Cotton prices continued their downward drive this week conceding another Rs 100 to Rs 150 per maund. Conditions on the cotton market are bearish and offtake of lint is decidedly low. Hardly any meaningful business is reported from the cotton market where ginners may still be saddled with close to half a million unsold bales of cotton from the current season (2013-2014).
Actually the Pakistani textile mills, together with the allied exporters, upholstery manufacturers, loom operators and the sizing industry, largely located in the Punjab province, are facing a serious situation and are said to be fighting for their survival.
Punjab located textile industry, including its downstream sector, are said to be facing 18 hours of gas shortages and 8 hours of power load-shedding which has resulted in a colossal loss to the industry, while other provinces are said to be facing no such difficulty.
The problem with the Punjab textile industry is reported to be so serious that due to appreciation of the Pakistani rupee over the past several weeks and shortage of gas and power supply, several of their units have been closed down or their output decreased in a large way. The situation on the labour front in these Punjab textile mills has turned ugly with several cases being reported of workers beating up the management cadre. The Chairman, All Pakistan Mills Association (APTMA) Punjab Zone, S. M. Tanveer has called for provision of gas and electricity supply to Punjab on a priority basis.
Consequently, the domestic cotton market is weak and conditions are not well for the cotton economy of Pakistan. The Karachi Cotton Association (KCA) decreased its ex-gin price of grade three cotton by Rs 100 per maund (37.32 Kgs) on Wednesday and fixed it at Rs 6,400 per maund.
Lint prices in Sindh for the current season (2013-2014) reportedly ranged lower from Rs 5,000 to Rs 6,200 per maund (37.32 Kgs) in Sindh according to the quality. In the Punjab they are said to have ranged from Rs 5,600 to Rs 6,400 per maund in a weak market where business was very slow on Thursday. Yarn prices are also said to be down in a dull market.
This situation is likely to last till June 2014 when the market may find a new balance to adjust itself with the appreciated rupee and the rampaging textile workers are pacified before the arrival of the new crop (August 2014-July 2015). On the global economic and financial front, several equity markets put up a good front from Monday through Wednesday, only to weaken on Thursday due to several negative factors which brought abundant fear amongst the sundry investors. Caution was the key word aiming to guide the equity values for the remainder of this week.
Asian markets presented a mixed picture after fall of technology shares in the US fearing further downslide in this sector. Early trading in shares comprising Nikkei Index and the Shanghai composite on Thursday showed a declining trend. With Chinese growth at an 18-month low figure and the slowing down of the Chinese economy, the investors were disappointed.
European scrips were generally lower in early trading on Thursday following nervousness due to rising fears in Ukraine where tensions have kept growing and prolonging even as the concerned parties were meeting for political talks with a view to defuse the fearful situation there. However, the situation remains quite volatile and unpredictable. With all the political talks between the western powers and Russia, the situation in Ukraine keeps simmering. Indeed the rising tensions in eastern Ukraine is promoting uncertainty on the global bourses.
Market pundits are of the view that indices like Dow Jones and Nasdaq, or for that matter Standard and Poor's will lose steam in the foreseeable future. Indeed there is a growing group of observers watching the bourses rise to dizzy heights who sincerely believe that stocks values are not only in for a major correction but are moving swiftly to see their worth cut into half within a short period of time.
Not only has the current state of the global stocks indices levels been described as an "aging bull Market", share price assessors believe that it is likely to go overboard. What is emerging is a universal call not only to facelift or perform a makeover of the basic philosophy or structure of the stock markets, but to make fundamental changes in it to make it more equitable, properly regulated by instilling rules and regulations in its working so that they become more transparent.
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