCI emerging markets index this month:

Pakistan to be dropped from MSCI emerging markets index this month:


According to the MSCI this is due to the floor mechanism which had resulted in total closure of Pakistani equity market. The MSCI international equity indices are constructed and managed with an objective of being fully liquid from the perspective of international institutional investors. However the statement issued says that if the floor mechanism is removed and in due course the index resumes its normal trading pattern then it may be allowed to be traded again. Removal from MSCI in addition to the downward rating by moody’s and S&P is another blow to the confidence of the already worried investors.

Stock exchanges to remove floor on 15th

Stock exchanges to remove floor on 15th
The longest ever closure of the stock market in the world is finally set to open on Monday, the 15th of December 2008 after 100 days of freezing the KSE-100 index at 9,144 point level. The move came after the failure of the apex regulator to offer any sort of support fund for providing a soft landing to the market. The immediate impact of the removing of floor will be significant selling pressures in the some of the key stocks bringing significant reduction in their prices. The key concern here is however the investment of around Rs. 11 billion in the ‘badla’ system but those brokers which were vociferous campaigners for the ‘floor’ to be in place have decided to swallow the bitter pill as it has bring more damage to the market. The imposition of the floor has led to the removal of MSCI Pakistan Index from the MSCI Barra.

Ismail Industries acquires 20 percent BoK shares:

Ismail Industries acquires 20 percent BoK shares:

Ismail industries now holds 20% of the stake on Bank of Kyber (BoK) by investing Rs1 billion. Through this acquisition the company has diversified into
the financial market

10 percent cut in taxes for car makers suggested:

10 percent cut in taxes for car makers suggested:




The Ministry of Industries and Production has recommended 10% r
eduction in taxes for local car manufacturers, to be considered by
the ECC. Automobile production has come to a halt with local car
sales plunging by 51% at 19,066 units in the Q1’09. Among major
players, massive drop was witnessed in INDU's sales units with 64%
decline at 4,659 units that is followed by PSMC which registered
48% decline in sales volume over the same period of FY’08.
This could provide support to the ailing auto sector due to weakening
demand. There are, however, reports that FBR is unwilling to give
any concession to the auto sector with the argument that if the
government accommodates one sector all industries would also demand
the similar concessions in which case the sector may end up not
receiving any relief.

Cement export via Gwadar:

Cement export via Gwadar:

manufacturers turn down government proposal:


The cement manufacturers have turned down the government's proposal to
export cement through Gwadar, because they termed it a costly and
unsustainable activity due to high cost of transportation.
APCMA also confirmed that cement manufacturers had rejected the
proposal due to unsupportable infrastructure at Gwadar port and rise
in cost. The exporters said that they are already exporting cement at
lowest margin due to high competition in the world market and
shrinking construction industry in the Middle East and UAE. Cement
export through Gwadar would put additional burden of some US$6-8 per
ton cement, which is unsuitable for the industry. However, he added
that if the government agreed to pay some subsidy on cement export
and provided facilities at Gwadar, then APCMA would consider the
proposal.