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…
Author: Shabbir Kazmi
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…
Index scores strong recovery; corporate results support but geopolitical tense weigh After recording heavy losses in the earlier week due to heightened tensions on geopolitical front, Pakistan Stock Exchange (PSX) posted a strong recovery during the week ended 23rd August 2019 as tensions eased slightly eased. The rebound can be termed a dead cat bounce after the market posted a decline of 46% from its peak of 53,000. The benchmark index closed the week at 31,350 points, up 9.0%WoW. With the strong rally, activity in the market the average traded volume also rose to 174.42 million shares. Foreigners remained net…
The benchmark index of Pakistan Stock Exchange (PSX) is on persistent decline for the last two years. The recent hike in policy rate by 100bps has further accelerated the decline rate. It seems that the ship (PSX) has been abandoned by the captain (regulator), its engine has stopped working (daily trading volume has reduced to historic low) and passengers (investors) have been left at the mercy of hide tides (pressure of the IMF). Before making further deliberations, one point must be made clear that the prime purpose of the stock exchange is ‘capital formation’ and not revenue generation. The most…
Listless market after growing unrest in held Kashmir and mounting macro risks During the week ended 9th August 2019, the benchmark Index of Pakistan Stock Exchange (PSX) fell more than 7.1% WoW to close at 29,429 points. It breached the psychological barrier of 30,000 after five years. This un-ceremonial fall was caused by mounting macro risks and growing unrest in Indian occupied Kashmir. Key news flows during the week included: 1) the Government of Pakistan (GoP) minimized furnace oil and coal based power generation to facilitate maximum intake of RLNG to avoid US$30 million penalty under Take-or-Pay mechanism and reduce…
At a recently held seminar at the Sustainable Development Policy Institute (SDPI), Teresa Daban Sanchez, Resident Representative, International Monetary Fund (IMF) to Pakistan said, “The Fund’s program faces significant risk from a failure to build political consensus around its key components”. Added to this is the threat of failure to get off the ‘grey list’ of the Financial Action Task Force (FATF) that could complicate access to private financing from global markets. She also insisted that Pakistan has to get out of the grey list. She minced no words and said that the biggest risk faced by Pakistan is political…
Losing streak continues as investors’ sentiments dampen; result announcements eyed Pakistan Stock Exchange (PSX) extended its 4th week of losing streak. Investors’ sentiments were dampened by high inflation rate and poor corporate results, as they overlooked numerous positives. The positives included government backed Sadiq Sanjrani’s surprise win in the Senate vote and resumption of military sales from the United States. The benchmark index lost 437 points or 1.36%WoW to close the week ended 2nd August at 31,666 points. Based on NCCPL data, foreigners remained net buyers amounting to US$3.4 million, as against this Mutual Funds emerged net seller of US$4.8…
At the recent monetary policy briefing, Dr. Reza Baqir, Governor, State Bank of Pakistan (SBP) defended persistent hike in policy rate as a measure to contain inflation in the country. One wonders how hike in policy rate can help the country’s suffering from cost pushed inflation. According to analysts, the three factors responsible for high inflation in Pakistan are: 1) rising interest rate, 2) eroding value of rupee and 3) spiking electricity and gas tariffs. As food and other consumable items are becoming expensive, savings rate is on the decline. In search of safe havens not only small investors are…
The benchmark index of Pakistan Stock Exchange (PSX) is on persistent decline for the last two years. The recent hike in policy rate by 100bps has further accelerated the decline rate. It seems that the ship (PSX) has been abandoned by the captain (regulator), its engine has stopped working (daily trading volume has reduced to historic low) and passengers (investors) have been left at the mercy of hide tides (pressure of the IMF). Before making further deliberations, one point must be made clear that the prime purpose of the stock exchange is ‘capital formation’ and not revenue generation. The most…
Bulls rule short-lived; instability persists, investors may take longer term view During the week ended 26th July 2019, the benchmark index of Pakistan Stock Exchange (PSX) remained under pressure and registered a decline of 356 points to close at 32,103 levels. The week started on a positive trajectory as first two sessions cumulatively added 257 points to index, on the back of trip of Prime Minister Imran Khan to the United States, but subsequently sentiments turned bearish on weak macro indicators. The key sectors adding to the erosion in the Index were Power & Distribution Companies followed by Food &…
Pakistan is among the top producers of cotton, sugarcane and food grains, i.e. wheat, rice and maize. However, significantly large quantities of food grains stale before reaching the market. This on one hand deprives growers of their rightful return and on the other hand does not allow the country to earn foreign exchange from export of surplus quantities. State Bank of Pakistan (SBP) embarked upon Warehouse Receipt Financing (WRF) program and issued the framework nearly six years ago. The central bank considers that development of WRF is inevitable for achieving food security, improving return to farmers and above all saving…
An exclusive interview with Hakeem Muhammad Usman, CEO, Marhaba Laboratories [box type=”shadow” align=”” class=”” width=””]Marhaba Laboratories (Pvt.) Limited is the brainchild of Hakeem Muhammad Usman. Its inception goes back to the days when he himself was a student at Tibbia College Lahore. Greatly inspired by the rich past of Oriental pharmacy and worried over its contemporary downfall, Hakeem Usman contemplated on evolving this noble profession of service to the mankind once again. It was never too late to accomplish his dreams, and due to his pervasive work into making this profession a credible one, Hakeem Usman finally succeeded in transforming…
Market remains dull, but may springs back on improving economic indicators During the week ended 19th July 2019, Pakistan Stock Exchange (PSX) remained under extreme pressure. The benchmark index lost 1,214 points, or plunged by 3.60%WoW to close at 32,459 level. Market remained under pressure during the first two sessions of the week owing to expected hike in policy rate and finally the central bank raised policy rate by 100bps, taking the rate to 13.25%, the highest in last 8 years. Continuous Monetary tightening by central bank has resulted in lack of fresh participation as investors’ interest is shifting towards…
Pakistani newspapers and magazines are full of praises for the Government of Pakistan (GoP) and State Bank of Pakistan (SBP) for ushering double digit growth of Islamic banking in the country. However, the performance over slightly less than two decades looks miniscule keeping the fact in mind that overwhelming majority of the population of the country is Muslim and the name of the country is Islamic Republic of Pakistan. The Constitution promises that all the laws and rules of the country will be promulgated in the light of Shariah, but the government itself remains the biggest borrower under Riba regime.…
The Government of Pakistan (GoP) has launched ‘Prime Minister’s Kamyab Jawan SME Lending Program’ aimed at providing self-employment opportunities to unemployed youth. Under the scheme, the GoP will provide mark-up and credit loss subsidy on small business loans up to Rs5 million disbursed by banks to youth. According to the scheme procedure announced by State Bank of Pakistan (SBP), all men/women holding CNIC, aged between 21 and 45 years with entrepreneurial potential are eligible for this scheme. For IT/e-commerce related businesses, the age limit will be 18 years. Under the scheme some 25 percent of the loans will go to…
Market volume posts a 7-year plunge; news of interest rates keep investors nervy During the week ended 12th July 2019, the benchmark index of Pakistan Stock Exchange (PSX) lost 518 points and closed at 33,672 points, down 1.5%WoW. Trading activity remained immensely dull as average volumes during the week fell to around 51 million shares. It is pertinent to note that the volumes in the outgoing week were lowest in the last 7 years (last reported lowest number was 28 million in January 2012). Investors preferred to remain on sidelines primarily due to uncertainty about the market support fund due…
The recently announced Rs309 billion agriculture package, with emphasis on improving crop yields, livestock development and import substitution can be termed a right step in the right direction. Reportedly, the share of Federal government will be Rs85 billion, Provincial governments will contribute Rs175 billion and share of farmers will be Rs50 billion. Even assuming a haircut, this could still imply double the agricultural spending than in last 9 years at an average. Out of the allocated funds, 7% is planned to be targeted towards increasing the average yield of wheat and sugarcane. The aforementioned developments, if materialized, could result in…
Pakistan stock market witnessed a substantial decline of 12% in Rupee terms and 23% in US$ terms during 4QFY19 amidst macro-economic uncertainties. Major decline was posted in the second half (Jan-Jun 2019 with a fall of 9% in Rupee terms and 21% in US$ terms). During the outgoing fiscal year, the benchmark index of Pakistan Stock Exchange (PSX) plunged by 19% and 39% respectively for the second consecutive year. The aggregate fall for the last two fiscal years was to the extent of 27% and 52% respectively. Market capitalization plunged by 53% in the last 2 fiscal years, from US$91…
Smidgen gain witnessed; new SECP rules may short-term hit to the sentiments The benchmark Index of Pakistan Stock Exchange (PSX) closed at 34,190 points, up 0.9%WoW the first week of FY20 ended 5th July 2019. The nose dive in daily trading volume by almost 41%WoW to average 86.6 million shares was particularly indicative of lack of investors’ interest. With approval from the IMF executive board for the proposed US$6 billion under EFF for the next three years (accompanied by release of US$ one billion), investor sentiment see-sawed as regulatory action to curb un-registered transactions, including SECP’s recently approved Search And…
Analysts seem to have the reasons to believe that new Governor of State Bank of Pakistan, Reza Baqir, has not understood the intricacies of Pakistan’s economy. This perception gets credence if one just looks at the depreciation of Rupee on Wednesday, 26th June 2019. The day witnessed a decline of 3.8% in Rupee value in a single day. The substantial fall in the value of Rupee took place after Governor central bank declared that the exchange rate would be market-based and the free float was not suitable for the country’s economy. Rupee has lost about 35% value since May 2018.…
Interview with Mr Mukhtar Khan HI (M) Rear Admiral (retired) – Director General, Bahria University Karachi Campus PAGE: Kindly describe role of Bahria University in promotion of higher education in Sindh and rest of the country? Mukhtar Khan: At the outset, let me acknowledge the efforts of Pakistan & Gulf Economist to promote this noble cause. Like other leading varsities, Bahria University has incorporated advance teaching methodologies to promote multi-faceted education, exchange visits of students beyond their normal text book education and knowledge. Bahria University is playing an important role as leaders in teaching and learning, in education, research and technology.…
Under mood of pessimism index weakens further; cautiousness advised Continuing the trend witnessed in the earlier week, the benchmark Index of Pakistan Stock Exchange (PSX) lost another 3.5%WoW to close at 33,902 points for the week ended 28th June 2019. Apart from the regulatory tightening that has been the dominant factor impacting market performance negatively other factors included: 1) fiscal year-end phenomena, where historically market remains under pressure in June, 2) exchange rate volatility taking exchange rate to new high of Rs163.5 before closing at Rs159.5 and 3) government increasing in gas tariffs up to 191%. Concerns over tail risks…
Finally, Pakistan managed to garner much-needed support from three-member states of the Financial Action Task Force (FATF) to avoid being placed on its blacklist, but the threats still lingers on. The country has been on the global money laundering watchdog’s radar since June 2018, when it was placed on the grey list for terrorist financing and money laundering risks after an assessment of the country’s financial system and security mechanism. This is certainly a positive development that there is no imminent threat of blacklisting by the FATF due to crucial support from Turkey, China and Malaysia, but Pakistan had to…
Govt should pay special attention to hotel industry in promoting tourism An exclusive interview with Akhtar Riaz — General Manager, Hotel Mehran [box type=”shadow” align=”” class=”” width=””]Akhtar Riaz is currently working as General Manager at Hotel Mehran Karachi. Prior to that he was General Manager at Ramada Plaza Karachi and has also worked as Acting General Manager. He has over 25 years of hospitality and mall management experience. He has worked in Pakistan, UAE and Malaysia. He achieved key milestones while working for Hotel Wilayah in Malaysia as well as for Hashoo Group and Avari Hotels International. This involved working…
Market remains choppy, budget opposition and FATF meeting may keep investors nervy The market performance during the week ended 21st June 2019 remained choppy and the benchmark KSE-100 Index of Pakistan Stock Exchange (PSX) closed at 35,125 points, down 1.26%WoW. The week opened on a weak note, as rupee continued to depreciate. Governor, State Bank of Pakistan, Reza Baqir, held a press briefing on Monday to guide on economic outlook particularly about 1) adoption of market determined exchange rate regime and 2) continued monetary tightening. Proposals regarding power and gas tariffs hike also surfaced during the week, furthering market fears…
Three weeks ago I wrote an article ‘Brewing turmoil in Pakistan’s backyard’ and the concluding remarks were, “The fact remains that none of the country (United States or Iran) wants to get the blame for initiating a conflict, but it doesn’t mean that the threat of eminent war is not there. There is a fear that miscalculation or misunderstanding can trigger confrontation and an outbreak of war. As the US expands its military presence in the region, the risk of beginning an accidental war rises further.” The apprehension came true last Thursday when two oil tankers were attacked and left…
Market likely to find foothold in the coming sessions on budget perceptive The week ended on 14th June 2019 commenced on a negative note, with the benchmark Index of Pakistan Stock Exchange (PSX) falling by about 1,000 points on broad expectations of a negative budget. However, the market pared losses in the remaining sessions on the expectations of formation of market support fund. Resultantly, the Index closed at 35,573 points, almost flat WoW. Average daily volume remained on the lower side at 136.4 million shares, down 13.0%WoW. Contrary to broader expectations Budget’19 was headline equities positive despite GoP’s efforts remaining…
Farmers must not allow cultivation of genetically modified maize and other crops All the major stakeholders of agriculture sector including farmers, food processors, national seed companies and agribusiness experts, etc. vehemently oppose cultivation of genetically modified (GM) maize in Pakistan. The unprecedented near-consensus against GM is amazing. However, the proponents of GM seeds are still trying desperately to get the government approval by openly criticizing Ministry of National Food Security and Research for the delay in granting the permission of cultivation of GM maize in Pakistan. It is on record that the 1st consultative meeting on commercial cultivation of GM…
Sort of Rs20bn fund should exist at all times for stock market Also there is a right time to accumulate under the falling stock sectors An Exclusive interview with Nazim Abdul Muttalib – Executive Vice President and Head of Broking, Ismail Iqbal Securities [box type=”shadow” align=”” class=”” width=””]Nazim Abdul Muttalib has over fourteen years of experience in Pakistan’s financial sector including Capital Markets, Banking and Asset Management. He is currently working at Ismail Iqbal Securities (Pvt) Limited as Executive Vice President, Head of Broking. Nazim has been working closely with foreign investors, broker dealers and local fund managers to give…
Index jumping for joy after support fund launched After a jubilant week, the benchmark index of Pakistan Stock Exchange (PSX) started the week ended on 30th May 2019 in the red on emerging concerns. While details of the upcoming budget weren’t very supportive, the government seemed desperate regarding meeting the revenue target of Rs5.5 trillion for next financial year. Towards middle of the week, euphoria on the back of Stock Market Support Fund was witnessed again after confirmation from Finance Adviser, helping the Index to close the week at 35,975 points, up 0.8%WoW. News of price increase by local cement…
During this past week the benchmark index of Pakistan Stock Exchange (PSX) posted one of the largest weekly gains of 7.65% or 2,537 points. The last highest gain of 9.1% was posted in first week of April 2009. All sessions of the week closed on positive note, depicting restored optimism of investors on the back of market support fund and deferred oil facility by Saudi Arabia. Another important point worth mentioning is that foreigners remained net seller of US$3.44 million and they were joined by mutual funds and insurance companies, with US$5.4 million and US$2.8 million respectively, as against these…
Since Donald Trump administration refused to extend waivers for Iranian oil exports, the United States and Iran have been giving threats and counter threats. In response to the US decision to tighten oil sanctions and push Iranian oil exports to zero, Iran has expressed its determination to resist the US pressure and retaliate, if deemed necessary. Iranian Foreign Minister Javad Zarif on a visit to New York in late April told the audience at the Asia Society that his country would continue to sell its oil despite the US sanctions and warned that the US should remain ready to face…
Reportedly the Government of Pakistan (GoP) is getting ready to issue ‘Energy Sukuk II’ amounting to Rs200 billion before end May 2019. It is anticipated that around 30 percent of the amount will be to be routed towards independent power producers (IPPs), implying 40 percent settlement of cumulative IPPs’ receivables by June 2019. According to the details for Kot Add Power Company (KAPCO), this may help in resuming payouts in 4QFY19, as payable to Pakistan State Oil Company (PSO) has already halved to Rs24 billion at end March 2019. Deleveraging does not seem to be a priority this time, as…
The good news is that the International Monetary Fund (IMF) has succeeded in convincing the Government of Pakistan (GoP) to agree on stringent conditions to pave way for the approval of US$6 billion under Extended Fund Facility (EFF). The bad news is that there will be further increase in policy rate, hikes in electricity and gas tariffs and reduction in subsidies. It may not be wrong to say that despite release of paltry tranches of US$2 billion per annum, Pakistan is likely to plunge deeper into debt trap, unless appropriate policies are implemented to restore competitiveness of Pakistani exporters in…
Monetary policy, budget measures and news of kekra well likely killjoy bears Fully cognizant of the unease prevailing at equity market, delegation of leading businessmen and brokers comprising of Bashir Jan Mohammad, Arif Habib, Aqeel Karim Dhedhi, Ali Jamil and Sulaiman Mehdi, Chairman Pakistan Stock Exchange (PSX) met Dr. Abdul Hafeez Sheikh, adviser to Prime Minister on Finance in Karachi. Others also present on the occasion were Chairman FBR, Syed Shabbar Zaidi and Dr. Khaqan Najeeb. They discussed the overall macro-economic situation of the country and its impact on the capital markets. Keeping in view the present depressed market sentiment,…
Keeping in view the ongoing discussions with the International Monetary Fund (IMF) team and the recent changes in key government positions, there are hopes that Pakistan may enter into IMF program during June 2019. It is also anticipated that Federal Budget for next financial year (FY20) will be prepared in the light of impending IMF conditionalities. This impression develops because announcement of next budget has been deferred for nearly a month. Soon after appointment, Dr. Hafeez Shaikh, Adviser to Prime Minister on Finance, has made clear that the focus of the new financial team will be on containing current account…
Market beleaguered by negotiations with IMF, review by MSCI and facets of fy20 budget During the week ended 10th May 2019, trading at Pakistan Stock Exchange (PSX) remained under pressure due to uncertainties emanating from negotiations with International Monetary Fund, forthcoming MSCI review and federal budget for next financial year (FY20). The benchmark index posted a decline of 3.9%WoW and closed at 34,717 points. With the commencement of Ramadan, average traded volumes for the week plunged to 73.5 million shares, posting a whopping fall of 30%WoW. Volume leaders included: KEL, MLCF, SNGP and BOP. Leading gainers were: ENGRO, BAFL, HBL…
Ever before Imran Khan came into power, Pakistan’s economy has been going through tough times. As per the norm the country delayed approaching International Monetary Fund (IMF). According to the latest reports, technical teams of the IMF and Pakistan are locked in negotiations for a bailout package and hope to strike a deal by 10th May 2019. Adviser to Prime Minister on Finance, Dr Abdul Hafeez Shaikh has expressed hopes that the talks on bailout package with the Fund would turn out to be successful. However, he didn’t mince his words and said that the upcoming budget would focus on…
In the recent past, Pakistan stock market has plunged in an unprecedented manner. Some analysts say, ‘it is reflection of the overall state of country’s economy’. Others term it the outcome of geopolitical strangulations. Whatever may be reasons, policy makers have to find the solution and the top item on agenda should be ‘overcoming confidence deficit’. Once faith of people in the incumbent government and Pakistan is established, other problems will be resolved in due course of time. Ever since, Imran Khan became Prime Minister of Pakistan, expectations of people have been marred by wrong priorities, bad decisions and on…
Deal with IMF amongst top rationale keeps equities falling During the week ended 3rd May 2019, the benchmark index of Pakistan Stock Exchange (PSX) closed at 36,123 points, down 2.7%WoW due to a number of reasons. On top of the list was inordinate delay in signing a package with the lender of last resort, International Monetary Fund (IMF). Key news flow impacting equities market, during the week included: 1) ongoing negotiations with IMF for US$6.5 billion funding, IMF team pushing for power sector reforms including resolution of circular debt though 25% hike in consumer power tariff and gas prices, 2)…
Many analysts believe that the decision of US President, Donald Trump to end the exemptions regarding buying Iranian crude oil is a double-edged sword. On one hand, he doesn’t want oil prices to go up and on the other hand he is adamant at pushing Iran out of oil market. It appears that like past; this time too, the US would succeed in luring Saudi Arabia to exploit the situation to its benefit. It is also believed that stringent sanctions on Iran can take both Saudi Arabia and the oil market into the unchartered waters. A question comes to minds, is Saudi Arabia capable of filling…
Recovery witnessed; results, amnesty report may keep investors optimistic The market ended the week on 26th April on a negative note, losing 888 points or 2.4% in the first two trading sessions. Stocks later rallied in the remaining three trading sessions on earnings upbeat, recouping some of the earlier losses. The benchmark index declined 0.4%WoW to close the week at 37,130 points. Trading activity remained weak and skewed towards main board items. Average daily trading volumes declined 30%WoW to 122.45 million shares. Key news flows impacting the market during the week were: 1) new economic team of government deciding to…
Pakistan is rich in natural gas but deficient in fossil oil. At present bulk of the gas demand is met through local production, which offers enormous saving of foreign exchange as well as cleaner environment. The added benefit is that Pakistan could buy gas from its next door neighbor Iran as well as a not too far located friendly country Qatar. While analysts have the consensus on boosting indigenous gas production, they consider import of LNG as the second best option. Around the world, experts have the consensus on a point that natural gas is the cleanest fossil fuel. Its…
In the aftermath of growing criticism, Prime Minister, Imran Khan has found some scapegoats and reshuffled his cabinet. The induction of minister previously associated with rival political parties has attracted criticism as well discontent among PTI lovers. Selection of ex-ministers of rival political parties raises two perceptions: 1) PTI suffers from dearth of competent people and 2) non-state actors still control reins of the ruling junta. Some experts even go to the extent of saying that if Nawaz Sharif governments could be toppled; can Imran Khan also face the same fate? While Imran Khan may have done many good things,…
Index springs back on economic optimism; IMF plan and result season promising On last day of the week ended on 19th April 2019, Pakistan Stock Exchange (PSX) witnessed a rebound due to renewed optimism on economic front driven by cabinet reshuffle and some changes in investors’ sentiments. The benchmark index closed almost flat at 37,292 levels. Average daily trading volume surged to 175.7 million shares as compared to 148.36 million shares a week ago. Positive news flow of expected signing of agreement with IMF in late April/early May with policy level agreement between authorities and IMF failed to reinvigorate interest…
Stocks underperform on in the course of crucial financial decisions The market during the week ended 12th April 2019 remained under pressure, where a benchmark index of Pakistan Stock Exchange (PSX) touched 36,579 points mid-week, lowest level since PTI’s government came to power. The rumour of a potential price war in cement sector led to a further drag on the market performance. Meanwhile, a delegation led by Finance Minister Asad Umar reached Washington for crucial discussions with the IMF. The discussions are expected to last till 15th April, which will be followed by official announcement of amnesty scheme. The government,…
Edotco Group Sdn Bhd, the leading end-to-end integrated telecommunications infrastructure services company, reinforced its commitment to Pakistan and building its digital future with a broad range of new service offerings to accelerate the country’s connectivity infrastructure development. Witnessed by Tun Dr Mahathir Mohamad, Prime Minister of Malaysia and Imran Khan, Prime Minister of Pakistan, edotco signed agreements with three of the country’s major Mobile Network Operators (MNOs), Jazz, Telenor and Zong 4G. These agreements are aimed at boosting connectivity capabilities in the country via shared telecommunication towers, and more efficient operations and energy management. Signing of these agreements is part…
Interview with Mr Sultan Hamdani – Partner, MaisonConsulting.com [box type=”shadow” align=”” class=”” width=””]Profile: MaisonConsulting.com was founded with the theme of owned and run by professionals and soon it became a synonym of a seasoned group of experts working on modern business utensils such as ERP, CRM and Security. With strong team of professionals having vast experience in fields of Information Systems locally and abroad, the Company is set to give consultancy and implement mission critical information projects for local organization. Over the years we have developed our repute as an On-Time and In-Budget Goal Achievers. With contracts in the local…
Index posts 16-week highest loss as investors stay gloomy over slow economic progress During the week ended 5th April 2019, the benchmark index of Pakistan Stock Exchange (PSX) posted 16-week highest loss, losing 2.92% WoW to close at 37,522 level, with four sessions closing in red and one in green. Investors’ sentiments remained under pressure throughout the week owing to slow growth of economy and weak macro indicators due to 5-year high inflation and fiscal deficit. The hike in policy rate also encouraged investors to make their way to fixed income securities like National Saving Certificates and other government securities…
Reportedly, postharvest losses range from 10 to 20% for different crops in Pakistan. To achieve food security, containing such colossal losses should be the top priority of the Government of Pakistan (GoP). Analysts have the consensus that if such losses are contained, twin benefits can be achieved: 1) increasing income of farmers and 2) boosting exports from the country. Pakistan is among the top producers of various staple food grains that include rice, wheat and maize. The country exports substantial quantity of its top quality Basmati and other varieties of rice. Lately, the country has been producing around 25 million tons wheat per annum and…
Descon Oxychem is a part of Descon’s Chemicals line of business. The Company offers the largest and the most complete product line of Hydrogen Peroxide products. Its products offer top of the line, world class range that meet all international safety, quality and sustainability standards. It is operated the Descon way, driving business and being responsible. This implies sustainable chemistry, respecting the people and the environment, acting as a responsible player, taking into account and meeting sustainable challenges faced by our stakeholders. With an unyielding commitment to hygiene, safety, environment and sustainable development at its core, backed by an experienced team, the…
The new models are coming up with the scale of the network Additional services in insurance, capital markets, savings, access to credit & real estate areas are required An exclusive interview with SYED HAMZA MATIN – CEO, EDP Services North America, Inc [box type=”shadow” align=”” class=”” width=””]Profile: Syed Hamza Matin has worked with large network of clients in Banking, Mutual Funds, Asset Management, Investment Banks, & Insurance. He has implemented over 500 projects for 100+ clients in 20 years in FinTech/FinServ with Fortune Clients in Pakistan, Middle East, North America, Singapore and Africa. Mr. Hamza has deep knowledge of Automation, Software…
Equities remain volatile in Jan-Mar 2019 quarter on news of IMF, FATF, Pak rupee and MSCI frontiers Pakistan equities remained volatile during the outgoing quarter (Jan-Mar 2019). The benchmark index of Pakistan Stock Exchange (PSX) KSE-100 gained 4.3% QoQ. The highest (one day) gain during the quarter was 2.70% posted on 2nd January due to positive investor sentiments after securing a US$3 billion support package from UAE, at the beginning of quarter. The sharpest single day decline of 2% was observed on 26th February due to Indo-Pak conflict, though subsequently the market recovered on the intervention of global powers. During…
It was opening up of a new chapter in the history of Tharparkar when Engro Powergen Thar (Private) Limited (EPTL), fed electricity from its first unit into the national grid. It was realization of the nation’s dream of producing electricity from Thar coal. EPTL – the majority owned company of Engro Energy Limited, tested and energized the first unit of 330MW of the combined 660MW power plant located in TharBlock II. EPTL operates as a subsidiary of Engro Energy along with other sponsors that include Habib Bank; Liberty and China Machinery Engineering Corporation. The successful synchronization happened amidst presence of…
Index remains under pressure as confusion mounting over economy slowdown The benchmark index of Pakistan Stock Exchange (PSX) mostly remained under pressure as confusion is mounting amongst investors over slowdown of economy. Despite expectations of IMF negotiations to conclude soon, investors fear IMF demands including flexible exchange rate and reform agenda implementation would bring further inflationary pressure and demand slowdown. Invest record remained cautious in short run as risk of further monetary tightening and inflationary pressure would keep upside in check. The remaining in limelight were Banks on interest rate hike increase, E&Ps on attractive valuations, Textiles on likely benefit…
Prime Minister Imran Khan faces a number of impediments, which are marring policy formation of his government. While there are no reasons to doubt his integrity and love for Pakistan and Pakistanis, two factors just do not allow him and his team to come up with home grown plan. These are: 1) his speeches spread over more than two decades, as opposition leader and 2) lack of capacity of his team. Ironically, he has offended opposition parties to an extent that these are not even ready to support him on policies necessary for nation building and putting the country on…
A delegation of Canada Pakistan Business Council (CPBC) visited Pakistan Stock Exchange (PSX) to open the trading session with the gong ceremony. CPBC, a non-profit organization based in Canada promotes trade between Canada and Pakistan. The Council has organized several trade missions to and from Canada, which have resulted in investments in various sectors of the economy. CPBC also promotes other activities that include establishing scholarships and adopting schools in Pakistan, helping establish the South Asian Art Gallery at the Royal Ontario Museum, and supporting cultural exchanges between Canada and Pakistan. The Canadian delegation was led by Samir Dossal, President…
Equities keep downward slide on uncertain economic scenario Pakistan equities continued their downward slide for the sixth consecutive week and lost 643 points to close at 38,307 level for the week ended 15th March 2019, this was the lowest index level in 48 trading sessions. Simultaneously, volumes also remained subdued, with average daily traded volume for the week declining to 93 million, down 18% WoW. Commercial banks sector was the worst performing, followed by exploration and production and cement sectors. During the first four trading sessions of the week, foreigners emerged net sellers with US$17.7 million as against net selling…
At present Pakistan faces two contentious problems, depreciating currency and rising inflations. Both the issues are badly intertwined and cannot be separated. The hike in the international prices of energy and food products also erodes foreign exchange reserves of the country. It is must that policy planners keep an eye on the movement of commodity prices to minimize the adverse impact of the hike. There are many tradeoffs available, but only timely decisions can help. Rising crude oil Major crude benchmarks witnessed up swings, but prices are still hovering near/below levels seen last year. Sanctions imposed by the United States…
HABIB BANKÂ LIMITED (HBL) has posted earnings of Rs1.7/share, down by 63%YoY. Despite Rs3.2 billion reversal in Workers Welfare Fund (WWF) expense, earnings were below market expectations as the Bank booked hefty loss from dealing in foreign currencies as well as higher total provision charge. Despite increase in interest rate, net interest income of the Bank dropped by 3%YoY. This can be attributed to maturing high yielding PIBs as well as lag in re-pricing of assets compared to liabilities. HBL booked total provision reversal of Rs3.3 billion attributable to both worsening of equity market as well as decline in asset quality.…
Meezan Bank is Pakistan’s largest and full service Islamic bank, enjoying a market share of around 35 percent. Total assets of the bank are reported at Rs938 billion, while total deposits touch Rs785 billion. It enjoys an extensive outreach comprising of a network of 660 branches. Meezan Bank announced a dividend payout of 45% in 2018 (35% cash + 10% bonus issue) as compared to 30% last year. Following are the key takeaways from the latest analysts briefing. Meezan Bank has significantly improved its capital base, where the Tier-I capital has improved to 12.09% compared to 9.94% in the same…
Geopolitical tensions keep bulls away; mini-budget, IMF package and Sukuk may retake shine The movements at Pakistan Stock Exchange (PSX) during the week ended 1st March 2019 were largely reflective of the prevailing geopolitical tensions between Pakistan and India. The benchmark Index touched a low of 37,323 points, but managed to close the week at 39,539, posting a paltry decline of 477 points or 1.2%WoW. The Index declined by 6.7% mid-week as cross border tensions escalated and panic kicked in leading to an across-the-board sell-off. However, market recovered 1,369 points as investors took positions on dips. The increasing possibility of…
Providing level playing field can strengthen the sector, says UNISAME Chief According to State Bank of Pakistan lending to small and medium enterprises (SMEs) by banks in Pakistan was for the first time recorded at Rs513 billion for CY18 as compared to Rs450 billion for CY 17, registering growth of 14 percent. The growth was even more prominent in the last six months of CY18, registered at 25 percent. The growth in lending to SMEs becomes more significant because the policy rate witnessed an increase by 425bps during the year under review. Increase in lending to SMEs can be attributed…
“Stock exchange is not for making money, it is for creating money. This difference has to be understood”, says Hussain Dawood It is worth mentioning that Pakistan Stock Exchange (PSX) has embarked upon an initiative to recognize the efforts and contributions of business icons of the country for playing an important role in the development of Pakistan’s capital market and economy of the country. Hussain Dawood was the first recipient of this honour by PSX. On Wednesday, February 20, 2019 Chairman of the Board of Directors of Dawood Hercules Corporation (DH) and Engro Corporation, Hussain Dawood and his team, visited…
Index keeps falling; investors poise some political and economic news snag Despite positive news flows at the start of the week, a barrage of weak volumes, mediocre results, skipped payouts by IPPs and lack of concrete development on the passage of the Supplementary Finance Bill by the parliament equity market performance subdued. The benchmark Index of Pakistan Stock Exchange (PSX) declined by 1.16%WoW during the week ended 22nd February 2018 to close at 40,016 level. Key news flows during the week were: 1) Saudi Crown Prince Mohammed bin Salman signed investment agreements worth US$20 billion during his high-profile visit to…
It is no secret that bulk of Pakistan’s import consists of energy and food products. Lately, the government has allowed export of half a million tons wheat and millers are expected to produce half a million tons refined sugar. It is therefore, imperative that the business community and the policy makers keep a close eye on movement of prices of energy and food products. In January 2019, global commodity prices broke the downward trend observed in the previous two months, rose by half a percent following a fall of 1.6 percent in December 2018. The rebound in global commodity prices…
Index stays in red, Saudi crown prince visit likely to push positive outcome The benchmark index remained in red during the week ended 15th February 2019 and closed at 40,487 points, down one percent WoW due to poor corporate earnings as well as lack of any positive triggers. Even the hint by Finance Minister of opting for an IMF program could not cheer the investors as they preferred to book profit. Moreover, news about a deadly attack in Indian occupied Kashmir (killed more than 40 soldiers) kept the market range-bound on the last day of the week. Investors eye forthcoming…
Achieving food and nutritional security has remained one of the core underlying objectives of all the policies, programs and strategies by the successive governments in Pakistan. After the 18th constitutional amendment, the Ministry of Food and Agriculture (MINFA) functions were devolved to provinces. However, in view of the importance of attaining and maintaining national food security and better execution of unevolved functions of MINFA, Ministry of National Food Security and Research (MNFSR) was established by the Government of Pakistan. Pakistan needs a comprehensive policy focusing on enhancing food availability, improving food access, enabling food utilization and ensuring food stability at…
Historically, Pakistan has suffered from adverse balance of payment, because its exports are not enough to finance imports. The policy makers have been fiddling with different policies, from import substitution to export-led growth, but all in vain. The policy makers have been following the mantra of multilateral financial institutions. The policies of these institutions keep on changing due to the global agenda of super powers, which very cunningly make the third-world countries follow their agenda to keep them subservient. A lot could be said if one carefully analyzes the changing policies of Pakistan. Around the world countries exploit their competitive…
Index down over lack of IMF talks courage, Saudi prince visit a delight Building on last 5-week momentum, the market started the week on a positive note as the market participants were carried away by the announcement of potential financial assistance of US$2.5 billion from China. However, the KSE-100 Index lost earlier gains in the following three sessions due to the lack of concrete developments on the IMF bailout package. The benchmark Index of Pakistan Stock Exchange (PSX) closed the week at 40,887, down 226 points. Cement scrips remained in the limelight, initially gaining on softening coal prices, but lost…
In the latest Monetary Policy announcement, contrary to the market expectations, State Bank of Pakistan (SBP) has announced hike in policy rate by 25bps to 10.25 percent. Some analysts were prompt to term this hike as calibrated policy response by the central bank; others term it blind following of International Monetary Fund (IMF) mantra. The rate hike confirms continuation of ongoing monetary tightening on the instructions of IMF. Surprisingly, lack of concrete policy action on the fiscal leaves monetary tightening as the only policy tool to address challenges. As a result of persistent recent hike in policy rate the monthly…
Economic reform package, budget progress push market’s rally Investors asked to take longer investment horizon and build positions on dip During the week ended February 1, 2019, the benchmark index of Pakistan Stock Exchange (PSX) gained 848 points and closed at a 50-session high of 41,113 level. The rally was supported by the economic reform package, the cash deposit from the UAE and Saudi Arabia of US$ one billion each and continued buying by the foreigners for second consecutive week, net buying of US$12.3 million. Budget development continued to favorably impact the auto sector on withdrawal of ban on non-filers…
Engro Powergen Qadirpur Incorporated in 2008 as a subsidiary to develop power projects in Pakistan, Engro Powergen Qadirpur Limited is Engro Corporation’s first initiative into the country’s power sector. Its aim is to ease the burden on the nation’s energy sector by developing projects exploring cleaner, more efficient and economically viable sources of power generation including wind, hydro and solar energy. Engro Energy owns and operates Engro Qadirpur, a 217 megawatt power plant and the group’s first initiative in the power sector of Pakistan. Engro Qadirpur was listed at Karachi Stock Exchange (mow Pakistan Stock Exchange) in October 2014, offerings…
An exclusive interview with Fahd Chinoy — Deputy Chief Executive, Pakistan Cables [box type=”shadow” align=”” class=”” width=””]Profile Fahd Chinoy holds a MBA degree from INSEAD, Fontainebleau, France and a BA in Economics and Political Science from the University of Pennsylvania, USA. Other than Finance and departments that report to the Board of Directors (Internal Audit and Company Secretary), he is in charge of all key departments within the organization. Chinoy has previously served in the banking industry, having worked with TD Securities in New York and Toronto as an Associate in various departments including Loan Syndication and Corporate Banking. Chinoy is…
Market witnessed positive trend, euphoria of mini budget to continue Stock market opened the week positive in anticipation of a successful visit of Prime Minister Imran Khan to Qatar while the unveiling of much-awaited ‘mini budget’ during the week kept the momentum positive. Investors’ sentiments were reflected in the stock market’s performance as the bourse closed the week ended 25th January 2019 at 40,265 points, up 2.44%WoW. Average daily volume increased by 44%WoW to 168 million shares, while net foreign buying of US$17 million during the week also supported the index. Additional news flows moving the market included: 1) State…
National Bank of Pakistan (NBP) is a public sector commercial bank of the country that is fully aware of its social obligations. Over the years it has integrated its social welfare and community development initiatives to achieve sustainable growth in the social and economic sectors of Pakistan. The Corporate Social Responsibility (CSR) program was initiated by its former President, Syed Ali Raza in 2009. The bank runs its CSR Program to facilitate the community at large. Additionally, the bank is also active in extending support to a number of recognized charitable institutions for the uplift of underprivileged members of the…
Pakistan & Gulf Economist in conversation with Dr. Zeeshan Ahmed (Dean, Karachi School for Business and Leadership) discussed about what it takes to run a top-tier business school. [box type=”shadow” align=”” class=”” width=””]Profile: Dr. Zeeshan Ahmed has held eminent positions at top business schools of Pakistan. Currently he is the Dean at renowned graduate management school of the country, Karachi School of Business & Leadership (KSBL). He is passionate about cultivating the strategic mindset and competencies for growth and success in new generation. Dr. Zeeshan believes that if we prioritize education reform then we can solve most of our problems…
Automobile sales were up nominally in December 2018, as against 17%YoY decline in November 2018, sales were up 11%MoM. This is the first time in 12 years (since December 2005) that sales have increased in December on MoM basis. This brings 1HFY19 sales number to 120,066 units, down by 3%YoY. This is also the first time in 5 years that sales have declined during the first half of a fiscal year since 1HFY13. Despite seemingly better numbers in December, analysts fear significant slowdown in auto sales in near term due to: 1) deteriorating economy, 2) law barring tax non-filers from…
The Government of Pakistan (GoP) has notified an immediate ban on import of furnace oil (FO) and ordered all the refineries to utilize billions of rupees in annual deemed duty collected on petroleum products to upgrade their refining facilities. The GoP has also ordered immediate reduction in the FO production to a minimum and to enter into commercial agreements with power producers for utilization of their capacity for FO storage. The GoP has imposed ban on import of FO with immediate effect, except for the K-Electric. Previously, in similar situations the GoP has allowed the K-Electric to run their plants…
Bulls remain in control as FATF liking, uae package boost investor sentiments The benchmark index of Pakistan Stock Exchange (PSX) gained 1,502 points to close at 39,049 points for the week ended 11th January 2019. A US$3.0 billion support package was signed between Pakistan and United Arab Emirates that is likely to help the country overcome its balance of payments crisis. Furthermore, the Financial Action Task Force (FATF) expressed some degree of satisfaction over Pakistan’s efforts and action plan to combat money laundering and terror financing under international obligations and indicated areas where more has to be done before May…