STOCK MARKET NEWS

Pakistan Stock Market in the News   Economy and Oil   The WB mission, which visited Pakistan last month, had sought commitment from the government not to accumulate the PDC on petroleum products even if the oil prices in the global market shot up in future; thus passing the full impact on the consumers. The agreement has been inked between the two parties. Due to the subsidies provided by the government on POL and energy products has resulted in inter circular debt which has gone above Rs300 billion by the end of Nov'08. By eliminating the PDCs to the consumers the cash flow problems that the OMCs are experiencing will be removed completely in future.   Trade deficit jumps to $10.727 billion   The country's trade deficit has jumped to US$10.72 billion in 7mths'09, with 3.5% increase against US$10.35 billion of the corresponding period of last year. Exports registered growth of 8.02%, while imports grew by 5.77%. 83.5% of exports were from cement, chemicals and rice, whereas 95% of imports were on account of petroleum, fertilizer and wheat. Trade deficit was at US$1.16 billion in January 2009 against US$2.064 billion in January of last year. Surge in trade deficit on Y-o-Y basis was mainly due to costly imports of oil, fertilizer, wheat and other essentials and decline in textile sector's dyeing exports. Severe shortages of gas and power and rupee devaluation were other major reason for low exports by textile and other major industries. The shrinking imports and exports due to the global economic scenario will ultimately result in the reduction in value of trade deficits resulting in to favorable balance of payments.   Inflation eases to 20.52pc Inflation continued its downward trend on account of significant easing of food inflation and stability in oil prices. Headline inflation as measured by CPI was down by 42 bps from the previous month. Y-o-Y CPI eased at 20.52% down from 23.34% witnessed during Dec 2008. Core inflation however remained sticky and witnessed Y-o-Y growth of 18.9%. Average inflation for the Jul 08-Jan 09 period was recorded at 23.85%. Govt. estimates average headline inflation to stand at 20% for FY09.      Consensus on available for sale (AFS) impairment losses   During the meeting of ICAP with various stakeholders, a consensus was reached on the issue of impairment losses incurred in available for sale securities (AFS). Accordingly any impairment loses on AFS investments under IAS-39 should not be routed through profit and loss account, and instead, be taken to equity directly. This bodes well for companies with huge investment portfolios particularly in equity market which had been battered in CY08. KSE 100 index fell by a staggering 58.3% more because of the extraordinary conditions which prevailed in the market. The move will particularly favor banking and insurance scripts which have significant exposure in stock market.   If you have any query or question please contact our research analysts: Muhammad Ijaz  stockmarketpk@gmail.com