November 11, 2018 (MLN): Among a number of important events that took place during the departed week, some occurrences drove market sentiments towards optimism, while others proved to be a damaging influence on investors’ confidence, as they dragged down the benchmark index considerably.
Prime Minister Imran Khan’s visit to China:
The week opened on an unenthusiastic note, as markets buzzed with rumors regarding failure of Prime Minister Imran Khan’s visit to China. This caused the capital markets to crash substantially. Everyone including media, opposition and markets tried to evaluate the outcomes of the trip, whilst economic expert Mr. Muzammil Aslam lay the framework of the trip’s conclusion in a detailed article for Mettis Link News.
According to him, the first impression which reflected off the Joint Statement on the visit, issued by Pak-China, came off as a disappointment. But as he proceeded with his analysis, it became clearer that although the trip was fruitful, one cannot expect immediate financial help to materialize, based on the agreements made so far.
However, the slipping confidence and growing disappointment within stock markets, were arrested after Finance Minister Asad Umer assured that the Balance of Payment crisis has been averted.
When asked regarding potential financial support from China, he informed in a press conference that discussions on this matter are still underway with China.
On Friday November 9, 2018, a high level Pakistani delegation comprising governor of State Bank of Pakistan, Secretary of Finance and other high officials, left for China to discuss modalities to enhance bilateral cooperation between the two countries in various fields.
IMF team on a visit to Pakistan for negotiations on potential bailout:
A delegation of the International Monetary Fund (IMF) landed in Islamabad on Wednesday on a two-week visit, to commence talks on financial assistance requested by Pakistan. During its stay, the Fund will examine Pakistan’s economical and financial standing at present.
During their first round of discussions at the power division, the IMF expressed dissatisfaction with the present structure of energy sector. They also presented a new set of measures for the energy sector reform.
Once the visit is concluded, Pakistan’s loan request will be forwarded to IMF’s executive board for approval.
ECC decides against privatization of Pakistan Steel Mills:
Another important event that took place during the week was the meeting of Economic Coordination Committee (ECC) on Wednesday, in which the committee decided to revive the Pakistan Steel Mills and resolved that it would not be a part of the privatization plan.
Capital Markets, FOREX and Remittances:
The week started off on a negative note and continued till next day owing to crushed hopes on the Chinese loan front as well as political turmoil caused by Supreme Court’s decision to acquit Aasia Bibi.
However, following the clarification by Finance Minister Asad Umar on the Balance of payment crisis and the success of PM Imran in securing a bailout package from China, the stock market showed immense improvement and went on to cross the 42000 mark by the third trading session of the week.
By the end of week, the market loitered in a state of consolidation and ultimately closed in at 41,388 points.
A look at the interbank markets show us, that PKR demonstrated a decline of 1.20 rupees within 2 days, and by the end of this week it depreciated by 1.35 rupees (1.02%) as compared to last week’s end.
Moreover, data released by the State Bank of Pakistan on remittances has revealed that during October 2018, the inflow of worker’s remittances amounted to US $2000.47 million, which is 37.7% higher than September 2018 and 20.9% higher than October 2017.
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