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Monday, 1 October, 2012

Samsung winsreconsideration ofGalaxy Tab sales banA US appeals court ruled that a lower courtshould reconsider a sales ban against Samsung’sGalaxy Tab 10.1 won by Apple in a patent disputewith the South Korean electronics maker

SAN FRANCISCO

AGENCIES

The injunction was put in place ahead of a month-long trial that pittediPhone maker Apple Inc against Samsung Electronics Co Ltd in aclosely watched legal battle that ended with a resounding victory forApple last month on many of its patent violation claims. However, thejury found that Samsung had not violated the patent that was thebasis for the tablet injunction and Samsung argued the sales banshould be lifted. U.S. District Judge Lucy koh said she could not actbecause Samsung had already appealed. In its ruling on Friday, theFederal U.S. Circuit Court of Appeals in Washington said koh couldnow consider the issue. The decision comes just a month before theSouth korean corporation is expected to unveil the second generationof one of its most successful devices, the stylus-equipped Note. TheGalaxy 10.1 is an older model, but the ban still hurts Samsung in therun-up to the pivotal holiday shopping season. The world’s top twosmartphone makers are locked in patent disputes in 10 countries asthey vie to dominate the lucrative market, which is growing rapidly.A U.S. jury found during the just-concluded trial that Samsung hadcopied critical features of the iPhone and iPad and awarded Apple$1.05 billion in damages.

KARACHI

ISMAIL DILAWAR

TURkISH Airlines (TA),ranked the best airline of Eu-rope for second consecutiveyear in 2012 by the SkytraxWorld Airline Awards,

wishes to enhance the frequency of itsflights to Pakistan to daily basis, HuseyinCepni, the Airline’s general manager inPakistan, told Pakistan Today in an exclu-sive interview here at his office. Talks inthis respect are underway on the govern-ment level and the management of theAirlines, which has the world’s 7th largestflight network and has not done away withthe idea to further increase its strength inthis area, has conveyed its desire to the au-thorities concerned in Pakistan.

“We want daily flights to Pakistanand if you ask for a reason. There is none.We just want it,” said Cepni who is basedhere since his transfer in April 2011 fromBarcelona where he served the Airline asa regional commercial chief for a coupleof years. He said his Airline was flyingfour times and thrice in a week to karachiand Islamabad, respectively.

This number, however, does not setwell with Cepni and his higher ups who, asthe manager said, wanted TA’s dailyflights to various destinations in Pakistan,a potential market for the Airline “Pak-istan is a huge country and is growing fast.karachi has a 65 percent control (in termsof revenue generation) over the economy.All travel agents are based here,” he saidwhile talking about TA’s operation in Pak-istan. Cepni said his firm was operating inthe country for last 30 years. A directors

level talks, Cepni said, had taken place be-tween the Turkish and their Pakistanicounterparts regarding the TA’s flight fre-quency. “It is between the governments ofthe two countries,” he said. “We are stillpending but hope the Pakistani side wouldrespond shortly,” said he adding “Theyhave to respond. We are still waiting. Ihope they would help us”.

For TA, Pakistan stands to be a coun-try of huge potential. According to Cepni,TA’s income from Pakistani passengerswas posting an annual growth of 20 to 25percent with challenges standing next tozero in the business-friendly country.Cepni says there are no problems at all forthe airline industry in Pakistan. “Thereare opportunities and facilities instead.And that is why you see many Europeancompanies working here,” the TA officialargued. Cepni sees Pakistan as a greatmarket for the airline industry whichweighs a country in terms of the numberof its air travelers. The TA manager saysPakistan having the world’s best textile,leather, cotton and carpet industry pro-vides his side with a remarkable numberof business passengers. “There is businesshere. You can find business passengershere. Even the families travel to and fromUk, Canada and other international des-tinations three to four times a year forbusiness or education purposes,” Cepnisaid. He said the increasing opportunitiesof education in England and Turkey hadsound bearing on his business in Pak-istan. Cepni responded in negative whenasked if the ongoing global recessionaryclimate and the resultant economic slow-down had casted a shadow on the Airline’srevenues, especially in Pakistan. “Our net-

work is so big that it offset any negativeimpact. If you fly to more than 2000 des-tinations you are not impacted that much.We even got enough passengers in Pak-istan because they did not stop travel-ling,” he said adding “the businesses inPakistan have been booming so Pakistanibusinessmen kept traveling to and fromEurope, the US, Germany, Italy, Spainand other destinations.”

Pakistan, Cepni said, constitutesaround 40 percent market share for theTurkish Airline given the airline’s flightnetwork linking the Asian country to theUk, the US and Canada. About Pakistanand its people Cepni jubilantly says that:“Pakistani people are so friendly and hos-pitable that I feel at home here.” Cepnisaid one of his major objectives was tobring Turkey and Pakistan closer throughpromoting each other’s culture in the twobrotherly countries. To this effect, he saidhis side had planned events like “DarveshCeremony” and “Turkish Food Festival”to be held in Turkey in November thisyear. Exhibitions displaying Turkish cul-ture would be organized in Pakistan whiledelegates from Pakistan comprising jour-nalists and other stakeholders would beinvited to turkey to increase andstrengthen people-to-people contact.

About Turkish Airlines, Cepni saidhaving started some 79 years ago from thescratch his company today was runningthe world’s 7th largest flight networkthrough its 186-unit fleet, 180 passengerand six basic cargo aircrafts. Based on theAssociation of European Airlines, TurkishCargo is considered to be the best in Eu-rope in terms of average increases in cargocarriage from Europe to and from the

world to the region. For last two consecu-tive years, 2011 and 2012, Turkish Airlineshasbeen the winner of the Europe’s BestAirline and World’s Best Premium Econ-omy Class Seats title conferred upon it bythe Skytrax World Airline Awards, saidCepeni. The Award is determined on thebasis of a survey of more than 18 millionair travelers. Besides being the officialpartner of the soccer giants ManchesterUnited and FC Barcelona, TA, in collabo-ration with Turkish Gold Federation, hasfor the first time sponsored a professionalmega golf event, titled “Turkish AirlinesWorld Golf Final”, scheduled to be held atTurkey’s Antalya Gold Club during Octo-ber 9-12. World’s renowned golfers likeTiger Woods, Charl Schwartzel, Lee West-

wood, Rory McIlroy, Hunter Mahan, Mattkucher, Justin Rose and Webb Simpsonare participating in the tournament. TheAirlines expects the global airline industryswelling beyond $ 800 billion over thenext decade as during the last decade thenumber of passengers had doubled to 2.2billion globally. The Airline calls it its fun-damental aim to make the most of this po-tential of the airline industry and carry itsflag all over the globe as one of the world’sbest airlines. Finding Istanbul having be-come a “connecting point” in the world’sair traffic, the Airline, this year alone, in-creased the number of its passenger trans-fers by 47 percent to cater its passengerstravelling between America, Europe,Africa and Asia.

Let’s savor the Turkish delightTurkish Airlines awaits official nod to start daily flights to Pakistan

NEW YORK

AGENCIES

The S&P 500 .INX.SPX finished its third positive quarter in the lastfour on Friday, despite suffering its largest weekly percentage declinesince June. For the past three months, the S&P 500 gained 5.9 per-cent - its best third quarter since 2010. In contrast, the index wasdown 1.3 percent for the week.

The benchmark S&P 500 earlier this month reached its highestlevel since late 2007. Yet uncertainty remains over whether stockscan hold their gains against the headwinds of a struggling economy.That explains, in part, the retreat over the last several days.

The S&P 500 hit a high of 1,474.51 in mid-September beforepulling back by a bit more than 2 percent. A run at 1,500 seems pos-sible, but the flurry of economic and world events ahead probablywill prevent a major advance in the coming week.

Bulls are betting this week’s Spanish budget proposals will be apreamble to a bailout request by Mariano Rajoy’s government. Themove would be seen as a first step to get the finances of the eurozone’s fourth-largest economy in order and would clear some of themarket uncertainty regarding the euro zone crisis.

Monetary policy is also on the list of market catalysts next week.Federal Reserve Chairman Ben Bernanke is scheduled to speak onMonday and the minutes of the latest FOMC meeting are set for re-lease later in the week. The week’s agenda includes meetings of the

European Central Bank, the Bank of England and the Bank of Japan.“I think we could see a rebound next week if we get some of the

stars aligning and have Spain ask for a bailout, the ECB announcingfavorable terms for that bailout, and if we see the Bank of Japan an-nounce further monetary intervention,” said Brian Jacobsen, chiefportfolio strategist at Wells Fargo Funds Management inMenomonee Falls, Wisconsin. “If Spain and the ECB don’t deliver,we could set ourselves up for a further lateral move in the markets.A negative would be if Rajoy flat-out denies that they need a bailout.”The ECB and BOJ are set to meet on Thursday, with the Bank ofJapan’s meeting extending until Friday.FACTORIES, JOBS AND THE DEBATES: Chinese factory andbusiness conditions data will kick off a numbers-heavy calendar formarkets. Manufacturing PMI, due on Monday, is expected to show asecond straight month of contraction.

A snapshot of U.S. manufacturing activity will be provided onMonday when the Institute for Supply Management releases its Sep-tember index. The September ISM reading is expected to show an-other month of contraction, but at a slightly slower pace than inAugust. On Wednesday, the ISM will release its U.S. services-sectorPurchasing Managers’ Index, which could show a slight decelerationin the pace of growth in the non-manufacturing sector.

“We have Chinese economic data over the weekend, and we’ll seehow markets react on Monday,” said Wasif Latif, vice president ofequity investments at San Antonio, Texas-based USAA InvestmentManagement. “It seems like the market is bracing for bad numbers,meaning if they’re not as bad, it could be market-positive,” Latif said.

Non-farm payrolls for September, due on Friday, are seen up115,000, while the U.S. unemployment rate is seen ticking up 0.1 per-cent from August to 8.2 percent in September.

The jobs data will come on the heels of the first of three U.S.presidential debates, scheduled for Wednesday night. Recent pollnumbers point to a strengthening lead by President Barack Obama,but a weak payrolls reading could give some hope to Republicanchallenger Mitt Romney. “If Romney doesn’t turn the ship with avery strong (debate)performance, the president is going to win,” saidJack de Gan, chief investment officer at Harbor Advisory Corp inPortsmouth, New Hampshire. He said the trend in the polls hastaken away some of the market uncertainty regarding the presiden-tial election. He added that an ECB- or Spain-related headline out ofEurope on Thursday could overcome almost anything that wouldhappen Wednesday night during the debate. “I think the market iscoming to terms with the fact the president is ahead, and unlesssomething significant changes, (he) will prevail.”

INTERVIEW: HUSEYIN CEPNI, GENERAL MANAGER TURKISH AIRLINES IN PAKISTAN

Stock bulls eye Spain, Bernanke and jobsWall Street will open October with a busy week, highlighted by low expectations for global manufacturing dataand the U.S. jobs report, but that could set the stage for positive surprises that help lift the market

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02

Monday, 1 October, 2012

Business

Greece sure to get next aidtranche: GermanmagazinesGreece will receive its next

tranche of international aid

despite budget shortfalls and

slow progress on reforms

because the euro zone does not

want the country to leave the

common currency, two German

magazines reported

BERLIN

AGENCIES

Athens will resume talks with the ‘troika’of international lenders next week on atranche worth 31 billion euros ($39.88billion) needed to avert bankruptcy anda possible euro zone exit. The Greekgovernment needs a deal so it can pushan austerity package through parliamentbefore the next meeting of Eurogroupfinance ministers on October 8. “TheGreeks will receive a list of reformswhich must be approved by theirparliament by a fixed date. The moneywill be released as soon as lawmakershave voted,” a Eurogroup source told theWirtschaftswoche business weekly. It didnot say what new reforms would beproposed but said the euro zone was nowfocused on avoiding a Greek exit. “Thefear of a ‘domino effect’ in the euro zoneis too great (not to release the funds),” asenior EU official told the weekly,referring to possible contagion to otherheavily indebted states such as Spain ifGreece were to default. A second reportin the Focus magazine, citing sources inthe European Parliament, also saidGreece would receive its tranche. “Thereport being drawn up by the ‘troika’ willturn out in such a way that the moneycan be paid out,” it said. The troikacomprises the International MonetaryFund, the European Commission and theEuropean Central Bank. Asked tocomment on the reports, a Germanfinance ministry spokesman said therehad been no change in the situation andthat the Berlin government was stillawaiting the troika report on Greece.Germany, Europe’s biggest economyand paymaster, has long criticizedGreece’s failure to sort out its publicfinances and restructure its economy,but Chancellor Angela Merkel andsenior members of her center-rightcoalition have recently started to stressthe dangers of pushing Athens out of theeuro zone. Greece, in its fifth year ofrecession, wants a two-year extension ofits bailout plan, something its financeminister has said would cost up to 15billion euros of extra funding.

J BRADFORD DELONg

The first two components of the euro crisis – a banking crisisthat resulted from excessive leverage in both the public andprivate sectors, followed by a sharp fall in confidence in eu-rozone governments – have been addressed successfully, orat least partly so. But that leaves the third, longest-term, andmost dangerous factor underlying the crisis: the structuralimbalance between the eurozone’s north and south.

First, the good news: The fear that Europe’s bankscould collapse, with panicked investors’ flight to safety pro-ducing a European Great Depression, now seems to havepassed. Likewise, the fear, fueled entirely by the EuropeanUnion’s dysfunctional politics, that eurozone governmentsmight default – thereby causing the same dire conse-quences – has begun to dissipate. Whether Europe wouldavoid a deep depression hinged on whether it dealt properlywith these two aspects of the crisis. But whether Europe asa whole avoids lost decades of economic growth still hangsin the balance, and depends on whether southern Europeangovernments can rapidly restore competitiveness.

The process by which southern Europe became uncom-petitive in the first place was driven by market price signals– by the incentives those signals created for entrepreneurs,and by how entrepreneurs’ individually rational responsesplayed out in macroeconomic terms. Northern Europeanswith money to invest were willing to lend on extraordinarilyeasy terms to those in the south who wanted to spend, andample pre-2007 spending made employers there willing toraise wages rapidly. As a result, southern Europe adoptedan economic configuration in which its wage, price, andproductivity levels made sense only so long as it spent €13for every €12 that it earned, with northern Europe financingthe missing euro. Northern Europe, meanwhile, adoptedwage and productivity levels that made sense only as longas it spent less than one euro for every euro that it earned.

Now, if, as appears to be the case, Europe does notwant its south to spend more than it earns and its north tospend less, wages, prices, and productivity must shift. If weare not to look back in a generation and bemoan “lost”decades, southern European productivity levels need torise relative to the north, and wage and price levels need to

fall by roughly 30%, so that the south can pay its way withexports and northern Europe can spend its earnings onthose products.

If the euro is to be preserved, and if stagnation is to beavoided, five policy measures could be attempted:

Northern Europe could tolerate higher inflation – anextra two percentage points for five years would take careof one-third of the total north-south adjustment;8 Northern Europe could expand social democracy by

making its welfare states more lavish;8 Southern Europe could shrink its taxes and social

services substantially;8 Southern Europe could reconfigure its enterprises to

become engines of productivity;8 Southern Europe could enforce deflation.

The fifth option is perhaps the least wise, for it implies thelost decades and EU collapse that Europe is trying to avoid.The fourth option would be wonderful; but, if anyone knewhow to bring southern Europe’s enterprises up to the produc-tivity levels of the north, it would have happened already.

So we are left with a combination of the first three op-tions, also known as “policies to restore European growth”– a phrase that appears in every international communiqué.But the communiqués never get more specific. Europe’stechnocrats understand what adoption of “policies to re-store European growth” means. So do some of Europe’spoliticians. But European voters do not, because politiciansfear that spelling it out would be a career-limiting move.But if Europe does not adopt some combination of the firstthree options as policy goals over the next five years, it willface a stark choice: either lost decades for southern Europe(and perhaps northern Europe as well), or continued north-south payment imbalances that will have to be financedthrough fiscal transfers – that is, by taxing the north.

Northern Europe’s politicians should become more ex-plicit about what “policies to restore European growth” ac-tually mean. Otherwise, ten years from now, they will beforced to confess that today’s dithering imposed enormousadditional tax liabilities on northern Europe. That mightturn out to be the ultimate career bummer.

Courtesy: Project Syndicate

MADRID

AGENCIES

SPAIN’S debt as a ratio ofgross domestic product willreach 90.5 percent by end2013, according to the docu-ment presented to Parlia-

ment for approval, almost three timesthat registered before the property bub-ble burst in 2008.

The budget aims to make savings ofaround 13 billion euros ($16.72 billion)next year by cutting spending by the pub-lic ministries, education, health and in-frastructure investments and freezingpublic workers’ wages.

“This is an austerity budget, but willserve to help us get over this long eco-nomic crisis and once again show thatSpain is a trustworthy partner within Eu-rope,” Treasury Minister Cristobal Mon-

toro told journalists after delivering thebudget. Spain is at the center of the eurozone debt crisis as nervous investors de-mand ever higher premiums to holdSpanish debt on concerns the govern-ment cannot control its finances in themidst of a deepening recession.

Calls by wealthy northeastern regionCatalonia for independence and the ris-ing number of demonstrations on thestreets of major cities have fuelled doubtsSpain can fix its problems without help.

Prime Minister Mariano Rajoy has de-layed any plea for aid, which would kick-start a European Central Bank plan to buydebt and ease financing costs, though thisweek has passed reforms and the budgetplan in what many see is an effort to pre-empt the likely terms of a bailout.RISING BORROWING NEEDS: Thebudget details spending cuts of 3.1 per-cent in health, 14.4 percent in education

and 6.3 percent in unemployment bene-fits, as the recession, which began in thefirst quarter, drags on.

The government would also have toincrease its reliance on internationalmarkets for funding next year, with grossdebt issuance requirements of 207.2 bil-lion euros after budgeting in 2012 forgross issuance of 186.1 billion euros.

Spain faces debt redemptions worth159.2 billion euros in 2013, up slightlyfrom 153.2 billion euros in 2012, the doc-ument showed.

The increase in the debt-to-GDP ratiowas due to a greater debt on the back ofthe economic crisis and the effect of stateinstruments on public accounts, theTreasury said in the document.

The instruments include the powerdeficit bond program, FADE, the serviceprovider fund for regional governments,Spain’s part in aid granted to Ireland,

Greece and Portugal and the recapitaliza-tion loan for the country’s banks, it said.

Brussels on Thursday said the budgetwas a large step in the right direction. Butmany economists expressed doubt thatSpain’s conservatives would be able toraise the cash the budget demanded aspension and debt-servicing costs rise.

“My general view is that this is an op-timistic budget, in the sense that predic-tions for the contraction in 2013 are veryoptimistic,” said Xavier Vives, economistat business school IESE, adding that heexpected the plans to be revised as withevery other budget over the last four years.DEFICIT JUMP: Spain will meet its2012 public deficit target as dictated byEuropean guidelines, Montoro said, butthe shortfall will jump by more than onepercentage point if aid to its strugglingbanks were taken in to account.

The Spanish deficit this year would be

6.3 percent of GDP, not including thesepayments to its banks, he said, but wouldrise to 9.4 percent of GDP last year and7.4 percent of GDP this year if the aid wasconsidered.

“Everything within the deficit de-rived from financial operations aren’t in-cluded ... they’re considered one-offs,”Montoro said. Spain has asked for up to100 billion euros for its crisis-hit banks,though the debate among Spain’s Euro-pean partners rages over whether thatmoney would go directly to its lenders orfirst via public coffers.

On Friday, an independent reportshowed Spanish banks will need up to59.3 billion euros in extra capital to rideout the economic downturn.

The budget details on Saturdayshowed Spain’s debt ratio included 30billion euros of the planned 100-billion-euro aid request for the country’s banks.

Shareholders showconcern over NonProduction DaysKARACHI: “Non-Production Days(NPDs) at Indus Motor Company’s plantsare due to the huge influx of importedused cars which affected the demand of lo-cally produced cars negatively,” statedIndus Motor Company (IMC), Chairman,Ali S. Habib while answering the share-holders’ concerns on NPDs during the23rd Annual General Meeting (AGM) ofIndus Motor Company Ltd. held yesterday.

CORPORATE CORNER

Spain debt rises on aid to banks, regions

Peek Freans Sooper, Pakistan’s leading biscuit

brand has over the past month been advertising

a consumer promotion to watch T-20 Cricket

World Cup Live in Sri Lanka & Support Team

Pakistan. On 28th lucky draw ceremony of Super

Cricket Sooper Pakistan offer was held at EBM

Head Office in the presence of EBM top

management. 50 lucky participants were

selected through draw who will be send to Sri

Lanka to cheer Team Pakistan.

Spain’s debt level and borrowing needs are set to rise next year, piling pressure on the government to apply for internationalaid, as it pours funds in to cash-strapped regions and an ailing banking system, its budget showed on Saturday

RIYADH

AGENCIES

“What should happen is we should have a full packagewith a full strategy to solve the problems,” SheikhHamad bin Jassim al-Thani, who also heads the coun-try’s sovereign wealth fund, Qatar Investment Author-ity (QIA), told U.S. financial broadcaster CNBC in aninterview aired on Friday.

This month the U.S. Federal Reserve announced aprogram of heavy purchases of mortgage-backed secu-rities in an effort to boost employment, but the U.S. gov-ernment has so far failed to reassure financial marketsthat it has an effective plan to cut its budget deficit andboost economic growth. The European Central Bank hasalso said it will buy bonds to protect economies from theeuro zone debt crisis, but governments of weak coun-tries such as Greece and Spain have not persuaded in-vestors their debts can be cut to safe levels.

Sheikh Hamad said the central banks were right toact to prevent worse crises, but added: “With moreprinting money, without having a strategy, I believe thevalue of the money will go down very soon.”

He did not give details of the economic measures

which he believed Western countries should be taking,but said the risk of further volatility in markets wasmaking investors such as Qatar cautious. Analysts haveestimated the size of Qatar’s sovereign wealth fund ataround $100 billion. “There are some questions withno answer up to now,” he told CNBC.

However, Sheikh Hamad added that Qatar wouldretain holdings of strategic stocks and buy when pricesdropped, and that it would continue to make new in-vestments in promising assets.

He said he was optimistic about the longer-termfuture of the banking industry, since better regulationand capital-raising would strengthen banks after someyears. He noted that QIA had a strategic stake in CreditSuisse CSGNNY.UL, and owned about 1 percent ofBank of America (BAC.N) and 5 percent of SantanderBrasil (SANB11.SA) among other banks. The gas-richGulf state has bought more than $5 billion or $6 billionof real estate assets over the last four to five months,mostly in the United States and Europe, Sheikh Hamadsaid. “If there is some good opportunity, why not,” hesaid of investing in crisis-hit Europe. XSTRATA BID: Qatar, which owns just over 12 per-cent of Xstrata (XTA.L), will help to determine the suc-

cess or failure of Glencore’s (GLEN.L) $32 billion offerfor the miner. Glencore was forced earlier this monthto raise its bid price, offering 3.05 new shares for everyXstrata share instead of 2.8, after Qatari pressure. Asa condition, however, Glencore imposed its own chiefexecutive and largest single shareholder, Ivan Glasen-berg, at the head of the combined group.

Xstrata’s directors face a Monday deadline to de-cide their position on Glencore’s higher offer. SheikhHamad told CNBC: “We have no problem with the newprice,” but added, “Other aspects (of the proposeddeal) have to be studied.” He declined to elaborate.AUX: Earlier this week Reuters quoted bankingsources as saying Qatar Holding, one of the country’sinvestment vehicles, was in advanced talks to buy a 49-percent stake in Brazilian billionaire Eike Batista’s goldfirm AUX for about $2 billion.

Qatar Holding subsequently issued a statementdenying that such talks had taken place.

However, asked about Qatar’s intentions towardsAUX, Sheikh Hamad told CNBC: “We’re studying it.Still there is no commitment from our side.” Details ofthe proposal need to be presented to the board, headded without elaborating.

Qatar ‘worried about value of dollar, euro’Wealthy Qatar, a major investor in US and European assets, worries that haphazard attempts bycountries to shore up their economies could weaken the dollar and the euro, its prime minister said

Stage three for the euro crisis?

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