November 18, 2018 (MLN): Although the past week did not cater to many real time events of importance; a number of data releases provided an overview of the economic situation of the country during the month of October.
The markets remained on edge for news from the IMF, while an envoy for the Mettis Link News revealed that China is in the final phase of finalizing a loan worth around $2 billion to Pakistan, for a period of three years.
Events of Importance through the week:
• The week began with NEPRA’s decision to withdraw upfront tariff for existing sugar mills, keeping in view the changed dynamics of the electric power market.
• The Economic Coordination Committee (ECC) meeting, under the chairmanship of Finance Minister Asad Umar, approved a loan amounting to Rs 17 billion to Pakistan International Airline Corporation (PIAC).
• Lucky Cement Limited (LUCK) and United Bank Limited (UBL) were removed by MSCI from the Pakistan Index and moved to the Small Cap index while Honda Atlas and Maple Leaf Cement have been removed from the Pakistan Small Cap Index.
In the course of the last seven days, PAMA released its numbers for the month of October which revealed a 25% increase in car sales, over the prior month. Meanwhile, sales for trucks and buses have dropped by over 11%.
In addition to this, Foreign Direct Investment in Pakistan declined by 46% in July – Oct 2018 compared to the same period last year, revealed official data released by the State Bank of Pakistan (SBP).
Stats released by SBP also disclosed that the Inflows of workers' remittances for the month of October increased by 21% YoY to US$2 billion. A key driver for the increase in October inflows was the weakening of the Pakistan rupee during the past year, with the latest depreciation being 7.5%. It is safe to say that a weak local currency made it more attractive for expatriate Pakistanis to remit higher amounts.
Apart from this, Current account deficit for the month of October increased by 32% MoM to $1.218 billion, as compared to $919 million in September, Pakistan's reserves fell to their lowest level since Dec 05, 2014 having declined by around 6.87% over the past month and by over 30.5% from the corresponding period from last year (Nov 03, 2017), and Foreign net selling via Specially Convertible Rupee Accounts (SCRA) thumped to a 3 month low, as investors await a positive turnout on the IMF and Chinese aid front.
Capital Markets:
Pakistan’s stock markets demonstrated a positive trend on the whole, during these last few days. The benchmark KSE – 100 index mounted by over 500 points during the course of this week. The capital markets winded up the final session of the week at 41,660 points.
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