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May 12, 2021: Remittances to South Asia remained resilient despite a shaky outlook at the outset of the spread of Covid-19, according to the latest data released by the World Bank on Friday.
The report further highlighted that in Pakistan, remittances rose by about 17 percent, with the biggest growth coming from Saudi Arabia followed by the European Union countries and the United Arab Emirates.
Remittances are a major source of foreign exchange reserves for under-developing countries including Pakistan. The World Bank in the 1HCY2020 had predicted a steep fall in remittance flows to Pakistan (including South Asia), hinting at a parching of foreign exchange funds for the country. However, against the predictions, inflows have seen a major spike over the last 12 months.
As per the latest data released by the State Bank of Pakistan (SBP), remittances to Pakistan remained above the $2 billion mark for 10 consecutive months in April, 2021. Experts say that the Covid-19 has forced around 8 million Pakistani expatriates across the world to send home inflows through the legal channels. In the pre-Covid-19 days, a large chunk of remittances to Pakistan was sent through illegal channels i.e. Hundi and Hawala. However, with the grounding of flights and social distancing rules in place, the expatriates were forced to send home funds through legal channels thereby increasing the total tally of remittances.
Meanwhile, the SBP has also launched the Roshan Digital Account for overseas Pakistanis allowing them access to local services in Pakistan. So far, non-resident Pakistanis (NRPs) have deposited around $1bn into the Roshan Digital Accounts.
“Despite COVID-19, remittance flows remained resilient in 2020, registering a smaller decline than previously projected. Officially recorded remittance flows to low- and middle-income countries reached $540 billion in 2020, just 1.6 percent below the 2019 total of $548 billion,” according to the latest Migration and Development Brief.
Meanwhile, it added that the average cost of sending $200 to the region stood at 4.9 percent in the fourth quarter of 2020, the lowest among all the regions.
May 12, 2021: First-ever truck laden with goods from Uzbekistan under the convention of International Transport of Goods arrived in Pakistan earlier today.
Abdul Razzaq Dawood said. “MOC is pleased to inform that a new milestone has been achieved with the first-ever truck from Uzbekistan reaching Pakistan under the TIR Convention. This was the result of collaboration between the transport companies of the two sides,”
The adviser further said “This follows the successful shipment of first-ever cargo from Pakistan to Uzbekistan earlier this month. This is the beginning of a new era where trucks from both sides will take trade cargo using Karachi and Gwadar ports.”
Earlier, Pakistan customs had processed first-ever shipment to Tashkent via Afghanistan under the TIR convention. Afghanistan, which is part of the multilateral treaty will allow movement of goods through its borders duty-free.
Around 77 countries are a part of this convention allowing duty-free movement of goods through the borders.
Pakistan with its strategic geolocation has the benefit to tap into the land-locked CAR states in the northern region allowing them to trade through its ports.
The Customs Convention on the International Transport of Goods under Cover of TIR Carnets (TIR Convention, 1975) is one of the most successful international transport conventions and is so far the only universal Customs transit system in existence.
To date, it has 77 Contracting Parties, including the European Union. It covers the whole of Europe and reaches out to North Africa and the near and Middle East. More than 33,000 operators are authorized to use the TIR system and around 1.5 million TIR transports are carried out per year.
May 12, 2021: The Union of Small and Medium Enterprises (UNISAME) has invited the attention of the Prime Minister (PM) Imran Khan to the neglected and uncontrolled rice, cotton, sugar and commodities sector and called for the formation of a board to safeguard the downsliding of important crops and harmful behavior of vested interest from injuring its progress.
President UNISAME Zulfikar Thaver said rice and commodities were the second biggest foreign exchange earners after textiles but unfortunately they are dwindling because of neglect and sense of direction.
He said our basmati rice is the best rice in the world but unfortunately due to lack of interest it has not been given the attention it deserves. Rice sector needs to be declared as an industry and its control given under the board.
Pakistan is importing pulses when they can be grown in the country. Pakistan is blessed with sunshine and rain and 3 climates but unfortunately due to lack of agricultural leadership and guidance we have become lethargic.
A huge amount of tea is also being imported when it can be grown in northern areas. Many other commodities like sesame seeds, dates and others can be grown and exported.
Cotton which we used to export is now on the import list, again due to lack of strategy and planning. Even sugarcane is in a mess despite its abundant growth. The sugar mafia has ruined its scope for vested interest.
Thaver urged the PM to set up a board comprising of experts from agriculture, commerce, science and technology ministries and UNISAME to focus on the aspects of growing, mapping, exporting, building reserves and monitoring of rice, cotton, sugar and commodities to maintain its consistent production and exports.
The government needs to sharpen its tools to ensure our national potentiality is exploited for best farm sector growth and modernization of agriculture rather than leaving it at the mercy of the vested interest.
May 12, 2021 (MLN): Pakistan State Oil Company Limited (PSO) held its Corporate Briefing Session (CBS) on May 7, 2021, to discuss the company’s financial performance for the period ended March 31, 2021, and the future outlook.
To recall, the company posted a profit after tax of 18.28 billion (EPS: Rs38.92) during 9MFY21 compared to a loss after tax of Rs4.41bn (LPS: Rs2.19) in the corresponding period last year.
Shedding light on the company’s financial performance, the management apprised that the rebound in the bottom line was primarily attributable to an increase in gross profit on account of volumetric increase supplemented by favorable price regime, reduction in finance cost and lower discount rate prevalent during the period.
The management also highlighted that company booked Rs4-5bn of inventory gains during 9MFY21 and Rs1bn of exchange gains. Here, it is pertinent to note that major gains were booked during 3QFY21.
During 9MFY21, the company registered an astounding volumetric growth of 21.6% over the same period last year while increasing market share by 260 basis points (bps) closing at 46.3%. As per the management, the company witnessed improvement in its market share across all major petroleum products as the launch of Hi-Octane 97 Euro 5, Premier Euro 5 and Hi-Cetane Diesel Euro 5 proved to be game-changers in the industry, bolstering customer’s confidence in PSO’s products. With a volumetric gain of 19.9% in MOGAS and 28.2% in HSD, market shares of both products increased to 310 and 370 bps respectively. Cumulatively, PSO’s white oil market share increased by 190 bps over the same period last year to close at 44.9% and black oil closed at 52.6% i.e., an increase of a staggering 480 bps.
The improvement in PSO’s market share is accredited to its investment in storages and logistics, newly signed contracts with Frontier Works Organisation (FWO) and less competition from and discounting by smaller OMCs (amid an ongoing crackdown on smuggling and government investigation of industry malpractices), key takeaways covered by Intermarket Securities said.
To highlight, the investment in Storages comprises of investment in new storage, rehabilitation of existing storage for capacity enhancement and conversion of storages of furnace oil to store white oil (Mogas and HSD).
According to the report, the management said that PSO has added 60,000 tons of Mogas and 50,000 tons of HSD (16-20% of existing) during FY21 so far. As a result, PSO is presently capable of maintaining 17-22 days of Mogas inventory and over 30 days of HSD inventory.
Commenting on circular debt, the management of the state-owned oil company underlined that PSO has about Rs23bn and Rs71bn of outstanding receivables from Hubco and Wapda/Gencos (none from Kapco) – which exclude Rs104bn of late payment charges (Rs28bn from Hubco, Rs12bn from Kapco, and Rs64bn from Wapda/Gencos; all not yet booked), the report cited.
Moreover, SNGPL owes the largest amount of Rs94bn for the Re-liquefied Natural Gas (RLNG) supplied by the PSO during 9MFY21, up by Rs24bn YoY. While receivables from the Power sector dropped by Rs5bn to Rs93.6bn. By end March 2021, total receivables of PSO stood at Rs210.3bn.
Talking about latest developments, the management said they have increased their focus on automation, digitization, and business process re-engineering to meet consumers need and in this regards PSO has recently transformed its procurement process through SAP Ariba which will significantly enhance the Company’s strategic and operational capabilities, increase efficiency, and reduce turnaround time.
Furthermore, in order to leverage the benefits of effective product sourcing on the business value chain, PSO entered into a long-term sale and purchase agreement with Qatar Petroleum for the procurement of RLNG with significantly lower price than before.
Besides, other automation and digitization projects are also in pipeline, the management said.
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May 12, 2021 (MLN): Morgan Stanley Capital Index (MSCI) today has released the results of its semi-annual index review (SAIR), whereby Pakistan now has a weight of 0.023% as compared to 0.016% previously.
Additionally, Pakistan’s weight in the Small Cap Index has been revised to 0.379% as per a report by Arif Habib Limited.
Under the MSCI Global Standard Index, Lucky Cement has been added while Oil and Gas Development Company (OGDC) has been removed from it. Now, the new constituents are MCB Bank (MCB), Habib Bank Limited (HBL), and Lucky Cement (LUCK).
On the other hand, there have been four deletions and one addition to the MSCI Global Small Cap Index as Indus Motors (INDU), Lucky Cement (LUCK), National Bank of Pakistan (NBP) and Packages Limited (PKGS) have been removed and TRG Pakistan (TRG) has been added.
All changes would be effective from May 28, 2021.
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May 11, 2021: Pakistan Railways has markedly scaled down the freight rates of its different services during Eid holidays from 10 to 16 May.
According to a press release issued by the Divisional Superintendent Office Karachi here on Monday, the move aimed at offering an endurable means of service to Cargo and container parties via railways mode during the lock down period.
Cargo booking rates have been substantially curtailed by 25 percent whereas uniform reduction of 5 percent has been offered in booking of coal and container wagons.
The booking fare of online premium train has been slashed by Rs10,000 per wagon.
Prior to that Pakistan Railways has announced 28 Up and Down Eid special trains within the Karachi division during the Eid holidays: 14 Up and Down between Karachi to Hyderabad and 14 Up and Down between Kotri and Mirpurkhas.
Whereas the route of 213 Up Moen-jo-Daro Express travelling between Kotri and Rohri via ML-II has been extended till Karachi so as to facilitate the people during the auspicious occasion of Eid ul Fitr.
May 11, 2021: Prime Minister Imran Khan said that government is fully determined to involve private sector in the development process as it is very crucial keeping in view of the public need.
He was addressing a briefing in Islamabad yesterday, regarding various development projects under Public Sector Development Program and projects completed with the participation of private sector.
Imran Khan said Board of Investment is being activated to facilitate local and foreign investors.
He directed the governments of Punjab and Khyber Pakhtunkhwa to present progress report on the implementation of federal and provincial development projects; besides submitting detail of the future plans, their distribution at the local level and the progress made so far.
The meeting was attended by Planning Minister Asad Umar, Finance Minister Shaukat Tareen, Secretaries and other high officials from concerned Ministries. Punjab Chief Minister Sardar Usman Buzdar and provincial Minster for Finance participated through video link.
The meeting was briefed that over fifty development projects worth Rs2000billion are under completion with the participation of a private sector.
It was also informed that 14 projects worth Rs978billion rupees would be approved in next three months while 18 projects of Rs1,016bn would be approved in the financial year 2021-22.
It was also told that the Public Private Partnership Authority has approved two major projects Sialkot Kharian Motorway Project and Sukkur-Hyderabad Motorway Project with a total cost of Rs233bn.
The meeting was briefed that six more projects worth Rs710bn would be approved by August of this year.
The meeting was briefed on the progress of PSDP Plus and future government practices under this model. The PSDP Plus strategy provides a conducive environment and other necessary assistance to ensure private sector involvement in the development process.
The meeting was informed that 180 initiatives have been identified under PSDP Plus with a total value of Rs5.5trillion.
May 11, 2021: Federal Minister for Finance and Revenue, Mr. Shaukat Tarin, chaired the meeting of the National Price Monitoring Committee (NPMC) at the Finance Division yesterday.
Federal Minister for National Food Security and Research Syed Fakhar Imam, Adviser to the PM on Commerce Abdul Razak Dawood, SAPM on Finance and Revenue Dr. Waqar Masood, Secretary Finance Division, Secretary M/o NFS&R, Chief Secretaries of the Provincial Governments, Member PBS, MD Utility Stores Corporation, Chairperson CCP and other senior officers of various Ministries participated in the meeting.
The NPMC reviewed the price trend of essential commodities especially wheat flour, sugar, edible oil/ghee, pulses and chicken during the last week. While briefing the NPMC about weekly SPI, the Finance Secretary apprised that prices of 07 basic commodities registered a decline whereas 26 items remained stable during the week under review.
Federal Minister for National Food Security and Research Syed Fakhar Imam updated the NPMC about the wheat procurement drive of the Provinces and PASSCO to ensure steady supply of wheat at fair prices during the current year. He further apprised the NPMC that Punjab is ahead of other Provinces in procurement of wheat to date.
Secretary M/o NFS&R informed the Committee that the summary to import 4 million metric ton wheat would be presented before the next ECC for requisite approval to build strategic reserves and to ensure smooth supply of wheat across the country.
While taking stock of the situation, the Finance Minister directed all the Provincial Governments to ensure daily release of wheat at subsidized rates in compliance with the directives of the Prime Minister. He strictly urged the representatives of the Provincial Governments to ensure uninterrupted daily release without fail.
While reviewing the price trend of basic commodities in international markets, the NPMC noted that major driver behind increase in prices of items of daily use is massive international price hike due to ongoing COVID-19 crisis. The Year-on-Year comparative analysis indicated that price of Crude Oil increased by 178% in April 2021 as compared to April 2020. Similarly, the prices of Sugar in international market have increased by 57% in year-on-year comparison. Furthermore, international prices of Palm oil, Soyabeen oil and Wheat also registered a continued upward trend which, in turn, led to sharp increase in prices of basic items in domestic markets.
Speaking on the occasion, the Finance Minister stated that COVID-19 crisis has fuelled food prices in international markets especially edible oil, sugar, tea and wheat. The Government is making an all-out effort to ensure smooth supply of basic items through a network of Ramadan Sahaulat / Saasta Bazaars and chain of USCs outlets to ease shortages and mitigate price spike in domestic / local markets.
The Chairperson, Competition Commission of Pakistan (CCP) presented findings before the Committee regarding completion of recent inquiry in the Poultry Industry. The CCP underlined some anti-competitive conduct that led to surge in prices of Chicken feed, which, in turn, increased prices of Chicken. The Finance Minister stressed that cartelization would not be acceptable at any cost. Stern action would be taken by the Provincial Administrations and Departments concerned to keep the prices of basic commodities in check. All those responsible for undue profiteering or hoarding would be taken to task, he concluded.
May 10, 2021 (MLN): Indus Motor Company Limited (INDU) held its corporate briefing recently to deliberate the latest financial performance and to shed light on the future outlook of the company.
To recall, the company posted a 68.8% YoY increase in net profits for 9MFY21 to Rs8.4bn (EPS: Rs107.07) as against the profits of Rs4.98bn (EPS: Rs63.4) in the corresponding period last year.
The upsurge in INDU’s profitability was mainly attributable to higher sales volumes and an increase in other income, due to the improved cash fund position of the Company.
The sales volumes improved in all segments, mainly due to pent-up demand after lockdown and lower interest rates during the period under review. The Company also experienced an overwhelming response to Toyota Yaris in the first, as well as the second quarter of the fiscal year 2020-21 which contributed to the increase in volume in the Passenger Car segment.
However, the increase in the cost of sales by 77% YoY mainly due to a rise in international steel prices and higher freight which minimized the impact of Rupee appreciation, resulted in a reduction in gross profit margin to 8% against 10% in the same period last year.
The management said if the commodity prices fail to stabilize, the company may increase vehicle prices to pass on costs.
After the great response of the new Corolla’21, the company has also launched a new facelifts version of the Fortuner and Hilux. The management stated that the delivery times will be around 4 months due to strong demand.
To meet the overwhelming demand, INDU has been operating on a double shift basis. INDU had already announced the expansion of its total capacity to 80K units from its current capacity of 65k units (Capex of Rs4-5bn). This capacity expansion was expected to come online by Sep’20 but got delayed due to the pandemic.
Since Yaris accounts for more than half of the volumetric sales, the launch of the new Honda City is likely to chip away some of its market shares, in view of a report by Foundation Securities. However, the delivery time to City 21 will be longer, while Yaris is currently available for delivery in less than 1-2 months, which may attract buyers to opt for INDU's offer.
The management also highlighted that the company faced shipment/container delays during Nov’20-Feb’21, but its supply chain team kept margins in check while maintaining delivery times. Going forward, the international supply chain disruption is under control and the company is also not severely affected by the global semi-conductor shortage, Taha Madani, Research Analyst at BMA Capital said.
With regards to a support package and incentives to produce hybrid vehicles, like those given in the EV policy, the Auto industry is in constant talks with the government. INDU’s management also shared its recommendation for the upcoming auto policy which includes removal of Federal Excise Duty (FED) and Additional Custom Duty (ACD) to improve the dynamics of the automobile market.
Speaking of automobile market growth, the management estimates that it will grow to 0.24/0.30Mn units by the end of FY21/22 and effortlessly to 0.5Mn units by FY26-27. This robust demand is likely to create room for all existing and new local players to maintain steady growth, he added.
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May 10, 2021: Stocks rose on Monday amid speculation that interest rates will remain low due to receding inflationary pressure, while oil and gas prices jumped after a cyber-attack on a U.S. pipeline operator unnerved markets.
MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.3%, while U.S. stock futures rose 0.14%.
Australian stocks hit their highest in more than a year, boosted by gains in miners, but shares in China fell 0.74%. Japanese shares gained 0.53%.
Euro Stoxx 50 futures were up 0.42%, German DAX futures were up 0.32%, and FTSE futures rose 0.37%, pointing to a strong start to the European session.
U.S. nonfarm payroll data on Friday showed job growth unexpectedly slowed in April, which gave equities a lift but put downward pressure on the dollar and U.S. Treasury yields.
Oil and gasoline futures extended gains after a cyber attack shut down a U.S. pipeline operator that provides nearly half of the U.S. east coast's fuel supply.
"It certainly pushes back the timetable for Fed tapering, perhaps to December from the prior expectations of the Jackson Hole Symposium in late August," Chris Weston, head of research at broker Pepperstone in Melbourne, wrote in a memo.
"A softer payroll is good for the reflation trade; the dollar weakened across the FX spectrum. We've also seen a solid bid in equity indices and futures are up."
On Friday the Dow Jones Industrial Average and the S&P 500 rose to record closing highs after disappointing data on the U.S. jobs market eased concerns about a spike in consumer prices.
In recent weeks, some investors had been placing bets that a robust U.S. economic recovery from the coronavirus pandemic would force the Federal Reserve to raise interest rates earlier than the central bank has outlined.
However, the weak nonfarm payroll report caused a rapid reversal in some of these trades, which rippled through stocks, bonds, and major currencies.
The focus now shifts to U.S. consumer price data due on Wednesday, which will help investors determine whether they need to scale back their inflation expectations even further.
MSCI's broadest index of global stock markets hit a record high on expectations that low rates will continue to spur lending and economic growth.
The dollar index against a basket of six major currencies edged up to 90.237 but was still near its weakest since Feb. 25.
The British pound jumped to the highest in more than two months against the greenback, but worries about Scottish independence could curb sterling's gains, traders said.
China's onshore spot yuan strengthened to 6.4265 per dollar, the highest since Jan. 29.
In the cryptocurrency market, ether rose to a record above $4,000. Bigger rival bitcoin rose to $58,920.
The yield on benchmark 10-year Treasury notes steadied at 1.5931% in Asia on Monday after having plunged to a two-month low of 1.4690% on Friday.
U.S. crude ticked up 0.51% to $65.23 a barrel. Brent crude rose to 0.53% to $68.64 per barrel in Asian trading as the disruption to U.S. supplies rattled energy markets.
Gasoline futures on the New York Mercantile Exchange rose 1.43% to $2.1574 a gallon, near a three-year high.
The White House is working closely with top U.S. fuel pipeline operator Colonial Pipeline on Sunday to help it recover from a ransomware attack that forced the company to shut its main fuel lines.
"The major takeaway is the bad guys are very adept at finding new ways to penetrate infrastructure," Andrew Lipow, president of Lipow Oil Associates told Reuters. "Infrastructure has not developed defences that can offset all the different ways that malware can infect one's system."