Power Holding Limited (PHL), a public sector entity fully owned by the Ministry of Energy, is issuing a debt instrument to address the liquidity constraints being faced by Pakistan’s power sector. This is the first ever debt issuance through book building in the history of Pakistan Stock Exchange (PSX) and represents an important milestone. The local bourse is playing a key role in helping the government overcome one of its biggest economic challenges, power sector circular debt. Pakistan Energy Sukuk-II (PES-II) is a Government of Pakistan (GoP) guaranteed Shariah compliant security of Rs200 billion which is 100% SLR eligible, having…
Author: Shabbir Kazmi
Interest rate cut, opening of businesses likely to give impetus The benchmark index of Pakistan Stock Exchange (PSX) closed the week ended 15th May 2020 at 34,008 points, up 2.23%WoW as investors focused on the reopening of parts of the economy and monetary policy announcement. There was an unprecedented contraction in economic activity (LSM down 22.0%MoM in March 2020), but market participants remained undeterred. The announcement of MSCI semiannual review brought fresh wave of interest in PPL and MARI (included in the small cap index, replacing NML and SNGPL). Other major news flows during the week included: 1) Prime Minister…
As hopes are building for easing of lockdown, which should not continue for indefinite period, it is necessary to evaluate the prevailing situation and come up with our own homegrown plan. One of the positive points is, this time International Monetary Fund (IMF) and other multilateral financial institutions are more than willing to extend help to every country, Pakistan is certainly not an exception. The latest assessment of International Monetary Fund of Pakistan’s economy lays out immediate economic fallout from COVID-19, as well as provides initial guidance on program modalities once conditions become normal. It is necessary to examine the…
Cement manufacturers in Pakistan have posted losses for 3QFY20 as compared to profit for 3QFY19 and 2QFY20. This raises concerns because the outcome of 4QFY20 could be even worse, because of prolonged lockdown and Ramadan impact. However, the silver lining is the package announced by the government for the construction industry. This analysis is based on a report by one of Pakistan’s leading brokerage house, Topline Securities, based on 11 listed cement manufacturers out of 15, representing 95% of the total sector market capitalization. The brokerage house has taken into account only those companies which have already announced quarterly results…
Profit-taking spoilsport; monetary, lockdown ease and budget news may favour market After posting a spectacular performance in the previous week (up 3.98%WoW), the market lost some of its momentum on profit-taking. The benchmark closed the week ended on 8th May 2020 at 33,268 points, down 2.47%WoW. Top gainers of the week were: SHEL, YOUW, IDYM and HMM, whereas laggards included: KTML, CHCC and SERT. Average daily traded volume for the week improved only slightly more than 190 million shares as Ramadan factor persisted. Volume leaders being: HASCOL, UNITY, MLCF and TRG. The total liquid foreign reserves held by Pakistan were…
Amid growing concerns about the potential economic impact of the COVID-19 pandemic, State Bank of Pakistan (SBP) in collaboration with Pakistan Banks Association (PBA) has announced a comprehensive relief package. This package is aimed at facilitating stakeholders including households and businesses (microfinance, SMEs, corporates, commercial, retail, and agriculture) to manage their finances through this temporary phase of disruption. Key highlights of the package are as follows: Banks’ overall pool of loanable funds has been increased To support the banking sector to supply additional loans to businesses and households, SBP has reduced the Capital Conservation Buffer (CCB) from its existing level…
The world has changed dramatically during Jan-Mar quarter of 2020. A rare disaster has resulted loss of a large number of human lives. As countries implement necessary quarantines and social distancing practices to contain the pandemic, the world has been put in a ‘Great Lockdown’. The magnitude and speed of collapse in activity that has followed is unlike anything experienced in our lifetimes. This is a crisis like no other, and there is substantial uncertainty about its impact on people’s lives and livelihoods. A lot depends on the epidemiology of the virus, the effectiveness of containment measures, and adopting corrective…
Index keeps surging on improved economic factors During the week ended 17th April 2020, the benchmark index of Pakistan Stock Exchange (KSE-100 Index) exhibited initial signs of consolidation, managing to close the week at 32,831 points, up 2.5% WoW. This was the third consecutive week of positive returns, a trend last observed at the end of 2019. Macro and policy developments remained in a state of flux, with sentiments broadly coming to a head at the tail-end of the week as foreign debt relief accompanied by the surprise 200bps policy rate cut changed investors’ sentiment. Key news flows during the…
Pakistan Day is celebrated with great fervor every year, but this year the circumstances are very different. People are living under extreme fear due to coronavirus pandemic, not only in Pakistan but around the world. The death of dozens of people from the pandemic, reminds us hundreds and thousands of people, who were assassinated after the partition of subcontinent. This also reminds the helplessness and the difficult administrative and financial conditions prevailing at that time. At that time Pakistan emerged strong only because people were united and had the resolve. Around this time the country has a robust administrative structure, financial conditions are…
At its meeting on 17th March 2020, the State Bank of Pakistan’s Monetary Policy Committee (MPC) decided to cut the policy rate by 75 bps to 12.50 percent. The decision reflected the MPC’s view that the outlook for inflation has improved in light of the recent deceleration in domestic food prices, significant decline in consumer price expectations, sharp fall in global oil prices, and slowdown in external and domestic demand due to the coronavirus spread. The Committee emphasized that it stood ready to take further actions if and when needed as more information becomes available on the outlook for inflation and growth. In reaching…
Massive selloff witnessed, uncertainty on Covid-19 fear to persist The week ended on 20th March 2020 started on a massive selloff and increased concerns over growing cases of coronavirus around the world. Commodities also witnessed a slide on the back of decreasing demand projections whereas ongoing tussle between global oil players also took a toll on oil prices. That said, slight rebound was witnessed towards tail-end of the week as investors went after cheap valuations. Consequently, the benchmark index of Pakistan Stock Exchange (PSX) closed the week at 30,667 points, down 14.5%WoW. Foreign investors continued with the selling, in-line with the…
The week ended on 13th March 2020 can be termed one of horrific weeks for crude oil producers and traders as prices went down about 50 percent since the start of the year. Oil rebounded a bit on Friday following movement in the US Congress to pass a coronavirus economic relief bill. Nevertheless, the near-term looks dire for oil markets, with supply rising quickly as demand continues to collapse. The added threat is likely hike in output by OPEC and Russia. Analysts anticipate oil prices to remain at current depressed levels for months amid a price war and the fight…
Federal Reserve of United States has cut rate in an emergency that has created opportunity for other central banks around the globe to cut rate, especially for those who held off so far out due to domestic and external concerns. It is expected that State Bank of Pakistan (SBP) will also follow the suite. However, many analysts expect the SBP to and opt for status quo in the upcoming monetary policy announcement. There are indications that inflation rate is easing in Pakistan, many attribute this to high base effect, delay in utility rate adjustments and price normalization in certain food…
Market remains under coronavirus fear, posts 5.7pc decline During the week ended 13th March 2020 Pakistan Stock Exchange (PSX) remained under pressure mainly due to coronavirus pandemic and plunging crude oil prices. Pak rupee also witnessed erosion in value. The benchmark index closed at 36,061 points, registering a decline of 5.7%WoW. Average daily traded volumes during the week grew by 9.0%WoW to 234.3 million shares. Volume leaders included: MLCF, FCCL, BOP and KEL. While gainers included: PIOC, CHCC, INDU and NCL, laggards were: POL, PPL, BOP and 4) MEBL. With the market in a clear under pressure depression (down 17%…
Members of Organization of Petroleum Exporting Countries (OPEC) are scheduled to meet in Vienna in first week of March 2020. Top of the agenda item is to decide production quotas in the aftermath of coronavirus spread. To arrive at further production cut will not be easy because of United States emerging as one of the largest oil producing country as well as exporting substantial quantity. Even the bigger concern is that crude oil price has plunged below US$50/barrel. On Friday, 28th February 2020, oil prices fell for a sixth day in a row on to their lowest in more than…
One completely fails to understand why even a thought of ending Saudi-Iranian animosity make the supporters of monarch jittery. If one could recollect lately Iraq made an attempt to ease tension between the two arc enemies, but turmoil was created in Iraq. Soon after two top military strategist, one each from Iran and Iraq were killed, the probability of war in the region increased manifold. Recently, Iranian Foreign Minister Mohammad Javad Zarif, who traveled to Germany to attend the 2020 Munich Security Conference, said that after the martyrdom of commander Qasem Soleimani, we received a message from Saudi Arabia calling…
The market started the week on a positive note, following encouraging developments on macro front – soft inflation numbers of 12.4% for February 2020, supported by promising trade numbers and trade deficit falling by 19.7%YoY and 15.8%MoM. The benchmark index of Pakistan Stock Exchange (PSX) gained 1,312 points in the first trading session. However, the market was quick in losing 389 points in the next two trading sessions. The mid-week Fed’s emergency rate cut and consequent reduction in bond yields once again raised the easing expectation amongst market participants, which led to another brief rally of 475 points in the…
Market stays dull but expected to pick up on FATF statement Amid uncertainty on the macro front, pertaining to IMF and FATF, performance of Pakistan Stock Exchange (PSX) remained lackluster. The benchmark index closed the week ended 21st February 2020 closed at 40,249 points, flattish WoW. The GoP continued to push for deferral of additional tax measures and energy tariff hikes till the next fiscal year amid backlash on inflationary pressures. The news flow indicated a lack of favorable response from the IMF. Meanwhile, Federal Board of Revenue (FBR) began its exercise on how to generate Rs200 billion additional taxes,…
Smidgen gain witnessed; IMF’s development, earning reports keenly awaited During the week ended on 14th February 2020, the benchmark index of Pakistan Stock Exchange (PSX) closed at 40,243 points, up 0.25%WoW as trading activity remained muted. Foreigners remained net sellers with US$11.15 million that was mainly absorbed by insurance companies and other organizations. Top performers of the week included MLCF, HUBC and HBL, while PAEL, KAPCO and GWLC remained the laggards. Major volume churners included UNITY, HASCOL, MLCF, BOP and DGKC. The week started with market witnessing a major sell-off, amid fears of global slowdown on coronavirus outbreak in China,…
In Pakistan there exists two distinct, but opposite opinions about the growth of Islamic banking in the country. The proponents are jubilant and claim that now a little less than 15 percent of total assets of the banking sector are now Shariah compliant. However, the other group insists that the quantum is paltry; keeping in view that the overwhelming majority of the population is Muslim. Therefore, it is necessary to first review the situation dispassionately and then come up a new strategy. After the judgment of the apex court that Pakistan’s banking system was not Shariah compliant, the Government of…
Prior to the outbreak of virus in China, analysts were of the view that gold prices will hold above US$1,500/oz in 2020 and make modest gains in 2021. It was also believed that low interest rates and geopolitical uncertainly will bolster appeal of the precious metal. Lately price of precious metal, falling in the list of safe-haven assets has been hovering around US$1,600/oz. Prices shot up 18% last year — the biggest annual gain since 2010 — as global economic growth faltered and central banks responded by easing monetary policy. Gold has re-established its safe-haven status and analysts expect price…
Inflation report push stocks down; earnings of banks, chemicals may drive volumes Higher than expected inflation recorded in January 2020 dampened investors’ sentiments on growing fears that monetary policy easing could be delayed. The benchmark index of Pakistan Stock Exchange (PSX) declined 3.6%WoW to close at 40,144 for the week ended 7th February 2020. Average daily trading volume plunged to less than 168 million shares, down almost 11%WoW as the beginning of earnings season failed to steer investors’ participation. Volume leaders for the week included: BOP, HASCOL, MLCF and UNITY. While FFC managed to post gains, laggard included DGKC, HASCOL,…
Reportedly, utilization capacity, on stated double shift capacity basis of major OEMs for CY19 declined as compared to CY18 as the industry dealt with a hampered demand outlook, specifically as consumers suffered from ‘sticker-shock’ over rabid price hikes. The lessons for CY20 remain the persistence of the ‘new model effect’, witnessed in CY19 segment-wise sales, likely to play out in the case of INDU. Moreover, improvements in purchasing power, either from monetary loosening or relative rupee stability, accompanied by tax concessions for consumers (removal of FED) could catalyze demand in the coming year. CY19 total industry sales of 191,085 units,…
Unchanged rates, weak corporate results mar sentiment; imf review keenly awaited Weak corporate results and State Bank of Pakistan (SBP) decision to leave interest rate unchanged marred investors’ sentiment. As a result the benchmark index of Pakistan Stock Exchange (PSX) closed the week ended 31st January 2020 at 41,631 points, down 2.35%WoW. Market participation also remained weak, with an average daily volume remaining flattish on WoW at 188.14 million shares. The top volume leaders included: MLCF, HASCOL, UNITY, AVN and BOP. While top gainers were: HASCOL, PSMC, NCL and INDU, laggards were: MCB, NML, UBL, POL, PPL and OGDC. Sector…
Reportedly, the Government of Pakistan (GoP) has confirmed that the operations of local refineries had slowed down because of high production of residual fuel oil (RFO) and the international ban on its use for bunkering after 31st December, 2019. In a statement, Petroleum Division has said that because of new regulations issued by the International Maritime Organization (IMO), crude oil import had reduced during the first six months of the current fiscal year. Under these regulations, RFO containing more than 0.5% sulphur content is disallowed for use in ships and its violation carries heavy fines. Most of the refineries operating…
Many Pakistanis, especially people living below the poverty line, are facing the brunt of brewing wheat crisis in the country. The news being printed in newspapers and aired by television channels are adding to the confusion, rather than easing the tension. However, it may be said in the simplest words that the brewing crisis is the outcome of gross mismanagement by the government. The story started with the failure of government in timely procurement of the staple food. Lack of storage facilities, ill-timed export and now the rush to import the commodity, clearly indicates that those at the helm of…
Markets jump back; FATF, monetary policy outcome likely to guide After four consecutive sessions of retreat, the benchmark index of Pakistan Stock Exchange (PSX) staged a rebound on the last trading day of the week ended on 24th January 2020, closing at 42,633 points, but still down by 1.24%WoW. The market remained under pressure on fears of: 1) inflation likely crossing 13% mark in January 2020 putting on hold expectations of interest rate cut in forthcoming Monetary Policy announcement and 2) potential gas price hikes where the decision to reduce GIDC to Rs5/bag from Rs405/bag added to the uncertainty particularly…
There are growing fears that the rate of inflation for January 2020 would be the highest in last nine years in Pakistan. It would be much convenient for the economic managers to blame the extraneous factors for this hike. However, the results could cause serious issues in Pakistan-IMF relationship, as the Government of Pakistan may not succeed in meeting the targets agreed with the lender of last resort. Reportedly, food inflation — reflecting pass-through of increases in international commodity prices, lagged impact of currency depreciation and a seasonal increase in certain commodities — remains key driver pushing headline number to…
Index remains range-bound; results may offer easing Pakistan Stock Exchange (PSX) remained range-bound during the week ended 17th January 2020 and its benchmark Index closed almost flat at 43,168 points, after having crossed its 17-month high mark a week ago. Despite Fitch forecasting a stable outlook for Pakistan, the cautionary tone kept the investors on the sidelines. Top performers of the week included: PSMC, MEBL, HMB, BOP and CHCC, while laggards included FFBL, KEL and HASCOL. Additionally, sector wise developments including a massive spike in coal prices and dismal auto sales data kept cement and auto sectors under pressure. Preliminary…
The Presidents and representatives of Habib Bank, National Bank of Pakistan, United Bank, MCB Bank, Allied Bank, Meezan Bank, Bank Al-Falah, Bank Al-Habib, Habib Metropolitan Bank and Faysal Bank have signed the shareholders’ agreement for the establishment of Pakistan Corporate Restructuring Company Limited (PCRCL). The agreement was signed at State Bank of Pakistan, Head Office. On this occasion, Dr. Reza Baqir, Governor of the central bank was also present. Under the provisions of Corporate Restructuring Companies Act 2016 and with an initial Paid-up Capital of Rs500 million, the above banks have decided to establish the Corporate Restructuring Company (CRC), which…
Without mincing words, it may be said that Pakistani readers/viewers get no clue of the current United States-Iran conflict. To be precise they are lost by reading reports released by international media houses. The reason in most obvious, these media houses are owned and operated by anti-Muslim elements. Over the years, distorted news reports were released about Pakistan-India conflict that culminated at East Pakistan, becoming Bangladesh. During 1965 and 1971 Pakistanis became addicted to BBC, as they were made to believe that the reporting was ‘fair’. When Saddam Hussein of Iraq attack Kuwait Pakistanis were introduced to another fantasy, CNN,…
Roller coaster week witnessed, local dynamics may take driving seat Pakistan Stock Exchange (PSX) went through a roller coaster ride during the week ended on 10th January 2020, mainly due to geopolitical tensions. Nosedive at the start of the week on heightened geopolitical tensions was followed by volatility in subsequent two sessions as markets looked for clarity. However, towards the end of the week subsiding tension formed the basis of strong recovery. The benchmark index closed the week at 43,207 points, up 2.1%WoW along with improved activity. Average daily trading volume for the week was up 7.6%WoW to more than…
Seminar on Emerging Trends in Good Governance of Banking Sector in SAARC Countries held Dr. Reza Baqir, Governor, State Bank of Pakistan during his inaugural address in a seminar on “Emerging Trends in Good Governance of Banking Sector in SAARC Countries” highlighted the importance of efficient and robust governance structure in the banking industry for sustainable economic growth of a country. Besides Pakistan, the captioned seminar was attended by delegates from Afghanistan, Bangladesh, Bhutan, Sri Lanka and Nepal. While addressing to the participants from SAARC member countries at National Institute of Banking and Finance (NIBAF), Islamabad, Dr. Baqir said that…
Hutchison Ports Pakistan created maritime history in Pakistan by welcoming maiden call of CV COSCO BELGIUM. It is the largest container vessel to ever call at any port of Pakistan, with length over all of 366 meters and a capacity of 13,386 TEUs. CV COSCO BELGIUM is deployed in the EPC 2 service and berthed at 2000 hours on 18th December 2019. The vessel sailed at 1400 hours on 19th December 2019 after handling 1537 moves during her stay. “The arrival of the CV COSCO BELGIUM to Pakistan is a matter of great pride for us as we are the…
The decision by the Government of Pakistan (GoP) to restrict claimability of input sales tax from unregistered consumers through the Tax Laws (Second Amendment) Ordinance 2019 is expected to increase price of Urea by Rs40/Bag within the first month of 2020. The objective of this amendment, through Presidential Ordinance, is to bring major distributors into the sales tax regime. Speaking with an industry expert it was revealed that against the sales made to unregistered distributors who make purchases of Rs10 million on monthly basis or Rs100 million on annual basis, the manufacturers would not be granted input adjustments. Another fertilizer…
Stocks get off to a lively start in 2020; geopolitical concerns, SBP decision may dominate Meeting the New Year on an exuberant note, with market expectations of economic stability crystallizing, the benchmark index of Pakistan Stock Exchange (PSX) closed at 42,323 points, up 3.6%WoW for the week ended 3rd January 2020. Average daily traded volume was 23% to 281 million shares. Based on NCCPL data, foreigners were sellers with US$7.3 million. The total liquid foreign reserves of Pakistan were reported at US$18,081.4 million on 27th December 2019. The break-up was: reserves held by the State Bank of Pakistan (SBP) amounted…
The Executive Board of the International Monetary Fund (IMF) on 19th December 2019 completed the first review of Pakistan’s economic performance under the Extended Fund Facility (EFF). The completion of the review allowed Pakistan to draw SDR 328 million or US$ 452.4 million, taking total disbursements to SDR 1,044 million or US$ 1,440 million. The Executive Board approved the 39-month, SDR 4,268 million or US$6 billion at the time of approval of the arrangement, EFF for Pakistan on July 3, 2019. Following the Executive Board’s decision, David Lipton, First Deputy Managing Director and Acting Chair, issued a statement stating, “Pakistan’s…
The year 2019 witnessed a mix of some predictable events—such as Organization of Petroleum Exporting Countries (OPEC) and Russia extending their cooperation pact, but a few unpredictable i.e. attacks on Saudi oil facilities and ships carrying oil. Many of the geopolitical issues lingering on in year 2020 could take unpredictable twists. Still, governments and corporate sector in oil consuming countries have to plan and remain vigilant to minimize the intensity of shocks. Some of these are: US shale production Keeping in view the declining number of active rig counts, it may be said that US shale growth is slowing down,…
In its first full year of rule, PTI government lead by Imran Khan introduced a number of regulatory actions in CY19, mostly to comply with the conditions imposed by International Monetary Fund (IMF) to remove macro imbalances and structural issues in the energy chain. Major regulatory actions include: 1) adoption of new flexible market determined exchange rate regime as against managed float previously, 2) withdrawal of tax exemptions to various sectors to improve tax collection, 3) utility rate adjustments both in electricity and gas sectors, 4) injection of Rs200 billion in the energy chain to improve liquidity situation and 5)…
Volatility witnessed; imf tranche, fatf talks may shape market direction Pakistan Stock Exchange (PSX) witnessed volatility during the week ended 27th December 2019 and closed flattish at 40,849 points. The market opened on a weak note due to increased political uncertainty and start of the rollover week. The benchmark 100-Index recovered over the next two sessions on receipt of US$454 million from International Monetary Fund (IMF) and a positive outlook given in the first review by the Fund. The announcement about discovery of fossil reserves by PPL changed the market sentiment. After revising downward the FBR’s target to Rs5.2 trillion,…
Reportedly, tourism has grown faster than the global economy for the eighth consecutive year. It is estimated that more than a billion people travel internationally, with around half of these journeys destined to developing countries. Pakistan is uniquely placed to take advantage of this trend as travellers can experience the historical heritage of one of the oldest civilizations in the world, worship at the rich collection of Sufi shrines, Hindu temples, Sikh gurdawaras and Buddhist monasteries, scale some of the highest mountains in the world, or simply experience natural beauty ranging from blossoming trees against a backdrop of snow-clad peaks…
From Hong Kong to Tehran to Buenos Aires, the world is in persistent turmoil. A question is getting louder, what is triggering global unrest. There is so much unrest throughout the world at any point that it would appear to be merely the normal chaos. However, a point is very clear reasons for turmoil are unique for each country and often multiple. Hong Kong, Tehran and Buenos Aires are very different places, each with its own geopolitical circumstances. One of the conspiracy theories suggests one element that is common to them all, economic chaos of 2008. More than a decade…
Contrary to the expectations of many Pakistanis, Prime Minister Imran Khan opted not to attend Kuala Lumpur Summit. The overwhelming perception is that the Prime Minister Imran Khan decided to stay away from the Summit under the pressure of Saudi Arabia. It is no secret that the Kingdom has been extending help to the incumbent government to avert the economic crisis, ever since Imran Khan came into power. Reportedly, Imran Khan had telephoned his Malaysian counterpart Mahathir bin Mohammad to express his regrets for not being able to attend the summit. He also conveyed the same to Turkish President Recep…
Profit-taking, political news killjoy positivism, sentiments may stay weak After closing positively for seven consecutive weeks, the benchmark index of Pakistan Stock Exchange (PSX) closed in red due to political pressures for the week ended 20th December 2019. The market started off on a strong note with the KSE-100 Index gaining 728 points on Monday, with the rally driven by main-board stocks particularly the E&P sector. However, profit-taking and negative news flow on the political front dented market sentiments with the benchmark Index closing flat at 40,833 points, down 0.2%WoW. OGRA’s proposal for a hike in gas prices by 31.6%…
Oil producers’ cartel led by Saudi Arabia and Russia agreed on Friday, 5th December 2019 for deeper oil output cuts during the first quarter of 2020, aiming at averting oversupply and supporting prices. The group of more than 20 oil producers agreed to cut an extra 500,000 barrels per day (bpd). The cartel seems fully cognizant of overflowing crude oil market, weak refining margins and no excess inventory. The cut has come at a time of year when demand should be the strongest and should also add pressure to hike product prices. While the market response may be muted, the…
According to media reports, tougher rules on sulphur emissions from ships will come into effect next year in the biggest shake-up for the oil and shipping industries for decades. International Maritime Organization (IMO) will ban ships from using fuels with sulphur content above 0.5%, existing limit is 3.5%. The regulations are aimed at improving human health by reducing air pollution. Only ships fitted with sulphur cleaning devices known as scrubbers will be allowed to continue burning high-sulphur fuel. Ship owners can also opt for other sources of cleaner fuel such as liquefied natural gas (LNG). Failure to comply with the…
Index remains up for 7th consecutive week, likely to resistance levels During the week ended on 13th December 2019, the benchmark Index of Pakistan Stock Exchange (PSX) closed positively for a 7th consecutive week, gaining 184 points WoW or 0.5%, the was despite three negative sessions. During the week Index crossed 41,000 level before closing at 40,917 points, in doing the Index also reached the highest level in last 41 weeks. Based on NCCPL data, foreigners sold equities worth US$9.05 million. On the domestic front, Mutual Fund emerged buyer of US$7.6 million, but corporate remained seller to the tune of…
Mercury level has already started declining and fears of gas load shedding are rising, historically load shedding of gas has been a regular feature in Pakistan. Not only gas supply to CNG stations and industries is curtailed/suspended, but domestic consumers also have to face the brunt of low pressure. This year low international gas prices offer an opportunity to Pakistan to avoid load shedding of gas for the industries and keep them running on optimum capacity utilization. The reason is simple – excess liquefaction capacity coming on-stream has created supply glut as offtake is not increasing. According to some media…
One wonders why Middle East and North Africa (MENA) continue to suffer from internal turmoil as well as proxy wars. Some analysts say the single largest reason behind the present turmoil can be ongoing attempts to keep crude oil prices high to facilitate other countries to boost their domestic oil production. The latest evidence was attack on Aramco facilities in Saudi Arabia to attract high subscription to Initial Public Offering (IPO). The immediate success was, China opting to take US$10 billion stake in one of the largest energy production facility in the world. Reportedly, Saudi Arabia is making efforts to…
A delegation of more than 40 representatives from industrial, commercial and trade organizations from 17 countries paid a visit to Chinese solar panel maker Risen Energy Company. These countries border the Chinese government’s Belt and Road Initiative’s route and representatives from Slovakia, Brunei and Panama were also present. After touring Risen Energy’s production facilities, learning about its development and market portfolio and communicating with its executives, the representatives were thoroughly impressed and praised Risen Energy’s contribution to the Belt and Road Initiative. Since 2013, when the Belt and Road Initiative was first launched by the Chinese government, Risen Energy has…
Index ends Nov-2019 on highest note since 77months; stocks may move under pressure Pakistan Stock Exchange (PSX) closed positively for third consecutive month and gained 15% during November 2019, which was highest index gain in last 77 months. Investors’ sentiments remained positive on the back of successful IMF review and encouraging macroeconomic indicators that included: 1) higher interest in local debt securities of Pakistan, depicted by inflow of US$713 million (T-Bills and PIBs) in SCRA account during the outgoing month, 2) Pakistan reported current account surplus of US$99 million for first time in last 4 years and 3) expectations of…
During 3QCY19 aggregate profitability of listed Pakistani commercial banks (excluding Silk Bank) rose to Rs45.5 billion, up 48%YoY. The increase in profit is primarily on the back of a 33%YoY increase in net interest income and 17%YoY growth in non-interest income. Biggest increase was posted by BankIslami, followed by Habib Bank and Meezan Bank. Cumulative 9MCY19 profits of the listed banks grew by 20%YoY to Rs127.7 billion. In absolute terms, the highest quarterly profit was earned by MCB Bank (Rs5.7 billion) followed by National Bank (Rs5.2 billion) and UBL Bank (Rs5.0 billion). Net Interest Income (NII) of the banks during…
All the indicators suggest that global crude oil market is suffering from supply glut, mainly because of high shale oil production. Nothing seems to be moving oil price in any way other than Sino-US trade war. The Western media is still trying to prove that very thing hinges on the two powerhouses striking a deal, be it global economic growth or oil demand. Any attempt to try to create bullish sentiments seems completely artificial and far away from ground realities. The markets appear to have turned decidedly bearish with supply/demand imbalances drowning out everything else to the extent that even…
Monetary Policy Committee of State Bank of Pakistan (SBP) has decided to leave the policy rate unchanged at 13.25%. The decision reflects the Committee’s view that recent developments have had offsetting implications for the inflation outlook. On the one hand, recent inflation outturns have been on the higher side. On the other, the causes behind these outturns have primarily been increases in food prices, which are expected to be temporary. Also market sentiment has begun to gradually improve on the back of sustained improvements in the current account and continued fiscal prudence. The SBP’s projection for average inflation for FY20…
Profit of fertilizer manufacturers of Pakistan has declined by 31%YoY to Rs8.6 billion for 3Q2019, primarily due to 1) decrease in gross profit margins, 2) increase in administrative expense up by 33%YoY, and 3) spike in finance cost by 110%YoY. The analysis is based on sample of 4 largest listed companies, namely Fauji Fertilizer (FFC), Engro Fertilizer (EFERT), Fatima Fertilizer (FATIMA) and Fauji Fertilizer Bin Qasim (FFBL). The analysis is based on unconsolidated statements of FFBL and FFC and consolidated statements of EFERT and FATIMA for true depiction of their fertilizer business. During the period, Urea sales of these companies…
Interview with Mr Nadir S. Qureshi – Chief Executive Officer, Engro Fertilizers Limited [box type=”shadow” align=”” class=”” width=””]Nadir S. Qureshi serves as the Chief Executive Officer of Engro Fertilizers Limited. Engro Fertilizers is a diversified agricultural, manufacturing and sales company providing a range of agri-products including urea, DAP, specialty fertilizers, seeds and crop protection. The Company has a market cap of US$600 million with urea manufacturing capacity of 2.3 million tons and operates the world’s largest single train ammonia urea plant. Nadir S. Qureshi is currently also a Director on the Boards of Engro Polymer & Chemicals Limited, Engro Vopak…
Interview with Mr. Ejaz Ali Shah — Managing Director, Pakistan Mercantile Exchange Limited (PMEX) [box type=”shadow” align=”” class=”” width=””]Managing Director Profile Mr. Ejaz Ali Shah is the Managing Director of Pakistan Mercantile Exchange Limited. He has over two decades of diversified experience in the financial markets of the country. Previously, he served for 16 years as General Manager at Central Depository Company of Pakistan Limited (CDC). As a part of CDC’s founding team, Mr. Shah played a vital role in developing, positioning and nurturing CDC as a diversified service provider in Pakistan. Before CDC, Mr. Shah has served in Cordoba…
Interview with Mr. Fahd Kamal Chinoy – Chief Executive Officer, Pakistan Cables Limited Pakistan Cables Limited launched its e-store in October 2019. The PAGE team spoke to Mr. Fahd Kamal Chinoy, Chief Executive Officer on Company’s latest advent in e-commerce, making it Pakistan’s first wires and cables manufacturer to sell online. PAGE: Is Pakistan Cables the first to launch sale of cable through ‘online’ store? Fahd K. Chinoy: Yes! Pakistan Cables is the first wires and cables manufacturer in Pakistan to launch its very own e-store in Pakistan, through which customers can now easily shop online for general wiring and have…
A candid interview with Imran Batada – Director, ICT & CICT IBA PAGE: Tell me something about yourself and your institution: Imran Batada: I have been associated with Institute of Business Administration (IBA) Karachi for more than a decade. I am currently working here as Director ICT Department, which primarily functions to provide and manage IT facility across IBA Karachi. I am also Founding Director of Center for Information & Communication Technology (CICT) which aims at imparting education and training in the ICT field. IBA has established itself as a premier business school in Pakistan with a strong track record of…
Volatility witnessed and to persists in coming week The week ended on 22nd November 2019 can be termed a volatile one for Pakistan Stock Exchange (PSX). The benchmark index touched a low of 37,101 and a high of 38,564, but finally closed at 37,926 level. The market was driven by expectations surrounding monetary policy and current account position. Pakistan posted US$99 million current account surplus in October 2019. Expectations of rate cut dampened soon as the latest T-Bills auction witnessed a marginal uptick in yields. Average daily trading volume rose to 330.9 million shares, from 311.2 million shares in the…
When the Government of Pakistan (GoP) entered into an agreement with the International Monetary Fund (IMF) for a bailout program one of the biggest apprehension was that the conditions imposed by the Fund may plunge the country deeper into problems. After the conclusion of recently held review the Fund has asked the GoP to definitely achieve the revenue target, keep a cap on issuing new guarantees and put into effective implementation of circular debt reduction strategy. The IMF advice can be summed up as, ‘address longstanding issues by undertaking structural reforms and strengthening institutions through legal framework to make the…
Palladium, relatively unknown precious metal in Pakistan, has lately emerged one of the most valuable four precious metals around the world. Its price has doubled in a little more than one year, making it more expensive than gold. Analysts say an acute shortage of the commodity is driving its prices to record levels and remain on upward trajectory in the near future. Speculative positioning remains relatively muted, suggesting genuine industrial demand is driving the prices. Palladium price is likely to rise still higher after growing demand from automakers and a gaping supply shortfall pushing prices to record levels above US$1,700…
Growing momentum persists; investors to book profits expected The benchmark index of Pakistan Stock Exchange (PSX) continued the upward momentum attained in the earlier and started the week on a strong footing, recouping 900 points in first trading session, supported by declining yields in the latest PIB auction. Additional stimulus was provided by easing noise on the political front. Encouraging numbers of external account also provided support. The positive impact of all the positive factors put together helped the index to close all 5 trading days of the week in green. The week ended on 8th November 2019 closed the…
As per the United Nations, the number of undernourished people has dropped by almost half in the past two decades because of rapid economic growth and increased agricultural productivity. However, in many developing countries, extreme hunger and malnutrition still remains a huge barrier to development. There are 821 million people estimated to be chronically undernourished as of 2017, often as a direct consequence of environmental degradation, drought and biodiversity loss. Nearly 151 million children under the age of five, being 22 percent of World population, were still stunted in 2017. Asia accounted for nearly two-thirds or 63 percent, of the…
In the recent past, businesses in Pakistan have been marred by exorbitantly high costs of doing business. The macro-economic adversity that was triggered by historic twin deficits has trickled down to every facet of business operation. The massive erosion in rupee value and hike in interest rate have further escalated the costs of doing business. The businesses in the current environment are facing server downturn as margins have squeezed and operational costs have skyrocketed, added to these is subdued demand for various products, due to shrinking purchasing power of people. The recent upsurge in the rail freight that cumulatively amounts…
Index retains rally as no reflect of political development observed Pakistan Stock Exchange (PSX) retained momentum during the week ended 1st November 2019, gaining 2.14%WoW to close at 34,338 points after remaining under pressure in the backdrop of FATF developments and application of ‘minimum brokerage commission’. Average daily trading volume improved to 166.3 million shares, up 33.5%WoW. Top performers included CHCC, PIOC, DGKC, ASTL and PSO, while laggards were HASCOL, NCL, FFC, MEBL and OGDC. Market was driven by: 1) resolution of issues between the government and traders, 2) decline in PIB yields raised expectation of an early interest rate…
The pressure of trade and industry is mounting on State Bank of Pakistan (SBP) to curtail policy rate to bring down rate of inflation in the country. The basic premise is that country suffers from cost pushed inflation, which is also a key hurdle in boosting GDP growth rate and exports of the country. Some analysts are of the view that the current low international oil prices and expectations that these would hover below US$60/barrel in near future, offer an opportunity to SBP to seriously consider cutting policy rate. It has become all the more necessary as most of the…
Mixed sentiment witnessed; political noise may push back investors Tensions on the eastern border and tough call from the FATF demanding swift action dampened investors’ sentiment. The benchmark index of Pakistan Stock Exchange closed the week ended on 25th October 2019 at 33,657 points, 0.63%WoW lower. The index lost 785 points in the first trading session of the week, but was quick to recover and pared 86% of the earlier losses in the next three trading sessions, as the investors shifted their focus on positive macro: narrowing CAD, improving EODB ranking and declining yields on short tenor government papers. Market…
In Pakistan more than 50% of the farm land is owned by less than 10% of farmers i.e. land holding is concentrated in hands of rich zameendars/agriculturalists. However, the remainder 90% of farmers have very small land holdings, which highlights the significance of small and subsistence farmers in Pakistan’s agri-sector employment. In this scenario, the subsidy given by government on urea produced on imported LNG is directly and disproportionately benefitting the large farm owners and zameendars whose agricultural income remains untaxed. Punjab Agriculture Minister, Malik Nauman Langrial while talking to a select group of journalists disclosed that government plans to…
The Center for Business and Economic Research (CBER) held the second Coffee@CBER session on 12th October 2019 at Institute of Business Administration (IBA), Karachi. The theme of the forum was “SME Financing: Issues, Challenges and Future Prospects”. The forum was attended by policymakers, government and business leaders, and visionaries to discuss the key issues that face the SME sector; especially in meeting their financing needs. This session was a second of a series of round table discussions that CBER will host on different aspects of the Pakistan’s economy. Panelists included G. M. Abbasi, Director Infrastructure, Housing and SME Finance Department…
Rally fizzle out on FATF effects, result season; political events may creep into the limelight During the week ended 18th October 2019, the benchmark index of Pakistan Stock Exchange (PSX) witnessed erosion of 605 points and closed at 33,870 level, down 1.76%WoW. Average daily volume also declined by 51%WoW on the back of uncertainty surrounding FATF plenary meeting. Investors remained cautious ahead of volatile result season where cement sector is expected to be a major drag. Top performers during the week were: HASCOL, EFERT, ENGRO, ASTL, and BAHL, whereas laggard were: PSO, PPL, INDU, PAEL and PIOC. Volume leaders at…
Global commodity prices rose by 3.8%MoM in September, as against a drop of 5.3% in August and marking the strongest increase in five months. September rebound mostly reflected a surge in energy prices, as well as sizeable increases in prices of base and precious metals. Overall, the price of three commodity groups was positively affected by news that China and the United States would resume trade talks and US President Trump’s comment that a deal could he reached sooner than expected. On the flip side, agricultural prices declined in September for the seventh time in the last nine months. Weak…
Bulls control persist; outcome of FATF meeting may sway the market The benchmark Index of Pakistan Stock Exchange (PSX) closed the week ended on 11th October 2019 at 34,476 points, up 4.37% marking the second consecutive week closing in green. Top performers during the week included FFBL, MEBL, HASCOL, PAEL and EFOODS, while FCCL and PSMC were among the major losers. The inverting yield curve, stable currency over the last three months and upcoming Eurobond and Sukuk issues, expected to shore up foreign exchange reserves, boosted bullish sentiment. The week began with the release of FATF report on Pakistan, indicating…
Pakistan enjoys enormous cultivable area, the largest man-made irrigation system, excellent and high yielding varieties and hardworking farmers. However, yields of different crops have remained below global average. Farmers’ income is further reduced due to huge postharvest losses. Production of various crops can be doubled without increasing area under cultivation. This target can be achieved by applying balanced nutrients, introducing farm mechanization, improving knowledge and induction of modern farming technologies, increasing lending to farmers It is encouraging to note that banks disbursed Rs1,174 billion or 94% against the ambitious target of Rs1,250 billion set by Agricultural Credit Advisory Committee for…
Index rises as cement shares shine; october remains an exciting month for participants For the week ended 4th October 2019 the benchmark index of Pakistan Stock Exchange (PSX) closed at 33,033 points, up 3%WoW. After a choppy start of the market, cement companies remained in limelight after the hike in cement prices by up to Rs15/bag. It was further supported by the expectation of double digit growth in cement sales during September 2019, signaling a revival in construction activities. The momentum gained strength as key stakeholders from government assured their support to business community. Investors’ participation increased significantly with average…
At present Pakistan suffers from precarious balance of payment situation. Its exports are too paltry to finance imports. Though, remittances are reasonable, meeting debt service obligation has got out of control. Even the recently acquired facility from International Monetary Fund (IMF) and other countries will soon prove insufficient. In the prevailing situation the country has to expedite the two-pronged strategy of boosting exports and containing imports. While boosting exports may not be easy, one industry stands distinguished in terms of its ability to support the cause and that industry is urea manufacturing. Manufacturers have the spare capacity and what is…
According to CNBC, when the world was beginning to believe that Sino-US trade tensions were easing, Chinese officials cut short their US visit and President Donald Trump announced he doesn’t really need to pull together a trade deal before the 2020 election. The news didn’t lead to huge losses, but hampered the markets from its attempts over the week to reach new highs. It was also a reminder of how sensitive stock markets are to the news headlines. With October to begin; Goldman Sachs predicts the month to be a wild one. Reportedly, stock markets remain calm in September, but…
Index almost flat; macro data, tax collection figures may drive investors’ sentiments The benchmark Index of Pakistan Stock Exchange (PSX) closed the week ended on 27th September 2019 at 32,071 points, almost flat. The index lost 677 points in the first four trading sessions, as investors resorted to profit-taking following last four weeks’ strong performance. However, strongly bounced back on the last trading session, recovering 94% of earlier loses. Foreigners offloaded US$8.76 million worth of equities during the week. The market participation remained weak, with average daily trading volume declining 10.3%WoW to 107.96 million shares. Top performers of the week…
The Daily Telegraph, Britain based leading newspaper has termed Pakistan’s Ehsaas program, one of the most comprehensive welfare programs ever undertaken by a national government. The newspaper in one of its issues said that Pakistan is leading the way with its welfare state policy and the world can learn from its innovation. The program is led by Dr. Sania Nishtar, Special Assistant to the Prime Minister of Pakistan on Poverty Alleviation and Social Protection, who has been mandated to work in partnership across multiple federal ministries that these policies will be driven by, as well with provincial governments who have…
Pakistan continues to suffer from ‘confidence deficit’, mainly because of poor economic indicators. Over the last one year, the level has gone down further because of the disparity because the officially released data and the ground realities. The miseries are multiplied due to the failure of economic analyst to link Pakistan’s economy with the regional and global landscape, particularly geopolitics. I have no reason to doubt that the situation has not improved, but the quantum is too low and the pace is dismal. As the first quarter will be over in a few days, the efforts should be aimed at…
Interview with Mr Aslam Hayat — Acting Chief Executive Officer, Telenor Microfinance Bank Agriculture is the backbone of Pakistan’s economy. Analysts have the consensus that production of major crops can be doubled without bringing additional area under cultivation. The major impediments identified are lack deployment of modern technologies, failure in balanced use of nutrients and huge post harvest losses. All these problems cannot be overcome without boosting lending to farmers for the purchase of inputs, deployment of technology and appropriate use of nutrients and water. For boosting lending to farmers outreach of financial institutions have to be increased. Telenor Microfinance…
Successive peak witnessed as earnings, corporate news keep investors’ confidence firm Wildly fluctuating on the back of external factors (attacks on Saudi oil facility and likely disruption in global crude supplies) and expectations of a peaking monetary cycle, the benchmark index of Pakistan Stock Exchange closed at 32,111 points; up 2.1%WoW for the week ended 20th September 2019. A slew of major earnings announcements accompanied by corporate actions played a large part in the firming up of investors’ confidence. Key news flows driving sentiments included: 1) current account deficit for 2MFY20 declining to US$1.29 billion from US$2.85 billion for 2MFY18,…
The State Bank of Pakistan (SBP) is scheduled to announce its Monetary Policy for next two months on 16th September 2019. There are two opposite opinions: 1) the central bank will cut the policy rate and 2) policy rate will be increased as per the IMF recipe. However, analysts are of the opinion that probability of reduction in policy rate is higher as against the probability of increase. Analysts believe that the SBP will use the most fragile argument of reduction in inflation rate, based on new methodology. However, a stronger argument is the decline in cutoff yields in the…
Global commodity prices plunged 5.3% on a monthly basis in August, as against 1.5% increase in July. During the month under review global commodity prices dropped in 4 of the last 10 months. The poor performance reflected a sharp drop in energy prices, mostly led by plummeting oil and oil-derivative prices. Agricultural prices logged the steepest decline since March 2017, while base metal prices posted its fourth decline in the last five months. Overall, the price for the three commodity groups was negatively affected by escalating trade tensions between China and the United States and a dismal global economic outlook.…
Stocks on the mending as upcoming imf meetings and monetary policy may sustain bulls The week ended on 13th September 2019 was reduced to three trading days due to Ashura holidays. Coming-off from holidays, the benchmark index of Pakistan Stock Exchange (PSX) continued with the trend of earlier week and gained 3.3%WoW to close at 31,481 points. T-Bill Auction (where 12M yield declined by 31bps) seeded market expectations of a cut in discount rate, providing critical catalyst for market performance. Other news providing the impetus included: 1) positive news flows from ongoing meeting of APG, an associate of FATF, and…
Pakistan Stock Exchange closed in red for the seventh consecutive month and lost 6.8% during August 2019, which was also a worst monthly decline in this year. Market remained highly volatile due to various reasons that included: 1) spike in Pakistan-India tensions at Line of Control after India revoked article 370, defining the disputed state of Kashmir, 2) uncertainty in global markets due to Sino-United States trade war and 3) volatility in global oil prices. The outgoing month also witnessed many surprises in financial results of the companies. HASCOL posted loss of Rs56.09/share for the half year ended 30th June…
Since 2013 the Government of Pakistan (GoP) has been working on introducing warehouse receipt financing for key food crops. Ideally, wheat being the largest staple food crop and having an annual output of 25 million tons, should have been the first crop. However, due to restriction of its intercity and interprovincial movement, the target could not be achieved. Rice is the second largest crop, which also fetches huge foreign exchange, also failed in convincing the key stakeholders to opt for warehouse receipt financing, mainly due to the lack of modern storage facilities. It has been observed that the consumers of…
Engro Corporation (ENGRO) posted 2QCY19 earnings of Rs2.87 billion (EPS: Rs4.97), up 37%YoY but down 29%QoQ. This takes the 1HCY19 profit after tax to Rs6.87 billion (EPS: Rs11.92), up 3%YoY. The sequential decline in earnings can be attributed to: 1) a 191%QoQ higher operating expenses – EPCL recorded 673%QoQ higher operating expense due to IFRS 16 implementation and exchange losses, 2) a 107%QoQ higher financial cost amid 200bps interest rate hike, and 3) higher effective tax rate of 50% during the quarter as against 31% for 1QCY19 (EFERT reversed tax credit recorded in 2QCY18). ENGRO also announced second interim cash…
Investors do not seem keen in buying euro because they are worried about the political situation in Italy, the possibility of a recession in Germany, the prospect of aggressive easing from the European Central Bank and the ongoing risk of more tariffs from the US on Chinese goods. This week, Italy’s Prime Minister Conte resigned, turning crisis into chaos for the eurozone’s third largest economy. Of all the euro troubles, Italian politics has the most limited impact on the currency. Europe is no stranger to Italian political uncertainty (they just had elections in 2018 and who can forget Berlusconi’s countless…
BEATS brings in quality education at the doorstep, ardent for education network expansion Interview with Vice Admiral Shah Sohail Masood (Retd) HI (M) – MD Bahria Foundation [box type=”shadow” align=”” class=”” width=””]About the organization? Bahria Foundation was established by Pakistan Navy in January 1982 by the Government of Pakistan as a Charitable Trust under the Endowment Act 1890. The Committee of Administration (CoA) of Bahria Foundation is headed by Chief of the Naval Staff, Admiral Zafar Mahmood Abbasi NI(M), as its Chairman. Committee of Administration acts as the supreme governing body of the Bahria Foundation. The Managing Director being the…