Wednesday, 26 September, 2012 48-member Malaysian delegation to attend Expo Pakistan ISLAMABAD APP A 48-member strong delegation of Malaysian entrepreneurs and business- men is scheduled to attend the 7th edi- tion of Expo Pakistan to be held in Karachi from October 4-7. “The participation of such a large dele- gation from Malaysia which had the largest foreign representation in Expo Pakistan last year as well, is a clear manifestation of the trust and confi- dence the Malaysian business commu- nity has in the Pakistani market and I am sure the visit would pave way for more business matchmakings and eco- nomic collaborations,” said Acting High Commissioner for Pakistan to Malaysia Mohammad Nadeem Khan while ad- dressing a pre-visit briefing arranged by the Commercial Section of the Mission for the Malaysian delegates here in Kuala Lumpur. Nadeem told the Malaysian delegates that the Expo Pak- istan 2012, held every year at Karachi Expo Center, was “the premier trade fair in Pakistan, which showcased Pakistan’s trade and manufacturing potential”. Asian shares ease as growth worries weigh TOKYO AGENCIES Asian shares eased on Tuesday after senti- ment was weakened by data showing Ger- many’s business confidence dropped in September, and a weak earnings forecast from Caterpillar Inc, both of which under- scored worries about a global growth slow- down. Uncertainty about the bailout prospect for Greece and Spain, which are the two major risks in what has become the euro zone’s three-year-long debt crisis, also under- mined investors’ risk appetite. The MSCI index of Asia-Pacific shares out- side Japan inched down 0.1 percent. Aus- tralian shares were down 0.2 percent, and South Korean shares fell 0.3 percent. Tokyo’s Nikkei average opened down 0.4 percent, hitting a fresh one-week low. “The German data is just the latest sign of a global slowdown and is likely to drag on the market today,” said Toshiyuki Kanayama, senior market analyst at Monex. The German Ifo institute’s monthly business sentiment index fell for a fifth successive month in September to its lowest level since early 2010, with the outlook component touching its worst level since May 2009. “This lends support to the thesis that the weaker growth outlook is spreading to the EU core,” Barclays Capital said in a note. Caterpillar, the world’s largest maker of earth-moving equipment, cited weak- ness in the world economy when cutting its 2015 earnings forecast, raising the possibility of weak guidance from other firms as U.S. earnings reporting season approaches. KARACHI STAFF REPORT D ESPITE the economic slowdown and ever worsening law and order situation in the country, the cumulative advances of banking sector sample, consisting of 33 commercial banks, during 1HCY12 rose by an impressive seven percent as against Dec-11, said a report is- sued by InvestCap Research Monday. According to the report, during the review period total advances of the country’s banking sector sample were seen to bolster on the back of exu- berant loan disbursement by Big 5 tier, local mid tier and local lower tier banks, growing by 8 percent, 7 percent and 6 percent respectively. In addition, it said, contribution of the foreign private banks tier was lim- ited as their advances grew by mere one percent during 1HCY12. “In the absence of any details of advances, we assume the up tick witnessed was due to addi- tional borrowings done primarily under the sub head of advances to power sec- tor, due to ever growing quantum of cir- cular debt coupled with loans disbursed to textile sector because of the export re- financing phenomenon,” said InvestCap analyst Asad I. Siddiqui. This assump- tion, Asad said, was based on figure of Dec-11 financial statments of our sample in which the above mentioned sectors had major contribu- tion in advances. Conversely, financ- ings (advances) of the Islamic banking tier contracted by 7 percent during the period under re- view (minor Rs10bn in mone- tary terms), which can be attributed to risk averse nature of their business. With increasing advances, rise in non-performing loans (NPLs) had been witnessed as well, up by 3 percent. How- ever, the rise under the said head was at a slower velocity as compared to rise in advances, suggesting the weak pace at which rolled over NPLs have been mov- ing. As a result, net infection of our banking sector sample has also shrunk by minor 20bps, the net infection ratio at 5 percent during the period under con- sideration. Furthermore, impressive re- duction of 130bps in the asset in- fection level of lower tier banks had been seen. However, the net infection ratio was still 1.8 times above than that of the banking sector sample, settling at 11.9 percent. It was more or less the same scenario existed with local mid tier banks, as their net asset infection was recorded at 8 percent during 1HCY12. This highlighted the fact that local mid tier and local lower tier banks have less access to advances of healthy nature. Due to the nature of our banking system, where virtually 50 percent of all the major heads of the banking sector rests with the big 5 tier, mid and smaller sized banks were forced to lend out at lesser rates to make themselves attractive and have more risky lending options as com- pared to the big 5 tier. Continuous reduction in the dis- count rate coupled with saving deposits being fixed at 6 percent, investment in government’s papers was becoming less attractive with the passage of every monetary policy. This would leave banks with 2 alternatives: To shift focus to- wards core banking activities and go for the riskier option or to remain heavily invested in government securities and end up earning a lesser spread. “In either case, we expect the Non- Performing Loans to rise by the end of the year, fueled by the non performance of freshly released advances,” said Asad. ADvAncing woefully g Non-performing advances to add to banks’ bad debts despite improved core activities ASHGABAT ONLINE Construction of Turkmenistan- Afghanistan-Pakistan-India (TAPI) gas pipeline will meet the rapidly growing needs of the Asian energy market, Turk- men President Gurbanguly Berdimuham- madov said on Tuesday. “Laying this transnational gas pipeline will allow to meet the rapidly growing needs of the Asian energy mar- ket through the export of Turkmen natu- ral gas, as well as address a number of important social and humanitarian is- sues, including those related to the cre- ation of new jobs, formation of the appro- priate infrastructure along the gas pipeline,” the report said. The meeting heard a report on the outcome of the TAPI Steering Commit- tee’s meeting held in Ashgabat, which was attended by sector ministries and representatives of all participant coun- tries of the project, as well as the Asian Development Bank (ADB). The meeting discussed the results of the business tour to Singapore, New York and London in mid-September, in order to attract the leading oil and gas compa- nies and financial institutions to the con- sortium, which will be created for the im- plementation of this major project. Turkmen leader stressed that “the construction of the TAPI will not only guarantee further economic growth of the participant countries of the project, their social well-being, but also, more impor- tantly, will help maintain peace and strengthen political stability throughout the region”. The basic document for promoting TAPI was the intergovernmental agree- ment signed by participating countries in Ashgabat in late 2010 to start implement- ing the project. Important agreements on TAPI were signed for the purchase and sale of Turk- men gas with the State Gas Systems of Pakistan and Indian GAIL Ltd. The project cost was estimated at $7.6 billion as of 2008. Bangladesh ex- pressed its interest in the project. Besides the Dovletabat field, the largest field being developed in Turk- menistan which was Galkynysh may be a resource base. Russia expressed great in- terest in this project. The U.S. adminis- tration also supported the implementation of this project. ASHGABAT IS ALL GEARED UP! ‘Turkmenistan ready to meet Asia’s growing demand for natural gas’ BERLIN AGENCIES Chancellor Angela Merkel said on Tues- day that Europe could only hope to come out of its crisis stronger and compete in a globalised world if its members pressed ahead with painful reforms and moved to more responsible budget poli- cies. Speaking at a meeting of the Feder- ation of German Industries (BDI), Merkel acknowledged that Germany was “not an island” that could disconnect from economic develop- ments in Europe and the world econ- omy. But she placed the onus on Berlin’s struggling euro zone partners to fix their own economies, rejecting the idea that Germany should relax its own produc- tivity drive in order to help its partners. “We need to take a deep breath to overcome this crisis,” Merkel said. “We must make the ef- forts that will allow Europe to come out of this crisis stronger than it went in.” “There is a lack of confidence on fi- nancial markets that some euro zone states can pay back their debts in the long term,” she continued. “The world wonders how competitive euro zone countries are.” The German leader said tough re- forms in southern Europe had led to some convergence of unit labour costs across the euro zone, but made clear that there was still work to do. She also expressed regret that the European Court of Justice had not been given stronger powers to intervene in na- tional budget policies in the euro zone. “We can’t have support without controls. The two go hand in hand,” Merkel said. The German economy has held up well during the cri- sis, with un- employment holding near post-reunifi- cation lows. But there are signs t h a t eco- nomic weakness across much of Europe and a slowdown in Chinese growth are begin- ning to bite. Business sentiment is at its weakest level since early 2010, data released by the Ifo economic think tank showed on Monday. And some economists believe Germany could fall into a technical recession in the second half of this year. “NOT AN ISLAND”: “We are feeling that Ger- many is not an island. We are an export nation. Forty percent of our exports go to the euro zone, 60 per- cent to the European Union. We can’t discon- nect from European and global economic develop- ments,” Merkel said. Merkel held up the fiscal compact for budget discipline and plans to intro- duce pan-European banking supervision as signs of Europe’s progress. She dismissed the notion that Berlin was slamming on the brakes in the cre- ation of a European banking watchdog. In recent weeks, the German govern- ment has made clear that it sees a Janu- ary deadline for putting this in place as unrealistic. “We want stronger European bank- ing supervision,” she said. Merkel was due to meet European Central Bank President Mario Draghi on Tuesday afternoon. Later he will give a speech to the same industry conference. Draghi’s plan, unveiled at the start of the month, to buy the bonds of strug- gling euro countries, combined with a green light from Germany’s Constitu- tional Court for Europe’s new rescue fund have been welcomed by markets. But worries have grown in the past week over Spain’s reluctance to seek a bailout that would allow it to profit from the ECB’s bond plan. Also weighing on the euro on Tuesday was a report that lawyers at the German Bundesbank were looking into the legality of Draghi’s bond scheme. Deep breaths everyone Europe must take ‘deep breath’ and enact reforms: Merkel PRO 26-09-2012_Layout 1 9/26/2012 12:34 AM Page 1