Author: Shabbir Kazmi

Since the re-launching of Islamic banking in Pakistan nearly a quarter of a century ago, the apex regulator — the State Bank of Pakistan (SBP), has been saying that the industry has made significant strides. However, many of the critics say the growth is far from satisfactory. The largest number of listed banks falls in the category of conventional banks. Excluding a couple of Islamic banks, most are too small, suffer from a dearth of asset and liability products and mostly suffer from complacency. Their biggest complaint is that the mindset of the people managing the finances of the Government…

Read More

Index moves up 2.84%WoW, profit-taking prevails The week ended on March 29, 2024 witnessed bullish trend at Pakistan Stock Exchange. Overall, the first four trading days cumulatively added around 2,000 points, with the benchmark index closing at 67,005 points, up 2.84%WoW on Friday (March 29), following a slight profit-taking session noted on the last trading day of the week. Positivity loomed over the successful last review of IMF’s SBA, the new incumbent government’s steps and commitment towards reforms. A new tax regime ordered for retailers and wholesalers, piloting initially in major cities, aimed to broaden the tax base. While similar…

Read More

Pakistan’s relationship with the International Monetary Fund (IMF) since 1958 has been marked by a complex interplay of financial challenges, strategic manoeuvres, and global assistance, profoundly shaping the nation’s economic trajectory over the decades. Recent data offers a nuanced perspective on Pakistan’s ongoing engagement with the IMF, with significant implications for economic stability. Pakistan ranks fifth in outstanding debt with the IMF, standing at US$7.4 billion, trailing behind Argentina, Egypt, Ukraine and Ecuador. The journey began in 1958 when Pakistan secured its inaugural IMF bailout of US$25,000. The largest-ever loan of US$7.6 billion which was sought in 2008, under the…

Read More

There is a growing consensus that large commercial banks prefer to work in certain comfort zones. Top of the list item is investment in totally risk-free government securities i.e. Treasury Bills and Pakistan Investment Bonds (PIBs). This is followed by lending to the blue of the blue-chip companies, which offer substantial deposits. Ironically, microfinance banks also suffer from this herd mentality. Many analysts strongly believe that agriculture has the potential to boost Pakistan’s GDP manifold, but paltry lending to the agriculture sector that too at a high-interest rate and on top of all lack of specific lending guidelines, does not…

Read More

Strategic shifts in market priorities Market remained volatile during the week with a sharp correction of 1,700 points mid-week followed by some recovery during the second-last trading session. Overall, the benchmark index lost 977 points or 1.49%WoW to close the week at 64,816 level. With the new cabinet taking oath, progress on the IMF SBA’s second review has begun. The arrival of the IMF team led to the circulation of conditionalities and requests across various economic sectors, most of which indicate long-term reforms and conditions, setting the tone for long-term programmes. Alongside conditions set in the SBA, additional conditions of…

Read More

There is a growing consensus that large commercial banks prefer to work in certain comfort zones. Top of the list item is investment in totally risk-free government securities i.e. Treasury Bills and Pakistan Investment Bonds (PIBs). This is followed by lending to the blue of the blue-chip companies, which offer substantial deposits. Ironically, microfinance banks also suffer from this herd mentality. Many analysts strongly believe that agriculture has the potential to boost Pakistan’s GDP manifold, but paltry lending to the agriculture sector that too at a high-interest rate and on top of all lack of specific lending guidelines, does not…

Read More

Pakistan Stock Exchange posts lackluster movement The week ended on March 08, 2024 started on a positive note, with the index gaining 1% on the opening day. However, as the week progressed, profit taking activities ensued, losing some of the initial gains. Nonetheless, by the week’s end, the benchmark index managed to maintain an upward momentum, closing at 65,326 points with a gain of 468 points or 0.7%WoW. With new Prime Minister taking office and issuing immediate directives focusing on engaging with the IMF and addressing privatization matters set an initial positive impetus. With new setup in place the IMF…

Read More

Index recovers and likely to come round With the political tumult settling, market bounced back and regained the points lost in the previous week. Benchmark index closed the week ended on Friday (February 23) at 62,816 points, up 4.9%WoW. The market had lost 3,000 points a week ago amidst political uncertainty. Overall, week started with the positivity, however exacerbated after Bilawal Bhutto’s announcement of new prime minister and president joint candidates. Similarly, provincial assemblies also began taking shape, with Punjab MPAs taking oaths and the announcement of the Sindh chief minister name. Additionally, healthy corporate earnings and developments on the…

Read More

PSE index likely to move up on new govt formation The week ended on February 09, 2024 was short three-day trading, the weight of a momentous event loomed large—the elections. The week began with positive news of possible nods by the IMF on circular debt and power tariff rationalisation plans, as well as a narrowed trade deficit for the month of January. However, uncertainty surrounding the election results on Friday (February 9) shattered the early gains. Contrary to expectations, the initial outcomes largely favoured PTI-backed independent candidates, resulting in the KSE-100 plunging by 2,300 points at the opening, before partially…

Read More

easypaisa: Redefining financial landscape of Pakistan In the heart of Pakistan, where nearly 100 million unbanked individuals face limited access to credit, a financial revolution was underway. The traditional commercial banking landscape struggled to provide services to the underprivileged, especially in remote regions. The daunting prospect of establishing brick and mortar branches in these areas was a significant challenge for many banks. However, the inception of easypaisa, emerged as a beacon of change. In 2009, easypaisa made its debut as a peer to peer money transfer service, marking the genesis of a fintech revolution in Pakistan. It went beyond mere…

Read More

Escalating tensions in the Middle East have begun to exert a notable influence on global trade, with Yemeni Houthi targeting commercial vessels leading to disruptions in maritime traffic. This development has resulted in a substantial surge in freight charges, as shipping companies opt for longer routes to avoid the Red Sea, consequently impacting various sectors. Additionally, the heightened tensions in the region have the potential to trigger a commodity super-cycle, driven by rising oil prices, contributing to increased inflationary pressures. According to the Topline Securities, the top most commodities that are shipped each year via Red Sea and Suez Canal…

Read More

Index edges up, likely to shine under election glare The week unfolded amidst political uncertainties and speculations of election delays, tempering market optimism; however, positive macroeconomic developments provided a counter balance. IMF’s approval of the second tranche of US$700 million on January 11, 2024, injected momentum, drove the KSE100 index to close the week at 64,638 points (up 0.19%WoW) after an initial dip to 64,237 on the first day. While the approval of the IMF’s second tranche was anticipated, the surprise was the absence of any comments on politics or elections. Additionally, a restrained trade deficit of US$1.7 billion in…

Read More

The country has the potential to accelerate the GDP growth rate, produce exportable surplus and optimise the cost of production The year 2024 is anticipated to be a good year for Pakistan. Improved relationships with the lender of last resort— the International Monetary Fund (IMF) has paved the way for the inflow of funds from multilateral lenders as well as friendly countries. Hovering of crude oil prices around US$80/barrel, despite the Israel-Hamas war going on for more than three months is likely to keep Pakistan’s energy import bill at a modest and sustainable level. Production of above 7.8 million cotton…

Read More

Benchmark index up 3.3%WoW on positive outlook The Year 2024 started optimistically for Pakistan Stock Exchange and its benchmark index surged 2,211 points on the first day. However, political noise cast a shadow, dragged the index 151 points below the week’s first day closing at 64,515 points, up 3.3%WoW to close the week on January 05, 2024. Despite the headwinds, economic factors provided positive signals, foreign exchange reserves held by State Bank of Pakistan rose by US$1.3 billion in last two weeks of December 2023, marking a 23-week high, closing at US$8.22bn as of December 29, 2023 and would potentially…

Read More

This year when I said down to write review of the outgoing year, nothing came to my mind except genocide of Palestinians by Israel in Gaza. Over the last eleven weeks nearly 20,000 people have been killed, mostly women and children. The biggest tragedy is, Israel is adamant at eradicating Palestinians and rest of the world is talking about humanitarian aid but not ceasefire. Two of the superpowers also enjoying Veto power, the United States and Russia abstained from a United Nations resolution passed by the Security Council that would increase humanitarian aid to the Gaza Strip without directly calling…

Read More

Pakistan Stock Exchange benchmark index declines 6.69%WoW After touching successive highs for the last two months, the benchmark index of Pakistan Stock Exchange (PSX) declined 6.69%WoW to close at 61,705 points on December 22, 2023. Overall, selling in scrips was witnessed as the year closes. On the brighter side, after much anticipation, ECP issued the elections schedule for February 08, 2024. Moreover, Pakistan recorded a current account surplus of US$9 million in November 2023 after having seen four consecutive deficits in the months before. Ministry of Energy authorized the plan to settle PKR262 billion payables to WAPDA and GPPs in…

Read More

Index keeps upward trend and likely to continue Pakistan Stock Exchange benchmark index continued its upward movement during the week ended on December 01, 2023, finally settling at 61,691 points, up 4.4%WoW, reflecting its historic high. Although the market participation witnessed a dip of 6.7%WoW, investors remained engaged amid the historic ascent, with avg. traded volume of 612.5 million shares. The impetus, post IMF review success, sustained with a notable increase in foreign inflows into the market, with net FIPI buying hitting its 6-year high of US$35 million in November 2023. Furthermore, Kuwait and UAE agreements, US$3 billion deposit extension…

Read More

Need for comprehensive plans to enhance food security in the country Many of the security experts are of the opinion that food security is the strongest defence against all sorts of aggressions, both internal and external. Availability of indigenously produced food not only keep their prices affordable for the people but also keep foreign exchange reserves of the country free from pressure. Before going ahead it is necessary to have a quick review of the prevailing situation in Pakistan. Despite tall claims of the successive governments, the country has remained net importer of food items. Top of the list items…

Read More

A little extra attention can reduce edible oil import bill of Pakistan to half The initial conversation with growers from Sindh reveals that in the recent past farmers used to grow sunflower on a substantially large area. However, with the passage of time and after making considerable losses, they have stopped cultivating sunflower. The experts are of the opinion that a little attention of the government, creation of awareness among the farmers and construction of modern warehouses can once again convince them to cultivate sunflower. The experts go to the extent of saying that Sindh has a potential to bring…

Read More

Bulls to dominate on optimistic outlook Pakistan Stock Exchange (PSX) witnesses persistent bullish run during the week ended on November 10, 2023. The benchmark index closed at 55,391 points, up 4.27%WoW, with daily trading volume averaging at 544.05 million shares, up 20.8%WoW. The sentiments were driven by an overall positive atmosphere owing to IMF’s review under the SBA, after the completion of technical talks, followed by policy level discussions scheduled to begin on Monday (November 6). Overall, discussions seem to be on a positive trajectory with IMF mostly questioning the fiscal targets and delay regarding gas price revisions. On the macro…

Read More

Pakistan Stock Exchange gains 1,261 points Pakistan Stock Exchange (PSX) remained positive throughout the week ended on October 06, 2023. The benchmark index gained 1,261 points to close at 47,494 level. In a meeting with the Senate Standing Committee on Finance, Dr. Shamshad Akhtar made a promising statement that the caretaker government will deliver on the IMF program to secure US$700 million under the SBA. Pakistan is also seeking foreign investments from Saudi Arabia in Reko Diq’s copper and gold mining projects while companies like OGDC, PPL, and GHPL are contemplating on selling their partial or full stakes in an…

Read More

There is no denying to the fact that the largest percentage of remittances originates from Saudi Arabia. However, it is felt that to capture the emerging opportunities Pakistanis should keep a close eye on the emerging state of the economy of the country. Now the Kingdom needs workers and executives equipped with new technologies. In recent years, the prospect of relocating to Saudi Arabia has garnered increasing attention worldwide. Fueled by ambitious reforms and a forward-looking vision, Saudi Arabia has embarked on a transformative journey that has captivated global interest. Under the leadership of Crown Prince and Prime Minister Mohammed…

Read More

Pakistan Stock Exchange benchmark index posts 1.46%WoW increase Pakistan Stock Exchange (PSX) posted somewhat lackluster movement during the week ended on September 22, 2023. It could be attributed to Monetary Policy announcement scheduled in the middle of the week, amidst dual fuel price hikes during the month. However, the decision of the central bank to keep the rates unchanged was a pleasant surprise. On the external front, country’s foreign exchange reserves remained relatively flat, ending at US$7.69 billion as compared to US$7.64 billion a week ago. Additionally, the domestic currency continued to strengthen against the greenback. Globally crude oil prices…

Read More

Urgent need for taking some corrective measures and make good policies Since independence Pakistan has been suffering from two deficits — current account deficit and budget deficit. Analysts believed that these two deficits will be overcome with the passage of time. However, the bad governance of the successive government kept the borrowing appetite high. Over the years governments have been borrowing to pay off the loans acquired in the past. Instead of improving tax collection, the governments have been increasing tax rates, which fueled inflation rate in the country and the wizkids resorted to hike in the interest rate to…

Read More

Index gains 1.5%wow; sentiments may improve Pakistan Stock Exchange remained range-bound during the week ended on September 08, 2023, with the benchmark index KSE-100 marginally fluctuating in the slim range of 654 points. The fear of interest rate hike due to the increase in the T-Bills yields kept the market activity in check. However, positive developments over SIFC and the caretaker prime minister’s announcement of total expected inflows of US$50 billion from UAE and Saudi expected to materialise in the next 4-5 years added a substantial layer of positivity to this multifaceted narrative. The KSE-100 index closed at 46,013 points…

Read More

The healthcare delivery system in Pakistan consists of public and private sectors. Under the constitution, health is the primarily responsibility of the provincial governments. Health care delivery has traditionally been jointly administered by the federal and provincial governments with districts mainly responsible for implementation. Service delivery is being organised through preventive, promotive, curative and rehabilitative services. The curative and rehabilitative services are being provided mainly at the secondary and tertiary care facilities. Preventive and promotive services, on the other hand, are mainly provided through various national programmes; and community health workers’ interfacing with the communities through primary healthcare facilities and…

Read More

The residents of the areas which now comprises of Pakistan have been playing an extra ordinary role when it comes to philanthropy. They have created educational as well as healthcare units. One of the outstanding example of private-public partnership is Sindh Institute of Urology and Transplantation (SIUT). At almost all the government hospitals Patients’ Welfare Associations are performing the leading role. Following are some of the examples, which are not exhaustive. Sindh Institute of Urology and Transplantation Four decades ago SIUT started its journey as an eight bed ward in Burns Unit of Civil Hospital Karachi. Gradually this small ward…

Read More

Lacklustre witnessed; cpi data and interest rates in focus -Stock Review The week ended on August 25, 2023 remained lackluster, with the KSE-100 index losing 547 points to close at 47,671 level. The anticipation of heightened inflation had a negative impact on the market, fearing an ad-hoc policy rate hike. However, the recent T-bill auction negated that sentiment, with yields largely maintaining their flat trend as compared to the previous auction. Now the focus is on September 2023 CPI data and the Monetary Policy Committee meeting scheduled for September 14, 2023. Nonetheless, owing to a week full of result announcements,…

Read More

Over the last 18 months, Pakistan’s economy has gone from bad to worse. It may be true that the country faced some serious structural problems, but the mother of all evils was the ‘inability of the economic managers to identify the real causes of economic downturn and failure to take the appropriate remedial steps’. Lately, the ruling junta suffered from the worst ‘confidence deficit’. It was mainly because the bad decisions were attributed to the conditions imposed by the International Monetary Fund (IMF). These included persistent hikes in interest rates, increases in electricity and gas tariffs and on top of…

Read More

Pakistan stock market closes almost flat The most important news was MSCI unveiling the outcomes of its quarterly review. The update featured noteworthy additions: 15 stocks were integrated into the MSCI Frontier Market Index, while 41 stocks found their place within the MSCI Frontier Markets Small Cap Index. Particularly significant was the projection for Pakistan’s weight to ascend significantly, anticipated to rise from its current 0.6% to a more substantial 2.7%. These alterations are slated to take effect as of the close of business on August 31, 2023. Post-announcement, investors quickly adjust portfolios, implying potential capital inflows the upcoming week.…

Read More

Banking Outlook: Pakistan’s Sectoral Growth & Impact of IMF According to Inter Market Securities pre-tax 2QCY23 profits for its Banking Universe is expected to rise 10%QoQ, reflecting strong core performance. However, net earnings may come off by 15%QoQ due to retrospective impact of super tax (10% against 4% previously). Payouts should remain broadly intact. Domestic asset quality has remained resilient, which should keep the cost of risk in check. Impairment, if any, should also be contained compared to the last few quarters. The brokerage house expects Meezan Bank to stand out due to the lagged asset re-pricing this quarter. Bank scrips have risen…

Read More

Agriculture contributes nearly one-fourth of the GDP of Pakistan. Over the years State Bank of Pakistan (SBP) has been increasing the lending target to farmers. Various schemes have been introduced for the financial inclusion of farmers, particularly small land holders. For the current financial year the Government of Pakistan has an indicative target of PKR2.25 trillion, which is a welcome sign. For the last financial year (FY23) the SBP had assigned agriculture credit disbursement target of PKR1.8 trillion to meet the growing demand of funds by the farmers. Making the farmers financially strong is aimed at achieving food security. The…

Read More

Forex, rupee-dollar parity progress likely to help index Pakistan Stock Exchange witnessed bullish sentiments during the first three trading sessions. However, profit-taking by investors resulted in market closing in red during the last two sessions. Still the benchmark index managed to gain 861 points during the week ended on July 15, 2023 and close at 45,068 points, up 1.9%WoW. Market participation remained healthy with daily traded volume averaging at 352 million shares as compared to an average of 265 million shares during the earlier week up 33%WoW. The market performance was characterized by the IMF’s executive board’s approval of the…

Read More

Sales of petroleum products in June 2023 were reported at 1.3 million tons, down 31%YoY, however, up by 4%MoM. The increase in volume was mainly driven by increase in Motor Spirit (MS) by 7%MoM and furnace oil (FO) by 10%MoM. HSD sales however, remained flat. MS sales for the month under review increased by 7%MoM to 0.64 million tons. This was mainly due to 1) seasonal effect of holidays and summer vacations and 2) slightly lower prices. FO sales increased to 100,000 tons, up 10%MoM, mainly due to the higher offtake by power generation plants. Total oil sales excluding furnace…

Read More

The Western mantra to get rid of fossil oil is getting louder. There are suggestions that countries have to take extra measures to contain carbon emissions and select an alternative fuel. In this race, the developed countries, particularly the United States and its allies are promoting cleaner energy i.e. solar, wind and gas. In the meantime the pressure is mounting on the less-developed countries, currently using fossil oil and coal, to switch over to natural gas and Pakistan is no exception. Pakistan’s economy is heavily dependent on fossil oil, especially for power generation. Pressure is mounting to quit the use…

Read More

Index posts 6.65%wow gain and likely to keep momentum The week ended on July 07, 2023 started on a positive note, with the market going up 2,000 points from the opening bell and closing the day at 43,899 points. Overall, market ended gaining 2,754 points or 6.65%WoW, breaking the 44,000 barrier, up 660 points in intraday trade on July 6 trading session. The rally was mainly driven by the positive sentiment coming out from the Eid holidays as the country’s authorities reached Staff Level Agreement (SLA) with the International Monetary Fund (MF) on June 30, 2023. The market capitalisation rose…

Read More

The recent statements of Finance Minister, Senator Ishaq Dar applies to two things that completely negate each other that what is valid or what is true, he said that geopolitics was behind a stalled International Monetary Fund (IMF) programme as global institutions wanted Pakistan to default like Sri Lanka and then enter negotiations, but in the same breath, he insisted that negotiations with the Fund were ongoing and the ninth review would be complete within June 2023. Testifying before the Senate’s standing committee on finance, he once again stressed that the country would meet its obligations with or without the…

Read More

It was believed that Federal Finance Minister, Ishaq Dar would present the Budget for the next financial year (FY24) keeping in view two prime objectives: 1) restoring relations with the International Monetary Fund (IMF) and 2) avoiding pitfalls of an election year budget. The general consensus is that the federal budget is unimaginative, lacks concrete substance and uses the old tried mundane methods which really haven’t ever been successful. The incumbent government has followed the decades-old practice of milking the already milked cow. It has proposed to continue super tax at income above PKR150 million. However, new slabs have been…

Read More

Index falls, short term range bound likely Market remained lackluster during the week ended on June 16, 2023, with KSE-100 index losing 603 points during the week to close at 41,301 points, posting a decline of 1.4%WoW. Market participation also registered a decline of 25%WoW, averaging at 161.7 million shares as compared to an average of 215.7 million shares a week ago. Despite the negative impact of the budget, including the imposition of a 10% super tax, windfall tax, and tax on bonus share, the market showed some resilience. Meanwhile, in the last Monetary Policy Committee (MPC) meeting last week,…

Read More

Economic policy of pakistan Currently, Pakistan struggles with high food import costs and limited foreign exchange. Prioritizing the textiles and sugar industries could enhance foreign earnings and generate significant employment for low-skilled workers. However, this requires a commitment from the government, the introduction of supporting Economic policy of Pakistan and the implementation of these economic  policies in letter and spirit. It is on record that 20% to 40% of agriculture produce goes stale before reaching the market. This on the one hand deprives the farmers of a modest return for their efforts and on the other hand, creates shortages and…

Read More

Index rises; political uncertainty likely to persist The week ended on June 02, 2023 witnessed positive movement in the first two days, turned bearish on Wednesday, but closed the week on a positive note. The benchmark index gained 388 points to close at 41,353 points, a paltry gain of 0.95%WoW. Participation in the market remained strong, average daily trading volume grew to 180.3 million shares from 117.7 million shares a week ago, an increase of 53.1%WoW. On the IMF front, uncertainty continues to linger as talks of Pakistan and the IMF going their separate ways continued to linger. However, rumours…

Read More

The Government of Pakistan (GoP) came up with an alternative delivery system for the benefit of farmers in the year 2013. It is aimed at achieving the financial inclusion of farmers, improving their financial conditions and on top of all achieving food security. The irony of fate was that when the program was launched there was no supporting infrastructure in the country. The work has to be started from ground zero, all the stakeholders have to join their hands and the GoP has to take the lead. If one looks at more than one-decade history, the progress is not very…

Read More

Index falls as political uncertainty persists The week ended on May 12, 2023 was mired with political uncertainty, at a time Pakistan needs additional financing for the successful completion of long standing 9th IMF review. The benchmark index closed the week at 41,488 points, posting 1.79%WoW decline. Participation also declined to average daily volumes of 133.52 million shares during the week, from 244.47 million shares a week ago, depicting 45.4%WoW fall. Pakistan has assured the IMF, it will not implement cross fuel subsidy program. Foreign exchange reserves held by State Bank of Pakistan (SBP) eroded by US$74 million to US$4.38…

Read More

In the rising interest rate climate, commercial banks have no incentive for venturing into consumer finance. On top of all the Government of Pakistan is not only the biggest borrower but also offers a very lucrative rate of return. Still, to satisfy the apex regulator, the State Bank of Pakistan (SBP), commercial banks keep the business within the family by extending the facility to corporates, high net-worth clients and employees of the corporate sector. Let us, first of all, see much profit is being earned by the commercial banks. According to a report by Pakistan’s leading brokerage house, Topline Securities,…

Read More

 Prudent risk mitigation and diversifying services are the bank’s key strategy Focus on education has facilitated financial inclusion, empowered individuals Khushhali Bank has one of the largest client base amongst microfinance dealers Interview with Mr. Aameer Karachiwalla — President/CEO, Khushhali Microfinance Bank Limited Profile With over 30 years of experience, Mr. Aameer Karachiwalla is a fellow of the Institute of Chartered Accountants of Pakistan and a long-serving Director and Chairman of the Board of Directors of Khushhali Microfinance Bank Limited. Mr. Karachiwalla was re-appointed as the Chief Financial Officer of UBL in July 2016. He joined UBL in 1998 and…

Read More

Index posts 1.4%wow gain amid political uncertainty The week ended on April 28, 2023 was marred with political uncertainty. The United States asked Pakistan to move ahead on stalled reforms by the IMF, while promising technical help in worst economic times. The IMF awaits clarity on the cross fuel subsidy scheme. In addition to this, foreign exchange reserves inched by US$30 million to US$4.5 billion as on April 20, 2023, culminating to an import cover of less than a month. The KSE-100 index closed the week at 41,581 points, posting 1.40%WoW gain. Participation in the market was a pleasant surprise,…

Read More

It is true that Islamic banking in Pakistan has attained a significant share of the overall banking industry. Though the data used in this article may look a little outdated, it presents a fairly reasonable picture. Assets of the Islamic Banking Industry (IBI) grew by PKR 121 billion during July-September 2022 quarter and were recorded at PKR 6,902 billion by the end of September 2022. Deposits of IBI also increased by PKR 165 billion during the period under review and crossed the five trillion mark to reach PKR 5,021 billion by the end of September 2022. The year-on-year (YoY) growth…

Read More

Index smidgen low; renew IMF plan likely to support The benchmark index of Pakistan Stock Exchange closed the week ended on April 13, 2023 with a dip of 0.47%WoW. Despite Pakistan’s completion of all prior actions, the resumption of the IMF program is still awaited. According to news sources, the pain point between Pakistan and the IMF of late is commitments from friendly countries. Furthermore, the circular debt of power sector increased by PKR419 billion during 8MFY23, taking the total circular debt to PKR2.67 trillion despite increasing electricity tariffs. With the interest rates at 21% and uncertainties regarding the country’s…

Read More

The Elusive IMF Tranche and Political Dynamics Despite Pakistan fulfilling many of the preconditions, the release of the IMF tranche remains elusive. Until greater visibility returns on politics and the economy, it is difficult to build conviction around Pakistan’s investment case. February CPI was reported above 30%, a 50-year high, while the SPI suggests even faster inflation, north of 45%. Analysts expect CPI prints to peak in the 35-40% range in the next few months, and for the SBP to further increase the Policy Rate by 200bps on April 04 meeting. On a more positive note, the current account deficit…

Read More

Market stays bearish, range-bound likely Pakistan Stock Exchange (PSX) witnessed lackluster performance during the week ended March 31, 2023, with a weekly change of mere 59 points. This disappointing performance can be attributed to economic and political instability that haunted the investors throughout the week. Currently, the IMF is seeking commitments from friendly countries to bridge the gap of external financing, and furthermore, the fund is demanding clarity on the announced fuel subsidies. The foreign exchange reserves held by State Bank of Pakistan (SBP) decrease of US$354 million to US$4.24 billion as on March 24, 2023. The benchmark index gained…

Read More

Average daily trading volume increased by 31.0%WoW Pakistan Stock Exchange (PSX) witnessed an overall lackluster week ended on March 10, 2023.The news about US$500 million inflow from China boosted reserves up to US$4.3 billion as of March 03, thereby instilling investor confidence. Despite fulfilling further IMF conditions, i.e. imposition of power surcharge and cabinet approval of 25% GST on luxury items, the long-awaited SLA (Staff-Level Arrangement) still hangs in the balance. The benchmark index closed the week at 41,794 points, indicating a 1.1%WoW gain. The market witnessed an active participation, with daily trading volumes exceeding 209 million shares during the…

Read More

Average daily trading volume increased by 31.0%WoW Pakistan Stock Exchange (PSX) witnessed an overall lackluster week ended on March 10, 2023.The news about US$500 million inflow from China boosted reserves up to US$4.3 billion as of March 03, thereby instilling investor confidence. Despite fulfilling further IMF conditions, i.e. imposition of power surcharge and cabinet approval of 25% GST on luxury items, the long-awaited SLA (Staff-Level Arrangement) still hangs in the balance. The benchmark index closed the week at 41,794 points, indicating a 1.1%WoW gain. The market witnessed an active participation, with daily trading volumes exceeding 209 million shares during the…

Read More

There can’t be two opinions about the need for boosting crude oil refining capacity in Pakistan. However, analysts are of the consensus that the issue is complicated, policymakers and players are not on the same page, presence of pressure groups and above all, there is an acute shortage of foreign exchange. As a result announcement of the new Refining Policy has been lingering on, eroding paltry foreign exchange reserves of the country. Lately, the government has asked local refineries to overcome the likely shortfall of 8,000 tons of petrol in the country. This clearly indicates that the concerned departments were…

Read More

Interview with Mohammad (Razi) Raziuddin — Chairman/CEO, Razi Energy Company (Pvt) Limited PAGE: Please tell us something about yourself and your organization. Mohammad Raziuddin: I have been involved with the Pakistan refineries since 1985. I have worked as policy maker, regulator, head of a refinery, advisory roles to refineries and consultant in Pakistan, Bangladesh, Saudi Arabia, USA and Ghana. I have worked on crisis and change management. PAGE: What is your demand for new Refining Policy? Mohammad Raziuddin: The new Refining Policy must have some objectives and targets to achieve. Under the present circumstances of Pakistan, where foreign exchange is at…

Read More

PSE witnesses decline; range bound expected During the week ended on February 24, 2023, Pakistan Stock Exchange remained volatile due to news flows regarding the IMF deal and approval of Financial Supplementary Bill for raising additional taxes of PKR170 billion Unease amongst the participants increased as T-Bills cut-offs in the latest auction by State Bank of Pakistan (SBP) went up to 19.95%, contributing to the fears of further hike in the interest rate. Reserves held by the SBP witnessed an increase for second consecutive week, rising to US$$3.26 billion, still standing at a critical level. The noticeable improvement can be…

Read More

Political, economic fronts may keep market in check – stock update The week ended on February 03, 2023 remained volatile due to the ongoing talks with IMF to ensure its prerequisite conditions are implemented which includes high circular debt which is hovering around PKR2.5 trillion for power sector and PKR1.6 trillion for Gas sector while restricting subsidies only to vulnerable domestic consumers. Furthermore the lender has also demanded political consensus given that opposition might create hurdles in the way of implementing tough economic decisions. The local currency has dropped significantly after it was left to market forces, depreciating to PKR276/USD.…

Read More

Interview with Kabeer Naqvi — President & CEO, U Microfinance Bank U Microfinance Bank Ltd. (U Bank) has been witnessed to be one of the most progressive and fast-growing microfinance banks in Pakistan. The bank is a wholly-owned subsidiary of Pakistan Telecommunication Company Limited (PTCL) – e& Group (previously known as Etisalat Company). It has a vast network of branches across the rural and urban areas of Pakistan, offering a wide range of microfinance loans, deposit products, and branchless banking solutions. U Bank is dedicated to its mission of financial inclusion of the masses, under the strong leadership of its…

Read More

The sector experts are of the consensus that the policy governing the automobile industry in Pakistan has remained ‘OEM centric’ from day one. This includes incentives for the new entrants, lopsided indigenization policy, nominal difference in the duties on CKD kits and basic raw material and above all failure of the government in containing the influx of parts as ‘scrap’. As a result, the vendor industry has been fighting for its existence. The biggest proof is that the annual turnover of the replacement market (parts market) in Pakistan is estimated at around PKR35 billion. Ironically out of this, only 5%…

Read More

Benchmark index plunges 4.8%wow  IMF Program Resumption: The Pivot for Pakistan’s Financial Stability Continuation of political uncertainty in the country, following the Punjab and KP government dissolution, kept the market under pressure during the week ended on January 20, 2023. The KSE-100 index lost 1,915.5 points or 4.8% to end Friday’s trading session at 38,408.0 points. Volumes dried, with daily volumes averaging 143.2 million shares as compared to 183.3 million shares in the earlier week, registering a 22%WoW decline. On the currency front, the PKR depreciated by 0.66%, ending the week at PKR229.67/US$. Other major news of the week were:…

Read More

At present Pakistan is plagued by policy paralysis and the situation is likely to get worse before getting better. The continuation of the IMF program remains critical. Unfortunately, analysts do not see much of an improvement. Pakistan seems to be caught in the midst of a perfect storm of adversities with spiraling inflation, falling reserves and external vulnerabilities. Politics appears to be a nightmare because the current set up seems incapable of making the right decisions. The logjam in politics continues to persist, which is prolonging policy inaction, delaying the 9th IMF review and taking the situation from bad to worse.…

Read More

Energy futures for crude oil, refined products and natural gas have plummeted in 2023 as traders reconsidered near-term worries over cold weather and fears of supply shortages and dumped contracts. Prices rose last year on worries of Europe freezing due to the loss of Russian fuel, as OPEC Plus cut production targets and as critically low US distillate stocks raised the prospect of fuel export curbs. Those fears have proven overblown, driving prices down. European gas stocks are well above seasonal norms, Saudi Aramco cut prices for oil shipped to Asia, and OPEC members’ output unexpectedly rose last month, a…

Read More

PSX remains under pressure Pakistan Stock Exchange (PSX) benchmark index witnessed an overall volatile week ended on January 07, 2023. Depletion of foreign exchange reserves continued, fueling uncertainty. Reserves have fallen by approximately US$2 billion since December 2022 began, pulling import cover down to alarming low level. Although, some respite was seen towards energy stocks such as PPL, OGDC and refineries with news amidst gas circular debt resolution and fresh investment in a coastal refinery from Saudi Arab (aided by the much anticipated refinery policy). Overall, average daily trading volume remained low at 176 million shares, as compared to 214.2…

Read More

As per The State of Economy Report 2021-22 released by the State Bank of Pakistan, the country’s economic growth is expected to moderate considerably in FY23. Having delivered a headline growth approaching 6% in FY22, the country is expected to even miss the revised growth target of 3% to 4% this time round. In addition, the government has targeted to reduce the fiscal deficit to 4.9% of GDP in FY23 from 7.9% in FY22, an outcome that would be achieved through both revenue and expenditure measures. Widening of the tax base through the elimination of exemptions, increase in tax rates…

Read More

It goes without saying that remittances by overseas Pakistanis have been the biggest savior. Lately, a declining trend has been observed in the influx of remittances, which can be attributed to the growing use of informal channels. It is regrettable that the Government of Pakistan (GoP) has not been able to offer incentives to the remitters. One of the reasons is that Pakistanis living in the Middle East, particularly Saudi Arabia and the United Arab Emirates (UEA), because of little knowledge are easily lured by Hawala/Hundi operators. It is a common complaint that the banking system operating in rural areas…

Read More

Nervousness likely to prevail The political turmoil in the country, along with the continuation of the currency crisis, has led to weakness in the market with a negative stock review for December 2022 during the week ending on December 23, 2022. The KSE-100 index settled at 39,669 points, down 1,632 points or 4%WoW. The index slipped below the 40,000 level since late July 2022. The weakness in the index was accompanied by a meager improvement in participation over the past week, with average daily trading volume at 180.2 million shares during the week, as compared to 161.9 million shares in…

Read More

At least 20 oil tankers queuing off Turkey to cross from Russia’s Black Sea ports to the Mediterranean face further delays as operators race to adhere to new Turkish insurance rules added ahead of a G7 price cap on Russian oil, according to Reuters. Turkish maritime authorities issued a notice in November 2022 asking for additional guarantees from insurers that the transit through the Bosphorus would be covered starting from the beginning of December 2022. The new rule was announced before a US$60 per barrel price cap was imposed on Russian seaborne crude. Western insurers are required to retain proof that Russian…

Read More

According to an IMF report, global food prices are likely to remain high amid war and high energy costs. Interest rate hikes have eased price pressures, but the weather, war and material costs could keep food prices elevated for longer. Food prices, which reached a record earlier this year, have increased food insecurity and raised social tensions. These have also strained the budgets of governments struggling with rising food import bills and diminished capacity to fund extra social protection for the most vulnerable. Impact on prices A 1 percentage point increase in the Federal Reserve’s main interest rate reduces food…

Read More

Market likely to stay range-bound Foreign Exchange Reserves and Cement Sales: A Glimpse into Pakistan’s Economic Landscape Economic uncertainty regarding Pakistan’s ability to make good on its debt payments kept the market under pressure during the week ended December 09, 2022. The benchmark index closed at 41,698 points, posting a decline of 1.07%WoW. State Bank of Pakistan (SBP) confirmed the payment of US$1.08 billion of International Sukuk. This brought down foreign exchange reserves held by the SBP to US$6.7 billion on December 02, 2022. Saudi Arabia provided a much-needed breathing space to Pakistan by announcing the rollover of US$3 billion…

Read More

Oil production in the United States rose to nearly 12 million barrels per day (b/d) in August 2022, the highest since the onset of the Covid-19 pandemic; even as shale companies have said they do not see production accelerating in coming months, according to Reuters. US crude prices have hovered around US$85/barrel after surging into triple-digits this year and boosting fuel costs for consumers. President Joe Biden has called on oil companies to boost production to reduce fuel prices. Overall US output peaked at 13 million b/d in late 2019, and has not returned to that level since the pandemic…

Read More

The perspective of a situation analysis matters a lot. Just as current Pakistan’s politics overshadow multiple positives. Believing that the KSE-100 index is an indicator of Pakistan’s economy, many investors, particularly those overseas follow it a little religiously. October was being watched specifically, because of the FATF decision. The benchmark index mostly remained on an upward trajectory for most of October, hitting a high of 42,350 points, before politics dragged it to close flat for the month ( up 4% in US$ terms). Imran Khan commenced his march onto Islamabad in a bid to galvanize public support and force early…

Read More

Allowing the export of sugar and fixing of sugarcane prices by market forces The sugar industry in Pakistan is the second largest agro-based industry. It has the installed capacity capable of producing an exportable surplus. There is a need to support the demand of the Pakistan Sugar Mills Association (PSMA) to allow the export of surplus sugar. Since the well-being or otherwise of industry impact the rural economy, the government has fixed the price of sugarcane, which ultimately plays the most crucial role in fixing the retail price of refined sugar. The latest demand of the industry is that the…

Read More

Robust recovery as political noise eases As the political noise in the country eased off considerably, the benchmark index of Pakistan Stock Exchange (PSX) posted a robust uptick. The index moved up by 1,237 points during the week ended on November 11, 2022 to close at 43,093 points, up 2.95%WoW. The uptick in index was witnessed amid healthy participation with the weekly average daily traded volumes also jumping by 8.8%WoW to settle around 306.4 million shares, as opposed to 281.5 million shares witnessed last week. Stability also returned in the foreign exchange market during the week with PKR holding its…

Read More

This year Pakistan is anticipated to face a shortfall of wheat. The estimated shortfall will require the country to import 2.5 million tons of staple food grain. This will cost the country US$1.3 billion, besides handling charges to be paid in local currency. The need to import wheat has once again highlighted the importance of attaining self-sufficiency in the production of wheat and introducing efficient storage facilities and trading systems. In this article, an effort has been made to explore ways to overcome the shortages and contain the outflow of precious foreign exchange. Wheat is an agricultural commodity and its…

Read More

In the backdrop of massive damages to agriculture by unprecedented floods caused by historic monsoon rains, the State Bank of Pakistan (SBP) has fixed an indicative annual agriculture credit disbursement target of Rs1,800 billion for the financial institutions for FY23 to cater to the rising agriculture credit demand in the country. Last year, the Rs1,700 billion target was missed primarily due to financial institutions’ cautious lending approach. The current year is under the immense pressure of devastating flash floods across the country. No official data is available about the loss of crops, livestock, and other related valuables in the agriculture…

Read More

Trading volume declines 14.4% WoW During the week ended on October 21, 2022, the focus of investors remained on the current account position, besides the upcoming FATF plenary. The benchmark index remained flat and closed at 42,213 points, up 0.6%WoW. The average volume for the index continued downward trajectory, dropping to 228 million shares down 14.4%WoW. Major news flows during the week included: 1) Q1FY23 Current Account deficit down by 37%YoY, 2) Trade deficit shrinks by 30.2%YoY in September, 3) Gas sector circular debt bloats to Rs1.5 trillion, 4) Pakistan receives only US$88 million assistance against US$816 million flash appeal,…

Read More

The fourth successive month where the headline inflation rate in Pakistan has topped 20% The CPI for the month of September 2022 clocked in at 23.2%YoY, a significant decline from the previous month’s 27.3%YoY, mainly due to the falling electricity charges. The GOP also slashed the prices of petrol, mainly due to the reduced Petroleum Development Levy (PDL). This is the fourth successive month where the headline inflation has topped 20% and is unlikely to fall below this mark over the next quarter owing to floods. The jump in monthly inflation is largely driven by the hike in prices of…

Read More

Pakistan Stock Exchange posts 2.33%WoW gain Pakistan Stock Exchange witnessed mostly an all green week ending on October 07, 2022 after a long break, closing at 42,085 points, up 2.33%WoW.Shrinking trade deficit and appreciating currency improved overall investor sentiment. Further, rumors about rate-cuts in the upcoming monetary policy meeting on October 10, 2022 loomed large. Trade deficit was reported at US$2.9 billion at end September 2022 and US$9.2 billion for1QFY23, down 20%MoM/21%YoY. Also, the new finance minister’s stance made his unfriendly stance clear for financial institutions involved in foreign exchange market volatility and speculation, instilling confidence into markets. Overall, the…

Read More

Large areas of Pakistan were inundated in 2010 by heavy floods, resulting in the displacement of millions of people. Experts had termed it one of the worst humanitarian catastrophes the country has suffered. Twelve years later, massive flooding has forced analysts and political leaders alike to search for new adjectives that can describe the devastation caused by monsoon rains, appropriately. It may be recalled that the Metrological department had warned about the intensity of rain and resulting devastation, but it was too late to avert the situation. Now the government has declared a national emergency and has desperately sought urgent aid from…

Read More

When Pakistan received a tranche of US$1.2 billion from the International Monetary Fund (IMF), it was anticipated that PKR would find solid ground against the US $. However, against expectations, the currency continued to depreciate. While the country’s borrowing needs for the year are fully met, the outlook beyond FY23 remains uncertain. As per the latest IMF document, Pakistan’s gross borrowing needs over the next 5 years are expected to top US$180 billion, meeting them or even rolling them over will be an uphill task. In the short term, the country’s borrowing needs may increase further as floods have washed away standing crops in Sindh…

Read More

Pakistan Stock Exchange benchmark index witnesses 2.5%WoW decline Pakistan Stock Exchange (PSX) remained under pressure during the week ended on September 23, 2022, driven by renewed weakness in the PKR against the USD and concerns regarding the country’s fiscal health. Participation in the market remained lackluster, with average daily traded volumes averaging 166.1 million shares during the week under review as compared to 183.2 million shares a week ago. The benchmark index, KSE-100 Index lost 1,059.28 points during the week, depicting a 2.5%WoW decline. The PKR continued to lose value against the US$, depreciating 1.2% during the week. Furthermore, the…

Read More

After the withdrawal of tax exemption, some of the sponsors of Modarabas in Pakistan have started converting these entities in private limited companies. They believe if this incentive is not offered there remains no justification for these entities to exist. They also say that a bad policy decision has made these entities ‘endangered species’. Let us explore, if the government right or rationale of Modaraba sponsors valid? In Islamic finance Modaraba is a financial instrument, but in Pakistan these specialized entities, first of its type, were the pioneers of conversion of country’s financial systems into ‘Shariah compliant’ entities. The objective…

Read More

Faysal Bank Ltd will become a full-fledged Islamic bank by the end of 2022 after ring-fencing its residual conventional loan portfolio, said Chief Financial Officer Syed Majid Ali. Speaking at a press briefing at the bank’s head office, Syed said the Bank will surrender its conventional banking mandate once the regulator grants it the licence for Islamic banking. Five Islamic banks and 17 conventional banks with Islamic banking branches currently operate in Pakistan. The share of Islamic banking assets in the overall banking industry is still below 20%, while the share of Sharia-compliant deposits is also below 20%, to be…

Read More

Interview Raheel Qamar Ahmed, Chairman, NBFI & Modaraba Association Modaraba companies operating in Pakistan are the unique entities. Around the world, Modaraba is an instrument, but in Pakistan these entities are an improvised shape of close-end funds making investments in diversified businesses from Ijarah to manufacturing to trading. In an exclusive interview with Raheel Qamar Ahmed, Chairman, NBFI & Modaraba Association of Pakistan PAGE discussed performance and outlook of the sector. Following are excerpts: PAGE: How do you review the performance of Modarabas in the post COVID-19 era? Raheel Qamar Ahmed: As you aware that Modarabas are managed by professionals, they…

Read More

Market witnessed a volatile week on devastating floods Pakistan Stock Exchange witnessed a volatile week as the country experienced devastating floods triggered by the heaviest monsoon rains in a decade which killed about 1,200 people and submerged one-third of the country. Although, there was respite due to receipt of US$1.1 billion tranche from International Monetary Fund (IMF) and crude oil price falling by US$6/bbl on the back Chinese economic weakness, hawkish FED stance and reemergence of Iranian supply. The index lost 283 points to close at 42,309 on September 02, 2022, last trading day of the week. On the macro…

Read More

Progress with IMF likely to push sentiments The market remained jittery during the week ended on August 26, 2022. Political uncertainty was further enhanced after a case was registered against ex-prime minister Imran Khan in the Anti-Terrorism Court. This shadowed positive news regarding foreign exchange inflows and SBP keeping interests rates unchanged. Erosion in Pak rupee value against the dollar continued, with the currency depreciating 2.72% against the greenback over the week, to close at PKR220.66/US$. The benchmark index lost 679 points, down 1.57%WoW. Participation in the market was also lackluster, with average daily traded volume dropping by 52%WoW to…

Read More

This year Pakistan is celebrating Independence Day, when the clouds of imminent are getting thicker. While the people have complete faith in the economic resilience, a lot needs to be done on war footings. People are worried about the ballooning confidence deficit. They believe that breaching current account deficit and budget deficit is possible but overcoming confidence deficit may take years. The brighter side of the story is that International Monetary Fund (IMF) is likely to release promised branch of about US$1.2 billion. This will pave way for the inflow of foreign exchange from friendly countries and other multilateral lenders.…

Read More

Bulls control likely to linger Bulls finally returned to Pakistan Stock Exchange as the looming threat of a potential default on foreign debt eased off with a couple of friendly countries stepping forward to bail out Pakistan from the crisis situation. The monthly external trade numbers were also announced this past week ended on August 05, 2022. The trade deficit pleasantly surprised consensus estimates owing to larger than anticipated squeeze on imports. Consequently, the KSE-100 gained 4.85% to close at 42,096 points, amid significantly better volumes with average volume for the index recorded around 268.61 million shares up 78.9%WoW, as…

Read More

Pakistan Stock Exchange (PSE), concluded FY22 with the benchmark index returning negative 12.3%, while on the back of hefty currency depreciation of 30%YoY during FY22, the dollar adjusted return throughout FY22 came to negative 42.3% making the KSE-100 index one of the worst performing indexes in the region. Amid tough economic outlook, the market participation remained dull throughout FY22, with the average daily traded volume during the year reported around 292.7 million shares as opposed to 527.4 million shares it averaged during FY21. As for the outgoing month, the average trading volume was slightly above the yearly average, clocking around…

Read More

Over 300 units closed due to cut in gas supply, says APTMA chief Abdul Rahim Nasir, Chairman, All Pakistan Textile Mills Association (APTMA) claims that over 300 textile units have been closed due to the cut in gas supply. He urged the Government of Pakistan (GoP) to immediately restore gas supply to the textile industry. Explaining gravity of the situation, he said Pakistan has already lost almost US$1 billion of textiles and clothing exports. Accompanied by APTMA, North Zone Chief, Hamid Zaman and Senior Vice-Chairman Kamran Arshad at a press conference, he said the 26 percent upsurge in the export…

Read More

Macro, political uncertainty may keep activity sluggish Pakistan Stock Exchange (PSX) witnessed a turbulent week ended on July 22, 2022, on account of political uncertainties mainly on the back of Punjab elections and massive currency depreciation on the back of oil payments. The index dropped by 1,968 points or 4.75%WoW to close at 40,077 points, while activity remained subdued as compared to last week. On the macro front, PKR/US$ depreciation was a shocker, as the domestic currency fell by 8.3% to PKR228 for a US$. Furthermore, PTI’s victory in the by-election of Punjab caused further uncertainty, prompting international credit raters…

Read More