Sharp gains: Rupee strengthens swiftly in sentiment-driven rally

An inflow of investment in fiscal year 2013-14 also helped shift market sentiments in favour of the rupee. PHOTO: FILE

KARACHI: 

Word on McLeod Road has it that the dollar is going to sell at Rs100 by the end of the current fiscal year in June.

If recent movement in the foreign exchange market is anything to go by, the idea of the rupee-dollar parity reaching Rs98 seems quite plausible.

After all, strengthening from Rs108.31 a dollar on November 28, the rupee-dollar parity now stands at Rs102.37 in the interbank market, which reflects a substantial 5.4% gain over just 14 weeks.

Moreover, the rupee has gained 2.78% against the greenback during the last one month alone.

So what’s causing the gains although fundamentals of the economy – such as the current account deficit, low foreign exchange reserves, etc – remain largely the same?

Speaking to The Express Tribune, Standard Chartered Bank Senior Economist Sayem Ali said the rally is driven more by sentiments, as macros remain largely weak.

“Sentiments have shifted due to positive IMF staff reviews, expectations of significant aid and investment inflows in 2014, and interventions by the State Bank of Pakistan (SBP) through the forward/swap market,” Ali said.

Foreign currency reserves held by the SBP stood at $3.92 billion on February 28, up 1.29% from the preceding week, according to latest data released by the central bank. These reserves give an import cover for only 1.1 months.

“Importantly, oil import payments, which account for roughly 40% of total imports, have now been moved out of the interbank and are instead being paid from FE25 loans,” Ali said while referring to the trade loan facility for exporters and importers, which is essentially a deferred payment.

No wonder, these measures have helped reduce the demand for the dollar in the interbank, thus bringing down the value of the greenback against the rupee.

An inflow of investment in fiscal year 2013-14 also helped shift market sentiments in favour of the rupee. According to the SBP, Pakistan received foreign direct investment (FDI) of $523 million in the first seven months of 2013-14. FDI amounted to $106.9 million in January alone.

Similarly, foreign portfolio investment (FPI) in January amounted to $31.5 million, which is 27% of the total FPI that the country has received in the first seven months of the current fiscal year.

In addition, the expected receipt of $550 million from the International Monetary Fund (IMF), along with the launch of Eurobonds amounting to $500 million likely next month, has also led to positivity in the foreign exchange market.

Ali said most exporters now prefer to book forwards at the prevailing rate in anticipation of a lower currency exchange rate three months down the line. Similarly, importers are staying away from booking forwards in anticipation of a further appreciation in the value of the rupee against the dollar in the next three months, he added.

As per the law, exporters must surrender dollars within 130 days. Typically, they hold on to foreign currency for that period hoping to sell at a higher exchange rate.

According to Exchange Companies Association of Pakistan Chairman Malik Bostan, the dollar is expected to be at Rs100 in the next few months. While appreciation of the rupee will contain inflation, a stronger currency will inevitably make exports less competitive.

“Hence, a widening trade gap will put more pressure on foreign exchange reserves, forcing the SBP to readjust the rupee to equilibrium levels,” Ali noted

Plant disease poses threat to wheat crop

USAID has launched Wheat Productivity Enhancement Project to strengthen rust surveillance and facilitate synergies. PHOTO:FILE

ISLAMABAD: 

A plant disease present in Iran may destroy 50% of wheat crop if it reaches here and the US has introduced two varieties that will resist this threat to ensure food security in Pakistan, says Ian C Winborne, Plant Health Adviser of US Department of Agriculture’s (USDA) Animal Plant Health Inspection Service.

“Ug99 (fungal disease) is a looming threat to Pakistan and may kill 50% of wheat crop leading to food crisis if it is transferred from Iran,” he said in an interview with The Express Tribune.

The disease has come from Uganda (Africa) and Middle East. “With the collaboration of US and Pakistan scientists, we have helped introduce two varieties – Narc 2011 and Pak-13 – to resist the disease attack on wheat crop,” he said.

The US has helped enhance productivity of wheat in a bid to increase production and income of small farmers to fend off the threat of food crisis. “We have brought a lot of varieties to test for high yield and resist diseases,” he said.

A new surveillance system has been put in place to monitor the disease. US Agency for International Development (USAID) has launched Wheat Productivity Enhancement Project in an effort to strengthen rust surveillance and facilitate synergies between Pakistan and international surveillance efforts.

It has also helped conduct pre-breeding to develop and test rust-resistant, high-performance wheat varieties. It has established a scientist exchange programme to create linkages between the US and Pakistan and build technical capacity.

According to Winborne, the US is helping Pakistan in spending money, allocated under the Kerry-Lugar bill, in several areas of the agriculture sector.

Dairy, cotton production

He saw great potential in the dairy sector as Pakistan was one of the top milk producing countries. “We expect to see development of a village-based dairy system in this country, which seems to be a rapidly growing market of the world,” he said, suggesting that an increase in food production was critical for food security.

Turning to cotton, Winborne said the US had launched the Cotton Productivity Enhancement Programme to mitigate the impact of Cotton Leaf Curl Virus on small farmers. The virus infection varies from year to year and annual yield loss may range from 10% to 40%. Over 3,000 cotton varieties have been imported from the US and planted here to test for virus resistance. Of these, 15 have been selected as having the potential to avert disease attack, which he termed a great success.

“We are also working with Pakistan’s agriculture institutes on different projects to demonstrate practices and technologies that can help rural farmers to more efficiently capture, store and use water for irrigation and reduce the loss of water and soil,” he added.

Insecurities: PM’s visit reignites hope in auto-industry turnaround

Prime Minister Nawaz Sharif (C) is given a tour of the Pakistan Association of Automative Parts and Accessories Manufacturers Show at the Lahore Expo Centre on Thursday. PHOTO: APP

KARACHI: 

Despite government’s apparent confusion over the upcoming auto policy, the industry has pinned its hope on Prime Minister Nawaz Sharif’s wish to see a ‘Made in Pakistan’ car, expecting to get some incentives.

The local auto industry partly succeeded in getting the attention of the prime minister, who inaugurated the Pakistan Auto Show 2014 in Lahore on Thursday. However, it failed to get any promise from him on the two biggest issues of the industry — a blanket ban on imported used cars and the issue of liberalising trade with India.

Nevertheless, the prime minister’s directive to the government officials to immediately sit with the industry officials and chalk out the future policy has given hope to the local industry. “We are hopeful of getting government support including the national car policy that the prime minister indicated in his speech at the Pakistan Auto Show 2014,” said Pakistan Association of Automotive Parts and Accessories Manufacturers (Paapam) Chairman Usman Malik.

Malik, who represents over 2,800 industrial units that produce auto parts, is confident that the prime minister’s directive to the government officials would bring some policy changes. “We’re especially looking forward for the national car policy as it will support the local manufacturing and assembling industry,” he added.

Auto assemblers say their fate hangs in the balance owing to the uncertainty in policies especially on liberal trade with India and the country’s import policy of used cars.

Automobile analysts say that the unusual delay in the announcement of the Auto Industry Development Programme II (AIDP II) suggests that the government is facing problems in dispelling the pressures of the two competitors: carmakers and car importers.

“The government seems confused over the much-awaited AIDP II, which is why it has taken several months in announcing it,” said JS Global Capital analyst Atif Zafar. “It is certainly under pressure from carmakers and car importers who have considerable influence in government circles.”

The delay in auto policy has fuelled speculations. Some say the policy will increase the age-limit for used cars from the current three years to five years, while others say the government may give some incentives to the car assemblers.

Another headache for the auto industry is its clear divisions on the issue of the trade with India. While the only representative of auto parts’ makers, Paapam, is dead set against the liberal trade with India, Pak Suzuki – country’s largest carmaker – is openly supporting the cause.

Pak Suzuki seems more enthusiastic unlike the other two carmakers – Honda Atlas Motors and Indus Motors – because of Suzuki Maruti, an affiliate of Suzuki Japan with over 50% market share in India from where it can import cheap parts for its cars in Pakistan.

Zafar believes the auto part makers in Pakistan are more vulnerable to liberal trade with India compared to the local car assemblers.

“In case Pakistan and India start trading, the likelihood of Pakistan importing car parts is much higher than the import of Indian cars. This is why Pakistani car part makers are more exposed to competition,” he added.

Former Paapam chairman Syed Nabeel Hashmi said that auto part makers just need an assurance from the government that a liberal trade regime with India will not hurt their interests.

Ronaldo beats Messi to top the Goal Rich List 2014

The Real Madrid star takes over from retired 2013 winner David Beckham at the top of our index, with Samuel Eto'o, Wayne Rooney and Kaka rounding off the top five

Cristiano Ronaldo has been named the world's richest footballer after topping the annual list of players' net worth compiled by Goal.

The Real Madrid superstar held off Barcelona rival Lionel Messi in the Goal Rich List 2014 with an estimated wealth of €148 million.

The Goal Rich List is collated by a team of analysts and takes into account all streams of revenue for active footballers over the course of their careers. 

Ronaldo succeeds David Beckham, who led the way on the 2013 list but called time on his playing career last May. 

Only current professionals are eligible with the earnings of more than 200 contenders assessed before Goal's experts finalised the top 10.  

Ronaldo has enjoyed a remarkable 12 months in which his value to club and country has never been more evident.

He scored all four goals as Portugal beat Sweden in the World Cup play-offs, landed the 2013 Ballon d'Or and signed a record-breaking new five-year deal with Madrid.

Messi came in second after inspiring Barcelona to the Spanish title and signing up for a range of lucrative endorsements. It was a mixed year for the Argentinian, however, who appeared in a Spanish court in September to testify over alleged tax fraud relating to commercial contracts and lost his grip on the Ballon d'Or after a year blighted by injuries.

Wayne Rooney makes the top four on the list following Manchester United's decision to offer him the biggest contract in British football history, worth €365,000 a week. 

Neymar's controversial transfer to Barcelona sees him rocket up the standings to sixth, with his parents' €40m 'compensation' payment included Goal's figures due to its game-changing significance. 

The rest of the list is made up of global superstars, who have accrued huge wealth over significant spells at the top of the professional game.

Samuel Eto'o is at number three, ahead of Rooney, thanks largely to the millions he earned at Russian club Anzhi Makhachkala, with Kaka, Ronaldinho, Zlatan Ibrahimovic, Gianluigi Buffon and Thierry Henry completing the top 10.

Click here to view the full Goal Rich List 2014

Online grocery shopping looking to find a way in

Aaramshop.pk banks on broadband penetration for growth. PHOTO: FILE

KARACHI: During the past few years, quite a few startups were launched to tap the country’s $25 to $30 million e-commerce market. Given that the market is still in its infancy, most of these online portals were focused on broader shopping categories, such as electronics, fashion and lifestyle segment.

While there is still enough room for the existing players to expand and for new players to enter, there are signs that some entrepreneurs have already started carving a niche out of this broader marketplace.

Take for example aaramshop.pk, one of the few startups focused on the online grocery market.

Based out of New Delhi, India, aaramshop is a grocery marketplace that expanded in October last year through a joint venture with Pakistan’s RedBox Groceries – the Pakistani venture was co-founded by an automotive and marketing entrepreneur Ahmed Arif and Qaysar Alam, a supply chain veteran and the Supply Chain Association of Pakistan president.

It is a neighborhood-based business model whereby customers buy grocery online and have it delivered by the nearest retailer – also called aaramshop – of their locality, according to Abdullah Soomro, General Manager at RedBox Groceries.

The aaramshop.pk team has technical support from India. It uses the back-end cloud application of the Indian parent to manage inventory and take customer orders.

Though a very small segment, Soomro believes, the online grocery market will grow with the increase in the country’s broadband penetration – the average basket size at aaramshop.pk is Rs1,500.

Since there is no official data available for this category and there aren’t any big grocery retailers, Soomro said it is difficult to estimate the market size. He, however, estimates that the online grocery market, only Fast Moving Consumer Goods (FMCG), is worth $1 to $2 million a year.

“It is a very small number but I expect it will grow very fast in a couple of years,” Soomro said. The growth will be driven by greater penetration of existing e-commerce players, introduction of 3G services, emergence of more online grocery retailers and higher grocery-focused marketing spend, he said.

“So far, electronics and fashion startups have made inroads in e-commerce space. We expect grocery to be the next in line to gain popularity among internet users in Pakistan,” the GM said.

Though Soomro is optimistic about growth in the next couple of years, it might take them a while to be profitable as the service is offered free of cost to the end user and retailers are not willing to pay at the same time.

Consumers place the order through their website, mobile phone app or on phone following which their nearest retailer delivers the goods without charging a delivery fee. Retailers, too, are not ready to pay at the moment, according to Soomro.

Aaramshop’s business model, therefore, relies on providing brands with premium services – they make money by charging for premium listings and offering promotions, such as coupons and discounts through retailers. A major strength of aaramshop lies in its ability to reach consumers through neighborhood retailers and its seamless integration with digital media.

“Our current focus is on expanding the network,” Soomro said. They currently have 302 retailers on their panel. Currently limited to Karachi, they are gearing up to move to other big cities soon.

Focus on FMCG

The business is presently focusing on FMCG and is planning to introduce dairy, vegetable and fruit delivery services soon.

It may be too early to comment on the outlook of the online grocery market but there are indications that the country is an attractive destination for this segment. This is perhaps why the Indian business chose Pakistan as the first market for international expansion.

“The way we look at it is the similarities between the two markets are enormous and the model we follow in India can be replicated with relative ease in Pakistan,” aaramshop CEO and co-founder Vijay Singh told TechCrunch in August, 2013.

Home / Blog / Ravindra Jadeja might be ‘the next Wasim Akram’,

It was very awkward for me when I saw a picture of Ravindra Jadeja on a magazine cover with ‘The next Wasim Akram?’ written on top of it. Indian Bowling coach, Joe Dawes gave a statement after losing the second Test match against South Africa that he may try to make Jadeja the new Wasim Akram.

His statement implicated that Jadeja should practice some seam bowling as previously done by Sourav Ganguly or Sachin Tendulkar. The first thing that disturbed me was how a spinner can be compared to one of the greatest pace bowlers the international cricket has ever seen. If anything, I personally think Sanath Jayasuria would have been a better choice as he was a left arm slow bowler and a master blaster. However, Jaya’s class is unmatchable when it comes to his batting talent.

The second thing that popped up in my mind was the numerous times Indians have choked their talented cricketers by comparing them with Pakistani greats. Irfan Pathan is a prime example who had some real pace bowling talent, but he was forced by his coaches to make his action identical to Akram, which ended up neutralising his natural talent.

To add to the cause, the Indian team insists on putting all 11 of their players behind the bat and force Pathan to be an all-rounder, which is a big loss on their behalf.

Coming back to Jadeja and his coach’s statement, even if we ignore the fact that a spinner is being compared to a pacer and only focus on their performance, he is being compared to the legend on the basis of his wicket taking ability in the away matches. Jadeja has only played one Test match against the Proteas in their backyard and got six wickets for 154 runs. As Jadeja has not played much of the long format cricket outside India, his record cannot be compared to Akram’s record of 255 wickets in 62 matches with an average of 24.61.

Let’s take a look at the performances of the most played format in international cricket; One Day Internationals (ODIs). Jadeja has played 36 away matches and has hunt down 28 batsmen at an average of 48.53. Whereas, the Sultan of Swing has taken part in 121 away matches and has taken 168 wickets at an average of 23.89. Akram has never bowled in a T20 format, so it is irrelevant to compare the records. However, if he had played, he must have better figures than Jadeja for sure.

The only way Akram and Jadeja can stand side by side is if you highly overrate Jadeja as the greatest slow left arm bowler of all time. I have no doubt that many Jadeja fans might believe that he is the best left arm orthodox spinner of this era or probably in history, but I rate Abdul Razzak of Bangladesh higher than him and even young Raza Hasan of Pakistan even though he hasn’t played much international cricket. Hasan is immensely talented and soon he will prove it to the world.

On the other hand, there is absolutely no doubt that Akram is the best left arm pacer or left bowler that has ever appeared on the field. Seeing the comparison above, I reckon Jadeja has a long way to go to even have his name mentioned alongside the Sultan of Swing.

Dawes’s statement is probably one of the most overrated and perhaps one of the most absurd statements that the cricketing world has ever heard. There is indeed no comparison between the two. Such statements usually end up destroying players and their talent rather than building it.

Outlook: Oil production set to reach record 130,000 bpd

The petroleum industry generally believes Pakistan’s geology is gas-prone rather than having any substantial oil potential. PHOTO: FILE

KARACHI: 

Pakistan’s crude oil output is expected to increase to 130,000 barrels per day in one or two years, a sharp rise from the stagnant 66,000 bpd seen in the last few years, industry players told The Express Tribune.

It has already risen to all-time high of 91,000 bpd in recent weeks, according to latest Pakistan Petroleum Institute (PPIS) statistics. That comes months after the highest level of 84,650 bpd was achieved.

Average oil production was at 81,000 bpd in 2013, up 13% over the previous year with most of the increase coming from the wells located in Khyber-Pakthunkhwa, especially the Tal Block.

“We were actually expecting production to rise to 100,000 bpd in 2013,” said Masood Siddiqui, a petroleum industry veteran who headed Oil and Gas Development Company Limited (OGDCL) till a few months back.

“If the work continues like it is right now, then we should be able to achieve the target of 130,000 to 140,000 bpd in a short time,” he said.

In other words, Pakistan’s annual oil production stands at around 4 million tons. That is a little less than what is imported every year to meet demand. In fiscal 2012-13, Islamabad spent $5.392 billion to import 6.939 million tons.

During the seven-month (July-June) period of current fiscal 2013-14, 4.22 million tons have been imported against $3.3 billion, according to Pakistan Bureau of Statistics.

The 130,000 bpd level appears very much reachable because of the substantial rise in drilling activity, Siddiqui said. “Around 76 wells were drilled last year alone. We have never seen work on so many wells being done in one year.”

While there remains uncertainty over the exact size of oil reserves in absence of any broad geological survey, Pakistan has estimated recoverable reserves of 27 million barrels, according to the last Economic Survey.

Petroleum industry generally believes Pakistan’s geology is gas-prone rather than having any substantial oil potential. The fact that companies have to drill deep wells to find hydrocarbon reserves adds credence to this argument.

The wells at Makori field have a depth of around 12,000 feet.

However, Siddiqui points out lack of experience as another reason behind this view. “You have to remember that our geoscientists and geologists have been mostly trained to study gas structures since Sui field was discovered 50 years back.”

But the perception is changing. “Ten years back, experts would have laughed at us if we would have asked them to find oil in K-P from where all the production is coming now.”

Higher oil production has also added to profitability of petroleum upstream companies, says Vahaj Ahmed, analyst at Topline Securities. “The realised price of oil is six-and-a-half times more than what these companies get for gas.”

The average price of gas in Pakistan is $12.5 per barrels of oil equivalent (BOE) against oil’s $85 per BOE.

Despite the seemingly high return on finding and producing oil, the companies take cautious approach because of the huge capital expenditure, Ahmed said.

Higher oil production does not mean it will help the balance of trade substantially since the country spends a lot to import petroleum products like diesel and furnace oil as well.