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Preferred Stocks:



OGDC, PTC, PSO, POL, ATRL, MARI, PNSC, ICI, DGKC, ENGRO, NML, ABL, AICL, BAFL, UBL, MCB and NBP

Gold prediction

The unit have been testing the resistance 939 and seem its hard to break out. RSI is giving a signal that the unit would give a correction soon.

Recommend Sell: 963-964 / Stoploss above 969/ Target: 947

Pakistan's Textile Sector: Cotton Update

According to latest data released by the Pakistan Cotton Ginners Association (PCGA), the arrival of bales as of March 15, 2009 stands at 11.30mn bales. This is against 11.22mn bales on March 1, 2009 and against 11.26mn bales (estimated) on March 15, 2008. The latest statistics translate into a marginal 0.3%YoY increase in cotton arrivals. Looking at arrivals from cotton producing provinces, we see that even a 19%YoY pickup in cotton arrivals in Sindh (estimated) has failed to stimulate total cotton arrivals. According to our estimates, arrivals from the Punjab belt have decreased by about 5%YoY and have dampened overall cotton production. After attaining some stability previously, late cotton arrivals and sticky cotton prices continue to add onto the embedded problems of the sector. However, big players operating at a larger scale are somewhat hedged against the cotton shortfall and sticky prices as most of the annual cotton requirement has already been procured during the key buying season. From this vantage, we believe that NML offers an edge in the present operating environment and we recommend a Buy on the scrip.

External account, inflation and interest rates

The movement towards the restoration of overall macroeconomic stability has certainly gathered pace in the last three months with the country achieving the milestone of a surplus in the Current Account after persistent deficits in the preceding twenty months. On a cumulative basis, the CA deficit stands at US$7.45bn in 8MFY09 as compared to a deficit of US$8.64bn in the same period last year, down 13.7%YoY. With international donor agencies fully supporting Pakistan’s nascent economic recovery, we think the external account will remain in a manageable state over the next four to six month period despite mounting pressures arising from the global financial crisis. This would of course depend on the GoP’s ability to maintain fiscal order and keep the budget deficit in the range of 4%-5% of the GDP. Empirically it has been seen that countries which have current & fiscal accounts in surpluses have experienced low erosion in economic growth during periods of slowdown in external capital inflows – a phenomenon which is in process these days. Maintenance of economic stability is a necessity if growth is to recover in the coming year, where we expect real GDP growth to recover to 4-4.5% in FY10.

Gold Prices continued to rise for US-Dollar

oaGold Prices continued to rise for US-Dollar investors early Thursday, hitting $951 an ounce in London's wholesale market as the greenback fell vs. all asset classes.World stock markets rose together with bonds, non-US currencies and all traded commodities after the Federal Reserve announced $1.25 trillion of "Quantitative Easing", creating money to buy long-dated US Treasury bonds and government-backed US mortgage debt."USD getting destroyed. Hearing Asian central banks buying Euro," said a London dealer to Bullion Vault this morning."Stops going off on topside," he added, pointing to bearish bets on gold being wiped out as the rising price broke above traders' stop-loss levels.Over on the currency markets – and for the first time since mid-Jan. – the Euro also jumped together with gold, adding to Wednesday's record one-session leap and hitting a fresh 10-week high vs. the Dollar above $1.3680.Crude oil broke above $51 per barrel. Copper jumped to a four-month high.The Fed's Nuclear Strike on US Treasury yields – which squished 30-year rates to new record lows – meantime rippled across government bond markets worldwide, with investors bidding up UK and German bonds so high, their 10-year debt yielded barely 3.0% by lunchtime in London."I am torn between deflation unleashed by a bursting credit bubble, and the inflationary pressures of the policy response," writes James Montier, strategist with Albert Edwards at SocGen in London.Trying to identify "cheap investment insurance" for clients this morning, Montier cites inflation-protected government TIPS as one possible solution. His "second inflation/deflation hedge" is gold."From an insurance point of view, most obviously...gold is the one currency that can’t be debased. Thus it provides a useful hedge against the return of [the Fed's] sort of beggar-thy-neighbor policy. In the event of significant prolonged deflation [on the other hand], what is left of our financial system is likely to collapse."Thus holding a money substitute isn’t such a bad idea against this cataclysmic outcome."Voicing concern at the recent surge in media coverage ("not hugely surprising given that gold is up some 30% since late October"), Montier adds that "Gold is massively under-owned institutionally" even as it "may have been moving up the list of attractive assets."The mainstream institutional appetite for gold has remained depressed."Recording an AM Gold Fix at $937.25 an ounce – its best level since March 2nd – the price of gold only stood sharply higher vs. the US Dollar, however.Wednesday's London close – one hour ahead of the Fed's $1.25 trillion announcement – saw gold hit five-week lows vs. the Japanese Yen, commodity-rich Canadian and Aussie Dollars, and the British Pound.Priced against the Euro, gold today traded 3.4% above Wednesday's 7-week low of €671 an ounce, but it failed to hold above the €700 mark – a level first broken on the way up in late January.Ahead of Wednesday's late surge in Gold Prices, notes Walter de Wet for Standard Bank this morning, "Gold and other precious metals sold off despite equities falling in the US and Europe, and despite a depreciation in the Dollar against the Euro [as well as] US Treasury yields declining."All these factors should have been bullish for gold. The only real factor weighing on the Gold Price [was] scrap metal flooding the markets."Recycled metal – originating from gold-jewelry owners taking profits to raise cash – began pouring onto the international market in mid-2008 as prices rose amid the global economic slowdown."[Although] many individuals expected to eventually re-acquire 22-carat pieces as the economy improved," reports Philip Newman, research director at GFMS in the consultancy's latest quarterly update, "Turkey switched from being a significant importer of gold in 2008 to a major net supplier of bullion."The world's fifth-largest gold jewelry consumer, Turkey imported an average 232 tonnes of gold per year between 2003 and '07."Most startling of all," adds Gargi Shah, writing for GFMS from India – the world's No.1 gold jewelry consumer – "for the first time since the Indian gold market was liberalized over 10 years ago, we are starting to observe near-zero levels of net imports."Back in the Western financial markets, meantime, and looking at Wednesday's $1.25 trillion injection of new money into US asset markets, "A lot of people thought the Fed didn't need to do this," notes John Authers for the Financial Times today."[Either] they know something we don't about the banks, or they think a lot more bail-out money will be necessary.""Should quantitative easing continue," says Emanuel Georgouras at precious-metals dealer Marex Financial, "you can expect to see further gains in gold."Contact





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