June 20: World oil prices spiked more than six percent Thursday on President Donald Trump warning Iran made "a very big mistake" after it boasted of downing a US spy drone.
The developments accelerated day-on-day gains in US oil benchmark WTI in late New York morning trading.
Europe's Brent Crude rose by nearly five percent at one point, before both contracts pulled back somewhat.
Iran shot down the drone near the Strait of Hormuz, a major choke point for world crude shipments, spurring market fears of a confrontation that could badly constrain supplies.
Further solid support for oil prices, as for global stock markets, also came from the US Federal Reserve signalling it could soon cut interest rates, while the dollar and US Treasury yields fell.
The Bank of England, leaving key interest rates unchanged, warned against the rising danger of a no-deal Brexit, which analysts took as a sign that it, too, seems ready to take a more accommodating stance.
Iran's Revolutionary Guards said Thursday they shot down a US "spy drone" which violated Iranian airspace near the Strait of Hormuz, in the latest incident to stoke tension in the area. The US later confirmed a US surveillance drone designed for high-altitude missions was brought down by Iranian forces, but insisted it was in international airspace.
"This will only stoke tensions in the region and produce short-term support for oil prices," said analyst Neil Wilson at trading site Markets.com.
Crude had ended slightly down Wednesday despite a drop in US inventories -- indicating a pick-up in demand -- and news that OPEC and other producers led by Russia had agreed a date to discuss further caps.
- Worsening tensions -
The drone incident comes amid worsening tensions between Iran and the United States.
The US has accused Iran of being behind a series of operations against oil tankers in highly sensitive Gulf waters, including two tanker attacks in the Gulf of Oman last week.
Tehran has denied involvement. It has floated the possibility Washington could be the author of the attacks, using the operation to justify force against Iran.
"We know that geopolitical tensions in the region are worsening and raise supply-side concerns in terms of short-term outages," said analyst Wilson.
"But with OPEC already curbing output and US production at a record high, we still think the market is far less susceptible to a shock than in years gone by."
Traders were also jolted Thursday by news that a Yemeni rebel strike targeted a desalination plant in southwest Saudi Arabia.
- Fed spurs markets higher -
Global equities were meanwhile spurred higher after Fed boss Jerome Powell said bank officials felt the case for a rate reduction had "strengthened", citing the trade standoff with China and weak inflation, adding it would "act as appropriate" to support growth.
The bank also dropped the word "patient" in describing its assessment of economic data, fuelling speculation of a reduction as soon as July.
The dollar was down against the euro, which had itself been under pressure since the European Central Bank on Tuesday hinted at rate cuts of its own.
The Bank of England, meanwhile, said Thursday that "the perceived likelihood of a no-deal Brexit has risen", compounding global concerns about increased trade tensions.
"The fact that Bank of England policymakers are flagging that the perceived risk of a 'no deal' Brexit is rising suggests that interest rates are unlikely to rise this year," said James Smith, an economist at ING.
"The latest statement is slightly more dovish than might have been expected," he said.
The softer outlook for UK rates caused the pound to pull back from its early highs.
- Key figures around 1555 GMT -
- Brent North Sea oil: UP $2.37 at $64.19 per barrel
- West Texas Intermediate: UP $2.82 at $56.89 per barrel
- London - FTSE 100: UP 0.3 percent at 7,424.44 points (close)
- Frankfurt - DAX 30: UP 0.4 percent at 12,355.39 (close)
- Paris - CAC 40: UP 0.3 percent at 5,535.57 (close)
- EURO STOXX 50: UP 0.4 percent at 3,468.08
- New York - Dow: UP 0.7 percent at 26,688.00
- Tokyo - Nikkei 225: UP 0.6 percent at 21,462.86 (close)
- Hong Kong - Hang Seng: UP 1.3 percent at 28,550.43 (close)
- Shanghai - Composite: UP 2.4 percent at 2,987.12 (close)
- Euro/dollar: UP at $1.1279 from $1.1226 at 2100 GMT
- Pound/dollar: UP at $1.2697 from $1.2639
- Dollar/yen: DOWN at 107.54 yen from 108.10 yen
Jun 20, 2019 (MLN): Pakistan's Forex Reserves decreased by USD 187.80 Million or 1.27% and the total liquid foreign reserves held by the country stood at USD 14,639.10 Million on Jun 14, 2019.
According to data published by the State Bank of Pakistan (SBP) its reserves decreased by USD 202.70 Million due to external debt servicing and other official payments.
|Foreign reserves held by||Jun 14, 2019||Jun 03, 2019||Change||% Change|
|State Bank of Pakistan||7,604.50||7,807.20||-202.70||-2.60%|
|Net Foreign Reserves Held by Banks||7,034.60||7,019.70||14.90||0.21%|
|Total Liquid Foreign Reserves||14,639.10||14,826.90||-187.80||-1.27%|
Amount in USD Million
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Jun 20, 2019 (MNL): The equity market broke the three day long losing streak today as the benchmark KSE – 100 index recovered nearly 340 points out of a net loss of over 900 points during the prior three sessions.
The market participants maintained a steady ascent at the trading floors, deriving positivity from the narrowed current account deficit (CAD) and the news of European Union (EU)’s intent to help Pakistan escape from the Financial Action Task Force (FATF)’s grey list.
The 11 – month standing deficit has improved according to latest results as it now stands at 4.8% of GDP instead of 6.2% of GDP, which was recorded last year.
According to a closing note by Aba Ali Habib Securities, “tough measures to curtail imports and friendly policies to boost exports and remittances has current account deficit by 29% to USD 12.68 billion Jul-May.”
They also added that, “Investors’ confidence further boosted as both sides of lower house show signs of flexibility, which may lead to smooth sailing of FY19-20 budget.”
The Benchmark KSE-100 index ended the trading sessionwith a 339.79 point or 0.98 percent gain to close at 34,995.91.
The Index traded in a range of 414.96 points or 1.20 percent of previous close, showing an intraday high of 35,061.54 and a low of 34,646.58.
Of the 90 traded companies in the KSE100 Index 70 closed up 18 closed down, while 2 remained unchanged. Total volume traded for the index was 92.01 million shares.
Sectors propping up the index were Fertilizer with 66 points, Commercial Banks with 62 points, Oil & Gas Exploration Companies with 44 points, Cement with 44 points and Automobile Assembler with 25 points.
The most points added to the index was by FFC which contributed 21 points followed by EFERT with 21 points, ENGRO with 20 points, POL with 19 points and HUBC with 19 points.
Similarly, the All Share Volume increased by 63.68 Million to 163.03 Million Shares. Market Cap increased by Rs.44.11 Billion.
Total companies traded were 340 compared to 316 from the previous session. Of the scrips traded 225 closed up, 101 closed down while 14 remained unchanged.
Total trades increased by 12,198 to 51,649.
Value Traded increased by 1.08 Billion to Rs.4.52 Billion
|Jahangir Siddiqui & Co. Ltd.||10,439,500|
|Maple Leaf Cement Factory||9,889,500|
|Sui Northern Gas Pipelines||3,161,500|
|Technology & Communication||29,058,800|
|Power Generation & Distribution||13,347,500|
|Inv. Banks / Inv. Cos. / Securities Cos.||11,183,100|
|Cable & Electrical Goods||10,479,550|
|Oil & Gas Marketing Companies||8,375,300|
|Vanaspati & Allied Industries||6,670,500|
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June 20, 2019: In May, the Securities and Exchange Commission of Pakistan (SECP) registered 1,323 new companies. As compared to the corresponding month of last financial year, it represents a 21 percent growth, raising the number of registered companies to 100,532, a landmark achievement.
The massive increase is the result of the SECP’s various reforms measures, i.e. introduction of simplified combined process for name reservation and incorporation, one window facility for company incorporation along with NTN generation, reduction in fee and assistance provided by facilitation wings at major CROs.
Around 73 percent companies were registered as private limited companies, while around 24 percent were registered as single-member companies. Three percent were registered as public unlisted companies, nonprofit associations, foreign companies and limited liability partnerships (LLPs). Around 55 percent of the companies were registered the same day.
The SECP has upgraded its browser’s compatibility and now in addition to Internet Explorer, other browsers such as Google Chrome, Mozilla Firefox and Microsoft Edge, Safari and Opera can be used for name reservation and company incorporation.
The trading sector took the lead with the incorporation of 199 companies. It was followed by services with 162, I.T. with 153, construction with 136, tourism with 74, food and beverages with 59, corporate agricultural farming with 56, real estate development with 55, education with 41, marketing/advertisement, textile with 40 and engineering with 29. Twenty-three companies belong to the pharmaceutical sector, 21 to transport, 19 each to logging and mining/quarrying, 18 to fuel and energy, 15 each to broadcasting, and healthcare, auto and allied, 13 to chemical, 12 cosmetics and toiletries, 11 each to communication and power generation. Eighty-seven companies were registered in other sectors.
Foreign investment has been reported in 67 new companies. These companies have foreign investors from Bahrain, Chile, China, France, Germany, Indonesia, Iraq, Japan, Jordan, Korea South, Kuwait, Lebanon, Nigeria, Norway, Philippines, Saudi Arabia, Spain, Sri Lanka, Turkey, UK and the US.
The highest numbers of companies, i.e. 500 were registered in Islamabad, followed by 362 and 231 companies registered in Lahore and Karachi respectively. The CROs in Peshawar, Multan, Faisalabad, Gilgit-Baltistan, Quetta and Sukkur registered, 74, 60, 48, 37, 9 and 2 companies respectively.
June 20, 2019 (MLN): Gold prices reached an all-time high level of Rs 77,300 per tola on Thursday, as its value recorded an increase of Rs 1,800 per tola in domestic market.
The value of yellow metal increased on the back of rise in international prices, which went up by $39 to $1,381 per ounce.
The price for 10 grams of gold jumped by Rs. 1,542 to Rs. 66,272.
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June 20, 2019: Adviser to Prime Minister on Finance Abdul Hafeez Sheikh Thursday constituted a high powered committee to rectify anomalies in the federal budget for addressing the legitimate grievances of the business community boosting up the economic and trade, besides ease of doing business.
An 18-member delegation of Federation of Pakistan Chambers of Commerce and Industry (FPCCI) led by its President Engineer Daroo Khan called on the Finance Adviser and apprised him about the anomalies in the budget.
Adviser to Prime Minister on Commerce Abdul Razak Dawood, Adviser to Prime Minister on Austerity Dr. Ishrat Hussain and Chairman Federal Board of Revenue Syed Shabbar Zadi were also present in the meeting, a press release said.
Hafeez Sheikh, while giving an overview of the economic indicators, said that the current government inherited Rs 31,000 billion as domestic debt and foreign loans were hovering around $100 billion.
He said foreign reserves stood at less than $10 billion while exports in last five years registered zero percent growth.
He said trade deficit was touching the mark of $20 billion, while fiscal deficit had reached at a staggering amount of Rs 2,300 billion. Besides, circular debt was increasing by Rs38 billion each month.
Abdul Hafeez further said our thrust will be on manufacturing rather than trading as it creates more job opportunities for people. He said private sector will be motivated to create jobs by giving them tax breaks on new hiring.
He said the FPCCI and top leaders of private sector have also been proper representation in the committee to make it effective forum to deliver the goods timely.
June 20, 2019 (MLN): Pakistani rupee (PKR) closed today's trading session relatively unchanged against the USD with the rate remaing stable at PKR 156.96
The Rupee endured a rather dull trading session, with the value of the currency trading in a range of 18 paisa per USD showing an intraday high bid of 156.98 and an intraday Low offer of 156.95
Meanwhile, the currency gained 2.5 rupees against the Pound Sterling as the day's closing quote stood at PKR 199.56 per GBP, while the previous session closed at PKR 197.35 per GBP.
On the other hand, PKR's value weakened by 1.5 rupees against EUR which closed at PKR 177.27 at the interbank today.
Within the Open Market, PKR was traded at 156/157.80 per USD.
On another note, within the money market, the overnight repo rate towards close of the session was 12.50/12.75 percent, whereas the 1 week rate was 12.35/12.40 percent.
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June 20, 2019 (MLN): The Board of Directors of Attock Cement Pakistan Limited has approved the installation of Captive Solar Power Plant of 7 MW at its existing factory premises.
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June 20, 2019 (MLN): While the past few months have been no less than an abyss for Pakistan, an overview of the economic predicament within the international arena provides an unfortunate solace as it implies that the rest of the World doesn’t seem to be doing that well either.
Of all sorts of depression that Pakistan has come face to face with lately, a Global Economic Depression is the most foul and unwelcomed one, given the ordeal times that are already inhabiting all of the nation’s attention and fortitude.
Although a global synopsis signals towards the arrival of global depression, it also means that Pakistan’s government is probably not responsible for everything that is going wrong within the country, as the international ordeals surface to share the blame.
Here are 3 things underscored by AKD Research that hint towards arrival of the next Global Economic Depression:
- Trade Slowdown:
In World Trade Organization (WTO)’s latest global trade outlook, it was estimated that the World trade will continue to face strong headwinds in 2019 and 2020 after growing more slowly than expected in 2018 due to rising trade tensions and increased economic uncertainty.
According to WTO economists, merchandise trade volume growth is expected to fall to 2.6% in 2019 — down from 3.0% in 2018. Trade growth could then rebound to 3.0% in 2020; however, this is dependent on an easing of trade tensions.
A research note by AKD Research has pointed out that WTO’s global trade outlook has fallen to in CY10 lows “amidst other global freight indicators marking clear deceleration in global trade volumes.
- Crumpling Manufacturing Activity:
The leading indicators of global manufacturing activity which includes JP Morgan Global PMI and OECD’s composite leading indicator for advanced and emerging economies, have collapsed to the levels that were witnessed in the global recession 2008-09, says AKD note.
According to them, this sets hints towards significant compression over medium term.
- Falling prices and shrunken demand:
International price of crude has fallen by around 11-12% over the month, that of coal trades at a three-year low whereas cotton prices have plunged by 4.2% MoM.
AKD’s research highlights that the international cotton prices toppled due to weak consumption data for the upcoming year, with benchmark Cotlook index moving down 8.1% MoM.
“Looking ahead, the direction of cotton prices hinges upon the outcome of ongoing trade spat between China and the US,” analysts at AKD believe.
Similarly, the US-China trade war has a deep impact on coal prices as well. This coupled with the oversupply is maintaining a solid pressure on prices which have come down by 11% and are traded at a three year low of $62 per ton.
“Commodity linked domestic industries reliant on global sourcing of raw materials are likely to undergo a period of significant demand compressions, where our interactions with industrial importers reveal a dissuasive approach, with lower inventory levels preferred and remittance payments delayed, in expectation of PKR stability,” informed AKD.
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June 20, 2019 (MLN): Federal Board of Revenue (FBR) has given extension in regularization of Rs 40,000 prize bonds.
Following ECC decisions, a number of steps have been taken with regards to bonds as per which, the date for registration of Rs 40,000 prize bonds has been extended to March 31, 2020, as opposed to previous date of September 30, 2019.
Prize bonds can be exchanged from SBP, NBP, MCB, ABL, HBL, Bank Alfalah branches. Moreover, investors have an option to buy defence, special and other certificates in exchange of prize bonds.
Investors can also deposit Rs 40,000 prize bonds in their bank accounts. In addition, all scheduled banks and SBP are advised to facilitate investors to exchange their bonds.
Ministry of Finance has said that all the registered holders will get normal six-monthly rate of return as well prize and no draw would be conducted on Rs 40,000 bearer bonds.
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