IMF warns G20 economic leaders that tariffs hurting global economy

BUENOS AIRES: The International Monetary Fund (IMF) warned world economic leaders on Saturday that a recent wave of trade tariffs would significantly harm global growth, a day after U.S. President Donald Trump threatened a major escalation in a dispute with China.IMF Managing Director Christine Lagarde said she would present the G20 finance ministers and central bank governors meeting in Buenos Aires with a report detailing the impacts of the restrictions already announced on global trade."It certainly indicates the impact that it could have on GDP (gross domestic product), which in the worst case scenario under current measures... is in the range of 0.5 pct of GDP on a global basis," Lagarde said at a joint news conference with Argentine Treasury Minister Nicolas Dujovne. Her warning came shortly after the top U.S. economic official, Treasury Minister Steven Mnuchin, told reporters in the Argentine capital there was no "macroeconomic" effect yet on the world´s largest economy.Long-simmering trade tensions have burst into the open in recent months, with the United States and China - the world´s No.2 economy - slapping tariffs on $34 billion worth of each other´s goods so far. The weekend meeting in Buenos Aires comes amid a dramatic escalation in rhetoric on both sides.Trump on Friday threatened tariffs on all $500 billion of Chinese exports to the United States. U.S. Treasury Secretary Steven Mnuchin will try to rally G7 allies over the weekend to join it in more aggressive action against China, but they may be reluctant to cooperate because of U.S. tariffs on steel and aluminum imports from the European Union and Canada, which prompted retaliatory measures.The last G20 finance meeting in Buenos Aires in late March ended with no firm agreement by ministers on trade policy except for a commitment to "further dialogue."German Finance Minister Olaf Scholz said he would use the meeting to advocate for a rules-based trading system, but that expectations were low."I don´t expect tangible progress to be made at this meeting," Scholz told reporters on the plane to Buenos Aires.Mnuchin told reporters on Saturday that he has not seen a macroeconomic impact from the U.S. tariffs on steel, aluminum and Chinese goods, along with retaliation from trading partners. But he said there have been microeconomic effects on individual businesses, he said, adding that the administration was closely monitoring these and looking at ways to help U.S. farmers hurt by retaliatory tariffs.The U.S. dollar fell the most in three weeks on Friday against a basket of six major currencies after Trump complained again about the greenback´s strength and about Federal Reserve interest rate rises, halting a rally that had driven the dollar to its highest level in a year.

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Mangla hydropower station rehabilitation project: Transparency International smells ‘corruption’ in contract bidding process

LAHORE: Transparency International Pakistan has leveled corruption charges on the state-owned Water and Power Development Authority (Wapda) for a contract bidding process related to rehabilitation of 980 megawatts Mangla hydroelectric power station, The News learnt on Saturday.Transparency International Pakistan (TIP), in a letter to Wapda Chairman in May, said a bidder given green signal by the authority in its evaluation is not supplying current limiter and medium voltage switchgear from the qualified manufacturers, and thus “the bid shall be declared non-responsive”.Justice (retired) Zia Perwez, a trustee of TIP and former judge of Supreme Court and Sindh High Court, observed that if the bid of any bidder is not complying with the specifications the bid could not be made responsive by allowing the bidder to change the supplier.Sources said Wapda management is tight- lipped on the issue and has yet to respond to TIP’s letter. No other corrective measure has been taken by Wapda in response to charges leveled against the authority, they added.The bidding process is part of rehabilitation of Mangla hydroelectric power station, with the financing of $237 million to be contributed by Agence Francaise Development, the United States Agency for International Development (USAID) and Wapda.Sources said Wapda is currently in the process of awarding the contract for Mangla rehabilitation package 6 and 8 to a Chinese company that has offered non-qualified equipment including current limiter and medium voltage switchgear by illegally giving a chance to replace it with qualified ones.The sources said such components are key parts and have to be offered from the qualified manufactures that must have to meet the technical and commercial requirements of the tender.The sources said a bidder termed lowest and qualified bidder byWapda quoted the current limiter from a Chinese’s manufacturer that could not meet the tender specifications.There is no manufacturer in China that manufactures the current limiter according to the required tender specifications, the sources added.Another bidder quoted the current limiter manufactured by the qualified manufacturer that could meet the tender specifications but Wapda did not accept the bid in its assessment.Medium voltage switchgear, which is one of the most critical components of the project and also called the heart of any power plant, must also be from a qualified manufacturer.The second lowest bidder quoted the component that meets the required tenderrequirements and which canbe fitted in Mangla power station in the same allocated spaces.The gear is manufactured by ABB and only offered by MHDC China, the second lowest bidder, said the sources.The bidder, termed successful by Wapda in its evaluation, expressed its intent to supply the required switchgear that is single level.This entails that the offered medium voltage switchgears are with only one circuit breaker and not two in the same panel as required and hence could not be fitted in the same allocated space in Mangla power station and thus not acceptable according to the tender conditions.Sources said such changes in the bidding process are against the Wapda’s earlier stance.Last year, General Manager Hydro Development of Wapda issued a post bid clarification before tender opening, specifically for medium voltage switchgear type, stating that it is not acceptable because it is single level and thus will not fit in the allocated space of Mangla power station.The sources said the current limiter and medium voltage switchgears quoted by the bidder could not meet the tender conditions, but even then thebidder is being accommodated for the award of contract by changing equipment.A tender clause (23.3 (i) (ii)) said the bid of Chinese bidder termed qualified by Wapda contains material deviations as the offered components do not meet the technical requirements of the tender, and is a major deviation, which cannotbe corrected by changing the manufacturers to the qualified ones and should be rejected, the sources said.Originally, the Mangla hydroelectric power station had a power generationcapacity of 1,000 megawatts from 10 generating units.The plant’s capacity was reduced to 980MW as aresult of degraded equipment.The Mangla dam rehabilitation project will add 90MW to the plant’s generation capacity after refurbishing and upgrading of units 5 and 6 of the plant, along with related plant facility enhancements.Consequently, Mangla’s revenue from electricity sales is expected to increase to approximately $60 million per year.New, modern equipment will ensure the availability of spare parts for preventive maintenance, and will improve the reliability and availability of the power plant for the next 25-30 years.

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Efficient water management stressed

SUKKUR: Judicial Water Commission Chairman Justice (retired) Amir Hani Muslim on Saturday stressed an efficient water management for sustainable socioeconomic development in the country that is on the verge of becoming water-stressed.“We must divert our attention and develop strategies and action plans to solve water-related issues,” Muslim said, addressing an event at US-Pakistan Centre for Advanced Studies in Water at Mehran University of Engineering and Technology, Jamshoro.The Supreme Court constituted the commission to probe into failures of authorities to solve water and sanitation issues in Sindh.The commission’s chairman said the country has witnessed devastating floods, prolonged drought, heat waves, and erratic weather patterns, which affect almost every aspect of life including agricultural productivity, livestock, food security, disease vectors, recession of the Himalayan glaciers and hydropower generation.Water availability in the Indus River has been decreasing over time. Per capita availability of water in Pakistan has been down to almost 1,000 cubic meters from more than 5,000 cubic meters in 1947. “The situation has been aggravated further due to the fact that Pakistan is considered as one of the most vulnerable countries in the world to climate change,” he added.Muslim further said water insecurity has emerged as an impediment to sustainable development in the country and inefficient management leads more than 50 percent of water. Reliable drinking water is accessible to less than 15 percent of the population.The commission’s head said inadequate sanitation leads to waterborne diseases and environmental and health issues. He called for collaboration between private and public sectors to attain the water sustainable goal of the United Nations.Mehran University Vice Chancellor Aslam Uqaili said prevailing water shortage and climate change increases responsibility of effective management of water resources and heightens the need of preparation to deal with extreme weather events. Uqaili said the university’s diploma course, ‘Flood Forecasting and Flood Hazard Management’, is an example of joint and coordinated efforts of the centre and the Sindh Irrigation Department, which provided Rs41 million to fund capacity building.

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Customs asked to verify exemptions before import clearance

KARACHI: Ministry of commerce asked the customs authorities to verify tax exemptions status of imports before clearing any consignment in a move to check inbound shipments that are the key driver to $18 billion of current account deficit, officials said on Saturday.The ministry of commerce directed the customs department, saying all import authorisations/exemptions/special permissions must be subject to verification of genuineness/authenticity from the ministry, according to the officials.The officials said the decision was taken on the alarming rise of imports. The State Bank of Pakistan data showed that imports of goods rose to $55.846 billion in the last fiscal year of 2017/18 compared to $48.683 billion a year earlier.Growing imports built up pressure on the current account deficit that widened to $18 billion or 5.7 percent of gross domestic product in FY2018, up a hefty 43 percent over the previous fiscal year.Tax officials said the ministry has deputed an official of joint secretary level as focal person to verify the authenticity of exemption certificate to grant the clearance of imports.Officials said huge quantum of imports is due to gross misuse of exemption certificates issued under various free and preferential trade agreements and special packages for various industries for import of raw materials.An official document showed that the government gave tax exemptions amounting to Rs541 billion in various heads during the last fiscal year. The last government exempted more than Rs300 billion of statutory regulatory orders related to tax exemptions after it signed an agreement with the International Monetary Fund in September 2016.The Economic Survey of Pakistan said the cost of customs duty concessions swelled to Rs198.2 billion in FY2018 compared to Rs151 billion in FY2017, depicting an increase of 31.2 percent or Rs47.2 billion. Approximately, 22 percent of customs duty exemptions were attributed to lower rates under various bilateral free trade agreements. Alone Chinese imports ate up Rs31.4 billion on account of tax concessions under the China-Pakistan free trade agreement.Tax officials said the latest ministry’s restriction on import clearance is applicable on all imports including automotive sector.The government has taken various steps to discourage imports of non-essential merchandised to save foreign exchange reserves that fell to nine billion dollars.In October last year, the Federal Board of Revenue (FBR) issued a list of 731 items, including cars as well as mobile phones on which five to 80 percent regulatory duties were imposed to discourage imports.Analysts are, however, critical of stopgap nature of regulatory duties. They said such measures could not lead to reduction in imports in the long-run. Especially, coercive duties on non-essentials could not contain their demand among the high income group.They, however, said reduction in capital-intensive imports and rupee depreciation may discourage inbound shipments.The central bank said the imports of machinery would scale back as Chinese-pledged infrastructure projects are reaching an advance stage. Energy sector is the key development component of more than $60 billion worth of China-Pakistan Economic Corridor projects.Rupee lost around 20 percent against the US dollar since December last year, making imports pricey.Currently, a mini-budget is under consideration at the top level as the economic ministries are contemplating different options to raise the additional customs duty by one percent on all the imported items or to jack up the regulatory duty on 1,550 items to discourage the rising import bills, officials said.The officials said the ministry of commerce and the FBR held different meetings to discuss the proposals. Even if the additional customs duty is placed the exemption will remain available to some items such as medicines or raw materials.

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Regulator oblivious to quality cherishes cheap medicines in market

LAHORE: Drug regulatory authority in Pakistan keenly focuses on price regulation, while taking it light to ensure purity and effectiveness of medicines being supplied to market – a fact that plays havoc with the lives of patients.As all the raw pharmaceutical raw materials are imported into the country it is absolutely essential to have a strict check on the quality of inputs being imported. Nothing should be released without proper testing or a certificate by a reputable accredited laboratory. Raw materials contaminated with injurious elements may cause more harm to the patients than cure. Pharmaceutical is a multibillion dollars trade in Pakistan and companies market only those products which are commercially feasible.Earlier this month, the Drug Regulatory Authority of Pakistan issued a ‘Recall Alert’ to 10 local pharmaceutical manufacturing companies, advising them to recall all their medicines containing contaminated raw materials imported from China. The European Medicines Agency has already issued a warning against the Chinese raw material suppliers.The substandard Chinese raw material is used to manufacture blood pressure control medicines in Pakistan. The local pharmaceutical companies were identified through customs documents.In other countries, such a directive from a regulator would automatically trigger an immediate recall from hospitals, pharmacies and patients. The identified companies claimed that they had changed the raw materials and had started supplying fresh stocks to market. This is, however, a false claim as changing a raw material in pharmaceutical products requires stability testing over a period of nine months before stocks could be released for use by patients.When a lower level or trace of a medicine subcomponent is transferred to finished products (food and medicines) it is considered harmless. But, improper manufacturing processes and monitoring can lead to its higher level in the final product, leading to toxicity damaging liver, heart and kidneys. Intake of higher level is carcinogenic.The subcomponent is a yellow, oily liquid with a faint, characteristic odor and a sweet taste. Called nitrosodimethylamine, it is an industrial by-product or waste product of several industrial processes, such as treatment of water via chlorination for use in manufacturing various products, including processed foods and medicines. The recent detection of higher levels of such component in Chinese raw materials indicates improper processes and poor monitoring at the suppliers facility.The drug regulator asked local pharmaceutical firms to immediately stop using of such raw materials from China. Surprisingly, even after several weeks of the alert, physical recall of the products containing the contaminated raw material is yet to be initiated and contaminated medicines are still being sold and prescribed by doctors in Pakistan.

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Trump ups ante ahead of G20 discussions on global trade tensions

Buenos Aires: US President Donald Trump´s latest attacks on China and the European Union will shape the discourse on global trade conflicts and competitive devaluation as Group of 20 finance ministers meet in Buenos Aires this weekend.Trump´s protectionist policies that have seen him slap steep tariffs on steel and aluminum, angering allies such as the EU, Canada and Mexico, already looked set to fashion discussions between finance ministers and central bankers from the world´s 20 leading economies during two days of meetings.That is even more the case after his latest Twitter outburst on Friday saw him accuse the EU and China of "manipulating their currencies and interest rates lower," while he also took aim at the US Federal Reserve for hiking interest rates, complaining that it eroded "our big competitive edge."China and the US have no plans for bilateral talks, according to US Treasury Secretary Steven Mnuchin, who has vowed to "respond to concerns on US trade policies" when he meets with fellow ministers.But China will be a hot topic as Group of Seven ministers hold a one-hour session on the margins of the wider meeting, not least afterTrump threatened to crank up punitive tariffs against the country to include the entire $500 billion in goods the US imports from the Asian powerhouse.As well as his steel and aluminum duties, and threats to likewise hit foreign car imports with tariffs, Trump has already slapped China with a 25 percent levy on $34 billion in goods, with another $16 billion on the way.Other than announcing counter-measures, China has kept relatively quiet over Trump´s various threats -- perhaps safe in the knowledge that his tariffs are a drop in the bucket next to their expected $2.4 trillion exports for 2018.But German Chancellor Angela Merkel warned that the EU was "ready" to respond to the US should more excises be forthcoming, describing current trade tensions as "very serious."International Monetary Fund chief Christine Lagarde, whose press conference will kick off activities on Saturday morning, said earlier this week that increasing trade restrictions pose "the greatest near-term threat" to the world economy, despite projected growth of 3.9 percent through 2019.She also warned Trump that "the US economy is especially vulnerable" due to "retaliatory measures."IMF economists say that in a worst case scenario $430 billion -- a half point -- could be cut off global GDP in 2020 if all tariff threats and retaliation are implemented.Others are also worried about Trump´s measures, including India, which alongside China, Brazil, Russia and South Africa make up the five emerging market BRICS countries, all of which are G20 members."All BRICS members have benefitted from globalization. All of them need finance and capital inflows," said Sreeram Chaulia, dean at Delhi´s Jindal School of International Affairs."Trump is trying to put a brake on trade and finance. We rely on internationalcapital movement andinward FDI, Trump wants to stop it."The economic problems plaguing a number of emerging markets will occupy ministers, particularly given that host nation Argentina recently secured a $50 billion IMF loan to try to stabilize its economy, after the peso plunged 35 percent between April and June."The situation facing certain emerging markets is more delicate with the rise of the dollar and the question of capital flows," a French source told AFP.As well as the dollar, rising oil prices and US interest rates have helped fuel the capital flight from emerging economies such as Brazil and Argentina, with investors taking out $14 billion between May and June."The meeting will take place against the backdrop of ongoing financial vulnerabilities in emerging market economies and global trade tensions," said Australian Treasurer Scott Morrison.He headed to Buenos Aires planning to urge G20 members to keep markets open."History is clear: when trade barriers go up, growth and jobs go down," he added.Economist Rubens Barbosa, former Brazilian ambassador to Washington and London, says Brazil will try to defend multilateralism in international trade -- notably as upheld by the World Trade Organization."In Buenos Aires, what will be on the table is protectionism and the strengtheningof the WTO from the point of view of emerging countries such as Brazil," he said.

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Elections-engrossed market sees support in results to keep up rally

Stocks market is intensively engrossed in elections happenings having witnessed boom and bust cycles, but results spree next week are likely to shift its focus to fundamentals-driven rally, dealers said.BIPL Securities said the market performance is contingent on the strength of new government-to-be after general elections scheduled next week. “Additionally, with the beginning of result season from next week, corporate earnings will dictate the direction of market,” the brokerage said in a weekly report. The KSE 100-Index of Pakistan Stock Exchange gained 950.75 points or 2.36 percent during the outgoing week due to a pre-election rally. Some jitters were, however, felt on rupee devaluation.“The exchange rate devalued by 5.3 percent on Monday, resulting in tanking of the market,” Ismail Iqbal Securities said in a report. Foreign portfolio outflow remained at an elevated level during the week, as net selling from overseas financial institutions exceeded $22 million, which further dented sentiments. Investors were, however, expecting elections to smoothly proceed and therefore rushed to cherry pick ahead of elections next week. Sector-specific developments convinced investors to make new positions in fertiliser sector. Fertiliser companies showed renewed interest after urea price rose Rs50 to Rs1,630 - 1,640/bag owing to the strong demand of fertiliser for the summer crops. Another factor which boosted fertiliser shares was healthy increase in water levels in dams.Topline Research said increase in cement prices and urea prices, during the week, also helped pull cement and fertiliser sectors higher, together adding 294 points to the index. It said banking stocks continued the rally from end of last week and have contributed 279 points to the index since the latest monetary policy statement that raised the key interest rate by 100 basis points to 7.5 percent. Steel manufacturers raised the price of high quality rebar to Rs107,000–Rs 11,000/ton as against Rs97,000/ton. Abdul Azeem, head of Research at Spectrum Securities said the increase in the index was an outcome of long-term investment on behalf of Punjab pension fund. Out of the total fund size of $39 million, $14 million were allocated to four asset management companies in the equity market on July 19.“We foresee market to remain volatile pre-election, while post-election we foresee a short bull rally to enter into the market to celebrate smooth transition of democracy,” Azeem added. “However, Pakistan's economic conditions are quite grave, which should be a point of concern for the investors.” The central bank’s reserves stood at $9 billion as of July 13, down by $416 million over a week ago, mainly due to foreign debt repayments. Exports of goods, however, recovered to $24.772 billion in FY2018 from $22.003 billion in FY2017, which gave some support to textile companies. As growth heralded in textile products it hints that listed companies are likely to perform better compared to preceding years.The central bank also imposed 100 percent cash margin on imports of 131 non-essential items to curb hefty trade deficit.Moreover, the Asian Development Bank agreed to lend $200 million to Pakistan to establish a fund for mitigating risks of natural hazards. All-Shares Index total capitalisation, during the week, rose two percent to $66.7 billion mainly due to increase in capitalisation of banks (2.3 percent), exploration and production (0.1 percent) and food (4.2 percent).

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Point of View

Currency is now part of the trade war, folks. And it is worth pondering whether this is a president (of US) who is going to break with 25-30 years of tradition in not interfering in Fed policy deliberations going forward—Market strategist at AxiTrader

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Amazon, Toyota, Alcoa and others working to counter Trump’s tariff plans

SAN FRANCISCO/WASHINGTON: Big companies in the United States from Amazon.com Inc to Toyota Motor Corp and Alcoa Corp are working to counter the effect of the Trump administration´s trade policies and to head off new tariffs.Companies are attempting to avoid any confrontation with U.S. President Donald Trump but want to exert as much influence as they can to dissuade him from tearing up trade agreements or introducing tariffs on a wide swath of imports.Amazon, the world´s largest online retailer and cloud-computing company, which could be hurt by tariffs on items sold through its website and components for its data centers, is discussing industry-wide advertising campaigns and more extensive government lobbying, a person familiar with the matter told Reuters on condition of anonymity.Amazon declined to comment. Toyota Motor North America, a subsidiary of Japan´s Toyota, which could suffer if Trump follows through on a plan to impose tariffs on imported vehicles and parts, flew workers to Washington for a rally this week in front of the U.S. Capitol while the unit´s chief has met key members of Congress in recent weeks to discuss the potential impact of tariffs.Executives from General Motors Co, which could be hurt if Trump pulls the United States out of the North American Free Trade Agreement or if he imposes auto tariffs, have also held meetings with the administration and Congress over the last year to raise its concerns about trade issues.

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Rupee may remain under pressure

The rupee is likely to remain under pressure against the dollar next week, owing to scheduled foreign repayments and weak fiscal conditions, analysts said on Saturday.The rupee witnessed sharp decline of 5.3 percent on July 16 to reach the record level of Rs128 against the greenback.The analysts said the local unit would further devalue to a level of Rs135 or so.The current account deficit of the country swelled to $18 billion, or 5.7 percent, of the GDP.The trade deficit ballooned 15.87 percent to $37.64 billion, mainly contributed by record imports of $60.86 billion in the fiscal year 2017/18.The analysts said high import payments demand deteriorated the rupee value and the exports had not exhibited as per the expectations.An analyst at Arif Habib Limited said that due to low level of import cover of around two months, Pakistan did not have an option to further run down its reserves.In order to sustain economic activity, Pakistan will need a major chunk of foreign inflows and the International Monetary Fund (IMF) could be a potential financier,besides friendly countries such as China, the analyst added.The market is expecting more devaluation of the rupee of around 11 percent during the current fiscal year, the analyst said.

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Dollar declines

TOKYO: The dollar was on the defensive against the yen and euro after U.S. President Donald Trump expressed concern about the currency´s strength and the Federal Reserve´s interest rate increases.Trump said in an interview with CNBC on Thursday that a strong dollar puts the United States at a disadvantage, adding that the Chinese yuan "was dropping like a rock." A strong currency tends to make a country´s exports more expensive.Trump also showed displeasure about the Fed´s monetary tightening, saying that he was worried about its potential impact on the U.S. economy and American competitiveness.The White House later said in a statement that the president respects the U.S. central bank´s independence and was not interfering with its policy decisions."The market was caught a bit off guard. The discussions and debates around trade policy have not necessarily involved foreign exchange so far," said Shinichiro Kadota, senior FX and rates strategist at Barclays. "Now it looks like Trump is criticizing yuan and euro weakness and the dollar´s strength. I guess that has taken people a bit by surprise," he said.Against the Japanese yen, the dollar recouped some of its losses after dropping as low as 112.05 yen from a six-month high of 113.18 yen on Thursday.

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Gold dips

Bengaluru : Gold eased for a sixth straight session, having slipped to a one-year low in the previous session, as the U.S. dollar firmed.Spot gold was down 0.2 percent at $1,219.28 an ounce at 0127 GMT.In the previous session, it fell to its weakest since early July last year at $1,211.08 an ounce.Bullion was headed for a two percent decline for the week.U.S. gold futures for August delivery were down 0.4 percent at $1,219.10 an ounce.The dollar index , which measures the greenback against a basket of six major currencies, was 0.1 percent higher at 95.129.It had dropped from a one-year high of 95.652 on Thursday after U.S. President Donald Trump expressed concern about the currency´s strength and the Federal Reserve´s interest rate increases.

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Oil surges

Tokyo : Crude prices rose but were set to drop for the week as concerns about oversupply and lower demand due to a possible economic slowdown caused by the trade conflict between the United States and China, the world´s two biggest oil users.Brent oil rose 7 cents to $72.65 a barrel by 0354 GMT, after rising to $73.04 earlier in the day.U.S. West Texas Intermediate (WTI) was up 14 cents at $69.60 a barrel, after reaching a high of $70.03 earlier.However, both benchmarks are on track for their third weekly loss, after big declines on Monday, with Brent set to drop 3.6 percent and WTI to fall by 2 percent.Prices have been dragged down by concerns about oversupply as some production returned after outages, while trade tensions between the U.S. and China stoked fears of damage to their economies and commodities demand.

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Cotton unchanged

Karachi : Trading activity slowed down at the Karachi Cotton Exchange on Saturday, while spot rates remained unchanged.Karachi Cotton Association kept the official spot rates intact at Rs9,400/maund (37.324kg) and Rs10,074/40kg. Ex-Karachi rates also stood firm at Rs9,545/maund and Rs10,229/40kg after an addition of Rs145 and Rs155 as upcountry expenses, respectively.Naseem Usman, president of the Karachi Cotton Brokers Association, said that high demand in the market and very low supply resulted in a huge increase of Rs1,600/maund in prices in the last three weeks. “Market prices remained at that level in 2010/11 when international market saw crisis,” he added. Karachi cotton market recorded five transactions of around 3,000 bales at the rate of Rs9,450 to Rs9,600/maund. Deals were recorded from Tando Adam, Shahdadpur, Burewala, Vehari and Chichawatni.

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Copper slips

Beijing : London copper struggled to pull away from the $6,000 a tonne mark, having touched a one-year low in the previous session, as concerns persist that a trade row between China and the United States will weaken demand for metals.Copper is heading for a 1.2 percent drop in London this week but early trade on Friday was less volatile than on Thursday, when sell stops were triggered after a break below $6,090. "Metal prices will stabilise in the short term after a combination of weak Chinese activity data and escalating trade war concerns among others put downside pressure on the complex, in particular copper," BMI Research said in a note."We believe the copper market remains quite tight fundamentally, which should limit further downside and support prices over the medium term," it added. Three-month copper on the London Metal Exchange edged up 0.1 percent to $6,070 a tonne by 0443 GMT, after hitting $5,988 on Thursday, its lowest since July 2017.

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Aramco’s potential SABIC deal to affect IPO timing: CEO

RIYADH: Saudi Aramco´s potential acquisition of a stake in petrochemicals maker SABIC would affect the timeframe of its own planned initial public offering, the firm´s chief executive, Amin Nasser, said in a TV interview.The offering is the centrepiece of an ambitious plan championed by Crown Prince Mohammed bin Salman to diversify Saudi Arabia´s economy beyond oil, but preparations for the IPO, which could prove the biggest in history, have slowed.Saudi-owned Al Arabiya television cited Nasser as saying that buying a stake in a petrochemicals company would make the state oil giant less vulnerable to price volatility."If the deal is completed, with relevant regulations taken into account, it will definitely affect the timeframe for the partial IPO of Saudi Aramco," he said in a transcript provided by the government media office.Aramco said on Thursday it was looking to buy a strategic stake in SABIC, which could boost its market valuation ahead of a planned IPO.When Aramco is ready to list, the IPO timing would be up to the government to decide, Nasser said."As I said in previous interviews, when Saudi Aramco is ready, the decision of going ahead with the IPO is for the state to make," he saidOn Thursday, Aramco said it was in "very early-stage discussions" with the kingdom´s Public Investment Fund (PIF) to acquire the SABIC stake in a private transaction, and had no plans to acquire any publicly held shares.Riyadh-listed Saudi Basic Industries Corp (SABIC), the world´s fourth-biggest petrochemicals company, is 70 percent owned by the PIF, Saudi Arabia´s top sovereign wealth fund. It has a market capitalisation of 385.2 billion Saudi riyals ($103 billion).Nasser also said Aramco had a long-term goal to convert 2 million to 3 million barrels of its oil products into chemicals.Nasser said the proposed deal with Sabic would help balance revenues from excavation and production with those from refining and chemicals, that normally remain strong even when oil prices dip.Reuters reported on Wednesday that Saudi Aramco had invited banks to pitch for an advisory role on the potential acquisition of a strategic stake in SABIC, citing two sources with direct knowledge of the matter.Some sources close to the Saudi Aramco IPO process have said the plans for a domestic and international listing might be pushed further into next year or beyond.A final decision has yet to be made by Prince Mohammed, who oversees the kingdom´s economic and oil policies, the sources said.Saudi Arabia´s energy minister, Khalid al-Falih, said last month it would be "nice" to see Aramco floated in 2019, adding that the timing was not critical to the government.Aramco plans to boost investments in refining and petrochemicals to secure new markets and sees growth in chemicals as central to its downstream strategy to cut the risk of an oil demand slowdown.

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US carmakers expected to warn of tariff pain when releasing results

DETROIT: When Detroit’s automakers report earnings on Wednesday, they are likely to highlight escalating tariffs and use the opportunity to warn investors of far greater pain ahead should U.S. President Donald Trump impose broader tariffs on the industry’s vehicles and parts, consultants and analysts said.“The automakers really want to get that narrative out there,” said Jeff Schuster, president for the Americas at consultancy LMC Automotive, who stressed it is unusual for General Motors Co, Ford Motor Co and Fiat Chrysler Automobiles NV (FCA) to post quarterly earnings on the same day.“All three automakers are on the same page with tariffs,” he added. “They can demonstrate the impact so far and warn about the risks of taking this further.”The shares of the Detroit Three automakers have been drifting down as Trump has escalated trade threats against China and Europe.So far, in a bid to reduce America’s trade deficit with China and protect U.S. industries, Trump has imposed tariffs on steel and aluminum imports, and on a range of Chinese goods including Chinese-made vehicles, starting July 6. China has responded with tariffs of its own on U.S. goods, including vehicles.The metals tariffs have pushed up steel and aluminum prices, raising costs and concerns in the auto industry, which expects vehicles sales to decline in 2018.Early this year, even before tariffs became a reality, Ford warned that rising aluminum and steel costs would hurt 2018 profits.“On the expense side, those extra costs are going to eat into automakers’ profit margins,” said Cox Automotive analyst Michelle Krebs. “There’s little room to pass those costs onto consumers.”Detroit’s automakers also face rising costs on specific models thanks to the tit-for-tat tariffs with China.GM, for instance, imports the Buick Envision from China, but has not yet said whether a 25 percent tariff will force it to raise prices on the SUV in the United States.Ford faces a difficult situation in China, with sales down 22 percent in the first five months of the year.The company’s luxury Lincoln models are all imported to China from the United States, and Ford has said it is not planning price hikes for now.With Chinese sales already cratering, price hikes are seen as a tough sell for Ford.“Lincoln specifically will be stillborn in China if they don’t eat those duties and they are significant,” said industry consultant and former GM executive Warren Browne.But altogether, these margin hits are seen as small compared to the effect of sweeping tariffs on imported vehicles and parts that Trump has threatened.U.S. Commerce Secretary Wilbur Ross said on Thursday it was “too early” to say if the administration would impose the tariffs, even as many automakers think it is a foregone conclusion.Administration officials have said the potential tariffs are in part designed to win concessions during the ongoing renegotiation of the North American Free Trade Agreement (NAFTA) with Canada and Mexico.About 40 percent of the content in GM’s U.S.-sold vehicles comes from outside the United States, while that figure is 45 percent for FCA and 20 percent for Ford, according to data from research firm Edmunds.com.“The problems the automakers currently face are a drop in the bucket compared to what could be coming,” LMC’s Schuster said.GM has already warned that higher tariffs on imported vehicles under consideration by Trump’s administration could cost jobs and lead to a “a smaller GM” while isolating U.S. businesses from the global market.A group representing major automakers said on Thursday that imposing tariffs of 25 percent on imported cars and parts would raise the price of U.S. vehicles by $83 billion annually and cost hundreds of thousands of jobs.Because of the U.S.-China trade war, Germany’s Daimler last month cut its 2018 profit forecast, warning sales of its Mercedes-Benz cars would be hurt, and BMW said it was looking at “strategic options.”There is also the risk Trump might unilaterally withdraw from NAFTA. Boston Consulting Group last year estimated U.S. tariffs in the range of 20 percent to 35 percent would add $16 billion to $27 billion annually to costs at automakers and their suppliers if the U.S. left NAFTA.“That would be a disaster, both short term and long term,” said Browne, who expects Detroit’s automakers to address these issues on earnings calls to prepare investors and warn Washington. “Look for them to be very vocal.”

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GE beats on EPS but trims cash flow target

SAN FRANCISCO: General Electric Co reported a smaller-than-expected drop in profit on Friday, but cut a key financial target, raising questions about its full-year outlook and sending shares sharply lower.The 126-year-old industrial conglomerate, whose power and financial-services units are struggling, said it expects to generate perhaps $1 billion less free cash flow than expected this year.The forecast cast doubt on GE’s full-year adjusted profit target of $1.00 to $1.07 a share. Though GE affirmed that target on Friday, many analysts see it as unrealistic and have cut their estimates to less than $1.00.“We are getting questions as to how the company can maintain EPS guidance while cutting free cash flow guidance,” JPMorgan analyst Stephen Tusa wrote in a note on Friday.GE’s conference call with analysts also cast doubt on the outlook. “They gave you all the conditions for why the forecast could go down,” said Deane Dray, analyst at RBC Capital Markets.For example, GE had previously said it expects to ship 50 to 55 large power turbines this year. “On the call, they said ‘We’re targeting 50.’” GE also said power equipment sales may take longer to close.“The only thing you’re going to hear from that is there’s downside risk,” Dray said.The stock was down 5.2 percent at $13.02 in midday trading.The stock decline was “all about cash and (GE’s) acknowledgement of risk to the second half,” said Jeffrey Sprague, analyst at Vertical Research Partners.GE cut the industrial free cash flow target to $6 billion from a range of $6 billion to $7 billion.Its adjusted earnings, which exclude certain pension and restructuring costs, fell 10 percent to 19 cents a share, beating analysts’ expectations of 17 cents a share, according to Thomson Reuters I/B/E/S.Total revenue rose to $30.1 billion from $29.1 billion.GE said weakness in power and renewables energy offset gains in its aviation and healthcare units.A decade and a half ago, GE was the world’s most valuable public company. But the Boston-based conglomerate foundered in several industrial markets and its move into financial services steered it into the global financial storm in 2008.GE shares have halved in the past year. Though investors are still interested in GE, many want to see the power and capital units stabilize and even improve before buying the stock, analysts have said.GE revealed no new bad news about ongoing accounting investigations, a shareholder lawsuit and a federal inquiry into subprime mortgage activity, and appeared to be operating better, some analysts said.“They didn’t screw up,” said Nick Heymann, analyst at William Blair. “This was a quarter driven entirely by aviation and healthcare.”GE beat earnings expectations in part because it cut overhead costs more than expected and the losses at GE Capital were less than analysts expected, said RBC’s Dray. The results capped an unusually busy quarter in which Chief Executive John Flannery announced a long-awaited plan to spin off its healthcare unit and sell its 62.5 percent stake in oil services firm Baker Hughes.In May, GE announced an $11.1-billion deal to merge its locomotive unit with Wabtec Corp.In June, it announced a $3.25-billion sale of its distributed power unit to U.S. buyout group Advent.GE also restated results for 2016 and 2017 to reflect new accounting standards. Last month, it was removed from the blue-chip Dow Jones Industrial Average.Finally, GE’s top executive in Latin America was jailed in Brazil after prosecutors said he was involved in a price-fixing scheme for medical equipment.Losses widened at GE Capital, the company’s financing arm, during the quarter.Power unit profit fell 58 percent in the quarter and orders there were down.GE’s power unit is relying on services revenue to offset declining sales of new equipment. But the services business also is under attack from competitors in important markets such as Saudi Arabia.Earnings from continuing operations attributable to GE shareholders fell to $736 million, or 8 cents a share, from $1.03 billion, or 12 cents a share, a year earlier.One positive for GE: Adjusted free cash flow from industrial activities swung to a positive $258 million in the quarter from a negative $1.7 billion in the first quarter. —Reuters

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Xi ends state visit to UAE with raft of deals signed

Dubai: The United Arab Emirates on Saturday said it agreed to set up a "comprehensive strategic partnership" with China as President Xi Jinping wrapped up a three-day visit to the Gulf country."The UAE and China have agreed to enhance cooperation in all fields to higher levels and forge overall strategic partnerships," the official WAM news agency said.It said this would "contribute to cementing and intensifying cooperation, boost joint development and prosperity, which is consistent with the common interest of both countries and their peoples".China and the UAE had already signed on Friday a raft of economic agreements and in the run-up to Xi´s visit they agreed oil and trade deals.Xi met UAE Vice President Sheikh Mohammed bin Rashid al-Maktoum, who is also ruler of Dubai, and Abu Dhabi´s Crown Prince Sheikh Mohammed bin Zayed Al-Nahyan during his visit.Abu Dhabi was the Chinese president´s first stop on a tour which now takes him to Senegal, Rwanda and South Africa.A joint statement by China and the UAE, published Saturday by WAM, said the two countries were committed to bolster cooperation across the board, including politics, economy, oil, gas and security.There would also be joint military training, the two countries agreed. The United Arab Emirates was "keen to deepen cooperation" which China´s "One Belt, One Road" infrastructure plan, the statement added. The ambitious trillion-dollar project aims to revive the ancient Silk Road trading routes with a global networks of ports, roads and railways.On Thursday, the UAE´s state-owned DP World announced an agreement between the two countries to build a new trade zone in Dubai as part of that project. A strategic cooperation framework between state-owned Abu Dhabi National Oil Co and China National Petroleum Company was among the deals signed on Friday, the UAE company said.

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Germany drops economic sanctions on Turkey

Berlin: Germany has lifted economic sanctions on Turkey and relaxed its travel advice to the country, Berlin said Saturday, after Ankara ended its two-year state of emergency.A 1.5 billion-euro ($1.7 billion) limit on export guarantees to Turkey would not be renewed this year, Germany´s economy ministry told AFP, confirming an earlier report by the newspaper Frankfurter Allgemeine Zeitung. The measure was imposed in July 2017 as a way to pressure Ankara after the detention of a German human right campaigner and five other activists, including the head of Amnesty International in Turkey.Opposition parties in Germany have accused the 1.5 billion-euro limit of being too timid, given that the value of export guarantees increased from 1.1 billion euros in 2016 to 1.46 billion euros the following year. Germany´s foreign ministry also removed a warning on its website about its nationals facing a high risk of arrest when visiting Turkey.

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