Monday, 19 November, 2012

ISLAMABAD

APP

THE participation in the Inter-national Trade Fair 2012 willopen new vistas of opportuni-ties for Pakistan's businesscommunity in India, said Pak-

istan High Commissioner in IndiaSalman Bashir.

Inaugurating Pakistani Pavilion at32nd Indian Internal Trade

Fair (IITF) 2012 in New Delhi,Salman Bashir said that there was grad-ual and significant improvement in theeconomic and trade relations betweenPakistan and India although latter's viewand stance on certain political issues werequite clear.

According to a message received here

from New Delhi, the High Commissioner said that more than

176 Pakistani stalls had been establishedin the fair and appreciated the FPCCI ef-forts for its cooperation in this respect.

He said that the fair had provided anopportunity to the Pakistani entrepre-neurs to explore joint venture opportuni-ties with their Indian counterparts.

He said that Pakistan wanted to keepcordial and peaceful relations with all thecountries, particularly its neighbours.

Sheikh Shakeel Ahmed Dhingra, VicePresident FPCCI, appreciated the Indiangovernment for extending full supportand cooperation to the Pakistani dele-gates.

Haji Fazal Kadir Khan Sherani, Pres-ident of FPCCI said Pakistani's cottage in-dustry was small, but its home textile

products were in big demand throughoutthe world, including India.

He expressed his gratitude andthanked to the Indian Trade PromotionDepartment issuing visas expeditiously tothe Pakistani participants and delegates.He called for establishing bank branchesin both the countries and simplifying/lib-eralizing visa issuance policy to facilitateexchange of business delegations andpromotion of trade and industry.

Sheikh Shakeel Ahmed Dhingra;Iqbal Dawood Pakwala; Azhar MajeedSheikh, Begum Salma Ahmed Vice Presi-dents FPCCI; Nasiruddin Sheikh, Chair-man FPCCI Standing Committee onExhibition; Naeem Ahmed, Pakistan'sTrade Commissioner in India were alsopresent on the Occasion. The fair will con-tinue till November 27.

NEW YORK

AGENCIES

All these events, in the end, turned out to bebuying opportunities for stocks. So will the"fiscal cliff," some investors say as they watchfavorite stocks tumble during the politicalgive-and-take happening in Washington.

The first round of talks aimed at avoidingthe "fiscal cliff" caused a temporary rise in eq-uities on Friday, signaling Wall Street's recentdeclines could be a buying opportunity. Thegains were small and sentiment remainsweak, but it suggests hope for market bulls.

Though shares ended moderately higheron Friday, it was not enough to offset lossesfor the week. The S&P was down 1.5 percent,while both the Dow and the Nasdaq fell 1.8percent. The S&P 500 is down more than 5percent in the seven sessions that followedPresident Barack Obama's re-election. Uncer-tainty arose as attention turned to Washing-ton's task of dealing with mandated tax hikesand spending cuts that could take the U.S.economy back into recession. Some see themarket's move as an overreaction to hyper-bolic headlines about policy gridlock in Wash-ington, believing stocks may start to reboundin what should be a quiet few days ahead ofthe Thanksgiving holiday next Thursday.

"It just doesn't seem to make any sensethat you suddenly wake up the day after theelection and realize we've got a fiscal cliff," said

Krishna Kumar, partner at New York hedgefund Goose Hollow Alpha Advisors.

Not long ago the S&P was on target for itssecond-best year in the last 10, riding a 17 per-cent advance in 2012. That's been halved toabout 8 percent, which isn't bad but disap-pointing compared with just a month ago. In-vestors have been selling the year's winners.Apple (AAPL.O) is down 25 percent from itspeak above $700. General Electric (GE.N) isdown 14 percent; Google (GOOG.O) has lost16 percent. Overall, the stocks that make upthe top 10 percent of performers in the monthprior to Election Day have been the worst per-formers since, according to Bespoke Invest-ment Group of Harrison, New York.

"I think it's a good opportunity to be longstocks at these levels," said Kumar.

Hikes on capital gains and dividend taxesare on the line, and Obama has dug in hisheels on what he sees as a mandate to makethe tax code more progressive.

He seems to have the upper hand indealings with Congress because Republicanlawmakers don't want to see tax rates in-crease, which is what will happen if no solu-tion is found by the beginning of 2013.Republicans don't want to take the blame fordriving the economy over the cliff. The cur-rent crisis is similar to last year's fight toraise the U.S. debt ceiling, which led to thedowngrade of the United States' top creditrating in early August 2011.

During the dealings, the S&P 500 lost18.8 percent between its peak in July 2011 andits bottom in August. As the market slid, thepolitical standoff badly hurt investors' confi-dence in Washington, setting off a spike involatility. In the end a deal was announcedthat raised the ceiling and put off longer-termfiscal decisions until January 1, 2013, settingthe stage for today's "fiscal cliff" crisis.

After staying flat through September2011, the S&P 500 jumped 31 percent be-tween its October low and the end of March.BUY THE DIP? Gridlock in Washingtonand all that could possibly go wrong with theeconomy if a deal is not reached have grabbedthe headlines, but the negotiations leave roomfor stock market gains. Congressional leaderssaid Friday they will work through theThanksgiving holiday recess to find a solution.

"The debate over how to solve (the fiscalcliff) may be more productive than is com-monly recognized," said Brad Lipsig, seniorportfolio manager at UBS Financial Servicesin New York. "The U.S. is facing a major debtoverhang, and serious steps toward address-ing it might ultimately be viewed as a positivefor future growth," he said. "The market mayrecognize this and, after a time of hand wring-ing, recover from the concerns with a renewedsense of optimism." The recent selling tookthe S&P 500's relative strength index - a tech-nical measure of internal strength - below 30this week, indicating the benchmark is over-

sold and due for a rebound.The RSI in four of the 10 S&P sectors -

utilities, telecoms, consumer staples and tech-nology - is below 30 and the highest RSI read-ing, for the consumer discretionary sector, isbelow 40, suggesting a bounce is in store.

"What I want to do is what we did duringthe decline following the budget negotiationsin the summer of 2011: The lower the stockmarket goes, the more I want to own stock,"said Brian Reynolds, chief market strategist atNew York-based Rosenblatt Securities.

"If we go off the cliff it will be with abungee cord attached," he said.KEEP CALM AND HEDGE: Volatility isexpected to rise through the end of Novemberand to spike in late December if no agreementon the fiscal cliff is reached in Congress. Along-

side comes opportunity for those with high risktolerance. "Recently, volatility has increased inthe market overall. You can't really pick it up inthe VIX yet, but I think as we get through No-vember, I think you're likely to see the VIX beat a relatively higher level," said Bruce Zaro,chief technical strategist at Delta Global AssetManagement in Boston. In 2011, the VIX aver-aged 19.2 in July and 35 in August. So far thismonth the average is 17.8 and it is expected tospike if negotiations on the cliff drag into latenext month. "Looking at the range of possi-bilities, I would say any of them would bebetter than sitting here waiting. I wouldeven put going off the fiscal cliff in that cat-egory," said Jill Cuniff, president of Seattle-based Edge Asset Management Inc, whichmanages about $20 billion.

Wall Street week ahead: Going off ‘cliff’ with a bungee cordg The 1987 crash. The Y2K bug. The debt ceiling debacle of 2011

Indian fair to open new vistas forPakistani businessmen: Bashir

MADRID

AGENCIES

"The bank plans on investing in the badbank," a spokesman for Santander, Spain'sbiggest bank, told Reuters on Saturday.

Spain has set up the bad bank to siphonoff toxic real estate assets from bank bal-ance sheets that date from the propertycrash. The bad bank's creation is a condi-tion of receiving up to 100 billion euros($127 billion) of aid in a European bail-outof the country's financial sector.

Spain's second biggest bank, BBVA(BBVA.MC), is considering investing in thevehicle, but has yet to make a decision, aBBVA spokesman told Reuters on Satur-day.

Sabadell (SABE.MC) is also consider-ing investing but has not yet made a deci-sion, a Sabadell spokesman said.

The bad bank's managers are currentlyin talks with BBVA, Sabadell andBarcelona-based Caixabank (CABK.MC)about them investing in the vehicle, a bank-ing source said. Caixabank was not imme-diately available for comment.

An Economy Ministry source said onFriday the bad bank could go ahead justwith backing from domestic investors butforeign investors would give it credibility.

The bad bank will initially have equityof 3.9 billion euros. But the governmentneeds private investors to stump up 2.2 bil-lion euros, or 55 percent of this, in Decem-ber, the Economy Ministry source said onFriday.

Private sector support is key becausethe government wants to keep its stake inthe bad bank below 50 percent to reducethe burden on state finances.

The bad bank, known as Sareb, will ini-

tially receive assets - such as soured loansto housebuilders and foreclosed property -from four state-rescued banks, includingBankia (BKIA.MC), worth 45 billion euros.It will have a maximum asset value of 90billion euros.

The equity in the bad bank could rise to5 billion euros after including assets from afurther group of banks, aside from thosetaken from the state-rescued banks, thesource said.

The government hopes eventually tocapture 500 million euros of investmentfrom foreign investors, or 10 percent of thefinal equity tranche.

The rest of the bad bank will be fi-nanced by senior state-backed bonds.

Government sources said on Fridaythat Spain's bank restructuring fund, theFROB, could use part of the European aidto invest in the bad bank, and as such,would not need to tap markets.

Santander plans to invest in Spain's bad bank

Quelle catastrophe!

France bank chiefsays end of eurowould be 'disaster'

MADRID

AGENCIES

Bank of France governor Christian Noyersaid Friday the euro is here to stay andwarned that its disappearance would bean "absolute disaster".The central bank chief defended thecurrency as the recession-hit eurozonetried to contain a growing debt crisis,with Greece battling to avert default andSpain pondering a sovereign bailout."The future of the euro is absolutelyclear cut," Noyer said in a speech to theannual assembly of Spain's Associationof Financial Markets in the Spanishcapital."I have absolutely no doubt that theeuro will stay in the long term future,"he added. "It is the natural continuationof the European Union, it was in thespirit of the founding fathers."Noyer said the benefits of the singlecurrency were "perfectly clear"."People don't realise that if the eurodisappears it will be an absolutedisaster," he warned.The French banking chief pressedEuropean powers to set up a bankingunion as an urgent response to theregion's financial crisis.European leaders agreed in October toestablish a regional banking supervisorin 2013, the first step towards a bankingunion that would allow the EuropeanUnion to directly help troubled banks.

g Spain's Santander (SAN.MC) plans to invest in the country's so-called bad bank in a sign that healthy

domestic lenders are willing to support the entity created to clean up the aftermath of a 2008 property crash

PRO 19-11-2012_Layout 1 11/19/2012 4:13 AM Page 1

02

Monday, 19 November, 2012

Business

PAOLA SuBACCHI

Throughout the just concluded 18th Congress ofthe Chinese Communist Party ubiquitous televi-sion screens in trains and metro stations broad-cast a live feed of the Chinese assembly. Beijing’sbusy people, however, seemed not to pay close at-tention: for them, it was business as usual.

The Chinese public’s indifference to theircountry’s ceremonial transition of power ishardly surprising. All critical decisions weretaken well ahead of the Congress, behind closeddoors, with very little input from outsiders. Thisapparently seamless transition, however, iswidely expected to usher in a complex and poten-tially difficult decade for China – and for the restof the world.

China is at a turning point. With more than100 million people still below the official povertyline and per capita income currently just over$6,000 in nominal terms, robust economic growthmust be maintained. Outgoing President Hu Jintaoindicated that China’s total GDP and per capita in-come should double by 2020, which will require7.5% average annual growth. Is this feasible?

Recent improvements in data for industrialproduction, fixed investment, and retail salessuggest that the Chinese economy, which hadslowed in recent quarters, may already be on themend. But the authorities remain cautious, giventhat China’s economic outlook depends heavilyon external conditions, which is the source ofmost current uncertainty. However, as thingsstand, most independent economists expect 7-7.5% annual GDP in 2013-2017, while the Inter-national Monetary Fund forecasts a moreoptimistic 8.2-8.5% rate during this period.

As we heard repeatedly during the Congress,China’s leadership reckons that its biggest policychallenge in the coming years will be the shiftfrom export-led growth to an economic modelbased more firmly on domestic consumption.This has now become a matter of urgency, as the

United States and Europe are unlikely to providemuch support to Chinese exports. Indeed, Chinais now expected to undershoot its 10% growthtarget for trade in 2012, even though exports toemerging-market economies were up by morethan that in the first nine months of the year.

Income growth and a lower household sav-ings rate are essential to the shift in China’sgrowth model, and each presupposes key reforms.For example, improving the provision of healthcare, education, and care for the elderly, andbringing it into line with the needs and expecta-tions of the emerging middle class should encour-age more households to allocate a larger share oftheir income to consumption. Likewise, increas-ing the interest rates paid on bank deposits wouldenable savings to decline without loss of income.

At the same time, as China proceeds alongthe path toward a market-based economy estab-lished more than 30 years ago by Deng Xiaoping,policymaking has become more complex. Theeconomy needs to be steered in the desired direc-tion without triggering instability, making correctsequencing and coordination of policy measures

essential. As some Chinese colleagues told me,the success of reforms in the next decade will de-pend more than ever on good design.

In particular, the new leadership will have toattend to the linkages between the real economyand the expanding financial sector as it overhaulsstate-owned companies and liberalizes the banks.From commodities to financial assets, price for-mation should become more market-based andtransparent, while capital allocation should be-come more efficient and the scope for rent-seek-ing and corruption should be reduced. Moreover,as the renminbi’s internationalization continuesat a steady pace, domestic liberalization shouldoccur in tandem with deeper global integration.

In the coming years, the key issue, reflectedin Hu’s Congress-opening speech, will be the re-lationship between the state and the market. Butreforms will continue to be top-down and grad-ual, especially in the financial sector, where mostefforts will be concentrated in the next decade.

Many Chinese seem to believe that marketdiscipline will bring fair competition and con-tribute to closing the widening gap between richand poor. China’s income distribution has be-come highly skewed: at 0.438, the Gini coeffi-cient, which measures income inequality, putsthe country closer to the United States than tonorthern Europe’s egalitarian societies (with theexception of the United Kingdom). And the un-just allocation of resources, which has enrichedso many politically well-connected individualsand families, has become more difficult to bear.

A key question for the next decade, therefore,is whether the Chinese authorities’ growth targetswill be enough to preserve social cohesion as fur-ther economic and political reforms are graduallyimplemented. As the economic pie grows lessrapidly, greater fairness will be crucial to socialstability. This much seems clear to the new lead-ership. Whether they will be able to engineer thenecessary institutional shifts remains to be seen.CourtESy ProjECt SyNdICAtE

SAN FRANCISCO

AGENCIES

IT'S an enormously important issuefor the broader smartphone patentwars. If all the Apple patents are in-cluded -including the "user experi-ence" patents that the company has

previously insisted it would not license - itcould undermine the iPhone makers effortsto permanently ban the sale of products thatcopy its technology.

Samsung Electronics Co Ltd, whichcould face such a sales ban following acrushing jury verdict against it in August,asked a U.S. judge on Friday to force Appleto turn over a copy of the HTC agreement.

In a court filing, Samsung argued it is"almost certain" that the HTC deal coverssome of the patents involved in its own liti-gation with Apple.

Representatives for Apple and Samsungcould not immediately be reached for com-ment.

Judges are reluctant to block the sale ofproducts if the dispute can be resolved via alicensing agreement. To secure an injunc-tion against Samsung, Apple must show thecopying of its technology caused irreparableharm and that money, by itself, is an inade-quate remedy.

Ron Laurie, managing director of In-flexion Point Strategy and a veteran IPlawyer, said he found it very unlikely thatHTC would agree to a settlement that did

not include all the patents. HTC declined tocomment.

If the deal did in fact include everything,Laurie and other legal experts said thatwould represent a very clear signal thatApple under CEO Tim Cook was taking amuch different approach to patent issuesthan his predecessor, Steve Jobs.

Apple first sued HTC in March 2010,and has been litigating for more than twoyears against handset manufacturers whouse Google's Android operating system.

Apple co-founder Jobs promised to go"thermonuclear" on Android, and thatthreat has manifested in Apple's repeatedbids for court-imposed bans on the sale ofits rivals' phones.

Cook, on the other hand, has said heprefers to settle rather than litigate, if theterms are reasonable. But prior to this

month, Apple showed little willingness to li-cense its patents to an Android maker.

HOLY PATENTSIn August, a Northern California jury

handed Apple a $1.05 billion verdict, findingthat Samsung's phones violated a series ofApple's software and design patents.

Apple quickly asked U.S. District JudgeLucy Koh to impose a permanent sales banon those Samsung phones, and a hearing isscheduled for next month in San Jose, Cali-fornia. In a surprise announcement on Sat-urday, however, Apple and HTC announceda license agreement covering "current andfuture patents" at both companies. Specificterms are unknown, though analysts havespeculated that HTC will pay Apple some-where between $5 and $10 per phone.

Additionally, Apple and Google are dis-cussing whether to arbitrate some patent

claims which would put at least part of itsglobal courtroom battle on hold, accordingto court documents filed on Thursday.

During the Samsung trial, Apple IPchief Boris Teksler said the company is gen-erally willing to license many of its patents -except for those that cover what he calledApple's "unique user experience" like touch-screen functionality and design.

However, Teksler acknowledged thatApple has, on a few occasions, licensed thoseholy patents - most notably to Microsoft,which signed an anti-cloning agreement aspart of the deal.

In opposing Apple's injunction requestlast month, Samsung said Apple's willing-ness to license at all shows money should besufficient compensation, court documentsshow.

Apple has already licensed at least one

of the prized patents in the Samsung case toboth Nokia and IBM. That fact was confi-dential until late last year, when the courtmistakenly released a ruling with detailsthat should have been hidden from publicview.

In a court filing last week, Apple arguedthat its Nokia, IBM and Microsoft dealsshouldn't stand in the way of an injunction.Microsoft's license only covers Applepatents filed before 2002, and IBM signedseveral years before the iPhone launched,according to Apple.

"IBM's agreement is a cross license witha party that does not market smartphones,"Apple wrote.

Apple's seeming shift away from Jobs-style war, and toward licensing, may also re-flect a realization that injunctions havebecome harder to obtain for a variety of rea-sons.

Colleen Chien, a professor at SantaClara Law in Silicon Valley, said an appellateruling last month that tossed Apple's pretrialinjunction against the Samsung Nexusphone raised the legal standard for every-one.

"The ability of technology companies toget injunctions on big products based onsmall inventions, unless the inventions driveconsumer's demand, has been whittledaway significantly," Chien said.

The case in U.S. District Court, North-ern District of California is Apple Inc v. Sam-sung Electronics Co Ltd et al, 11-1846.

WASHINGTON

AGENCIES

Standard & Poor's downgraded Dutchbanks ABN AMRO, Rabobank and othersFriday citing their exposure to a deepereconomic slump in the Netherlands andthe recession-hit eurozone.

The ratings on the two large Dutchbanks were cut by one notch each, to Afrom A+ for ABN AMRO and to AA- fromAA for Rabobank.

Two other banks, F. van LanschotBankiers and SNS REAAL, also were cut byone notch and S&P lowered the outlook on

ING Bank, ING Group and Achmea Hy-potheekbank to negative, while keeping theratings unchanged.

"In our view, Dutch banks are exposedto increased economic risks as a result of apotentially more protracted downturn inThe Netherlands and wider eurozone,"S&P said.

It added that the prolonged correctionin the Dutch property market and govern-ment deficit-cutting measures would con-tinue to hit the Dutch economy, "althoughwe expect the overall impact on the bank-ing sector to be moderate."

S&P was cautious, saying the Dutch

economy remains structurally sound andcompetitive, and that there is only a lowlikelihood that banks will experience asharp increase in housing-related losses.

Adventure for a causeKARACHI: SZABIST students of BBA 5E as part of their courseproject “Business Ethics” arranged a Corporate Social Responsibility(CSR) activity in collaboration with World Wide Fund-Pakistan(WWF). The objective of this initiative was to install Ultravioletgermicidal irradiation filters for water purification in theGovernment Boys and Girls Primary school, Kakapir village,Sandspit. Fresh water is scarce there and due to low income ofpeople living there, they cannot afford safe and clean drinkingwater. So in order to help the deprived people a water purifier and acooler was installed at the school for a better and hygienic living.Along with this a beach cleaning activity was performed by thestudents near the wet land of WWF to further promoteenvironmental sustainability. This entire project was done underthe supervision of Hina Shamsi Nauman. This venture was financedby the proceedings of their previous event K-Town Madness. It wasa treasure hunt for all major university students within the vicinityof Clifton and Defence where clues were placed at thirteen differentlocations like close-by malls and restaurants and the participantswere required to solve them and move forward. The main objectiveof the event was to earn a reasonable profit and conduct a CSRactivity to promote environmental sustainability.

KARACHI: Zuhair Siddiqui, MD, SSGC and Zubair Motiwala,Adviser to CM Sindh chairing a meeting, with the office bearers ofSITE Association of Industry, held on November 16, 2012 at theCompany Head Office. SSGC management reiterateddiscontinuing gas supply for 48 hours to those units in allindustrial estates in Sindh not observing supply closure everySunday. Total closure ensures consistent gas supply for next sixdays in a week. SITE Association representatives included Dr.Arshad Vohra, Chairman, former Chairmen and membersincluding Haroon Farooki, Irfan Moton, Salim Parekh, ArifLakhani and Zulfiqar Chaudhry. SSGC management includedShoaib Warsi, SGM (UFG), Aminullah Khan, ASGM(Distribution-South), Major Mohammad Akhtar (Retd. ), ASGM(Customer Services) and Shakeel Bukhari, GM (Measurement).

DOHA: Qatar Airways CEO Akbar Al Baker, (right) with USAmbassador to Qatar Susan Ziadeh and Qatar's Civil AviationAuthority Chairman Adul Aziz Al Nuaimi after touring theairline's new 787 Dreamliner at Doha International Airport.

Samsung goes after HTC deal to undercut Appleg When Apple Inc and HTC Corp ended their worldwide legal battles last week with a 10-year patent licensing agreement, they

declined to answer a critical question: whether all of Apple's patents were covered by the deal

China’S GroWth ChallenGe

S&P downgrades ABN Amro, Rabobank

PRO 19-11-2012_Layout 1 11/19/2012 4:13 AM Page 2