July 19: Asian markets rallied Friday as comments from a top Federal Reserve official were pounced on by investors as indicating the central bank will unveil a deep interest rate cut at the end of the month.
John Williams, the influential vice chairman of the Fed's policy-setting board, said in a speech that central banks should move quickly to support the economy when borrowing costs were already low.
He pointed to studies suggesting that when there are few stimulus options available, officials should "move more quickly than you otherwise might" rather than waiting "for disaster to unfold".
While a spokesman later clarified that Williams was not outlining Fed policy and was not flagging a half-point cut, analysts said the remarks provided an insight into how officials were thinking.
Markets have been wavering this week over how big the bank's expected reduction would be, with 25 basis points priced in but traders hoping for 50 basis points.
"Williams' remarks put probabilities of multiple rate cuts higher after strong economic indicators had put doubts on the number of rate reductions this year and how deep the cut will be," said OANDA senior market analyst Alfonso Esparza.
Wall Street ended in positive territory and Asia was on course to end the week on a strong note, despite concerns about the global outlook and a lack of progress in China-US trade talks.
Tokyo went into the break 1.7 percent higher, while Hong Kong and Shanghai were both up one percent in early business.
Seoul and Taipei also added one percent, while Sydney climbed 0.8 percent, Singapore put on 0.4 percent, Wellington added 0.3 percent and Manila advanced 0.6 percent.
- Warning for stocks -
However, Jeffrey Kleintop, chief global investment strategist at Charles Schwab & Co, warned that weakness in the world economy would eventually drag on markets.
"I don't think a few rates cuts is going to make the difference, whether it's 25 or 50 basis points at the end of this month," he told Bloomberg TV. "While the bond market is pricing in a realistic probability of the slowdown, stocks have gone the other direction this year and may be in for a surprise."
Bets on lower rates were also providing support to higher-yielding, riskier currencies with the Australian dollar and South Korean won climbing 0.6 percent and the Indonesian rupiah 0.5 percent higher. South Africa's rand, the Turkish lira and Mexican peso were also well up.
However, the greenback did claw back slightly against its major peers following steep losses on Thursday.
The softer dollar was also helping oil prices rally, while Donald Trump's claims that the US had shot down an Iranian drone that threatened an American naval vessel also provided strong support.
However, Vanguard Markets' Stephen Innes said the commodity remained under pressure from concerns about demand, despite moves to loosen monetary policy.
"It's not central bank liquidity that oil markets need but global economic growth," he said. "All the money in the world isn't going to alleviate the fact markets are mired in a trade war-induced global economic slump that is factoring in both consumer and industrial consumption metrics."
- Key figures around 0230 GMT -
- Tokyo - Nikkei 225: UP 1.7 percent at 21,394.23 (break)
- Hong Kong - Hang Seng: UP 1.0 percent at 28745.53
- Shanghai - Composite: UP 1.0 percent at 2,929.57
- Pound/dollar: DOWN at $1.2545 from $1.2548 at 2050 GMT
- Pound/euro: DOWN at 89.77 pence from 89.87 pence
- Euro/dollar: DOWN at $1.1262 from $1.1277
- Dollar/yen: UP at 107.55 yen from 107.30 yen
- West Texas Intermediate: UP 92 cents at $56.22 per barrel
- Brent North Sea crude: UP $1.20 at $63.13 per barrel
- New York - Dow: FLAT at 27,222.97 (close)
- London - FTSE 100: DOWN 0.6 percent at 7,493.09 (close)
Jul 18: Federal Board of Revenue (FBR) Chairman Syed Shabbar Zaidi Thursday called upon the business community that besides refraining from business in smuggled goods, they should not indulge in under-invoicing or other mis-declarations when getting their imported goods cleared at the ports.
The importers, their clearing agents and the delinquent staff, if found involved in such practices, would shall be liable to punitive action under the law. The chairman has further urged the traders to refrain from dealing in smuggled goods and has categorically stated that whosoever found involved in any way dealing with sale, purchase or storage of the same would be dealt strictly.
The country was facing problem of securing its economic borders as rampant smuggling not only entails huge revenue losses but also adversely impacts existing industry and future investment.
The prime minister has taken a very serious notice of the situation and has ordered a number of measures to cleanse the society from the menace of smuggling, he added.
The chairman said Pakistan Customs, being the country’s leading anti-smuggling organization, has accordingly stepped up enforcement actions in coordination with other law enforcement agencies to make an example of all such notorious elements engaged in smuggling.
Jul 18, 2019 (MLN): Pakistan's Forex Reserves increased by USD 989.90 Million or 6.94% and the total liquid foreign reserves held by the country stood at USD 15,249.20 Million on Jul 12, 2019.
During the outgoing week, SBP received the first tranche of USD 991.4 million from IMF. After taking into account outflows relating to external debt and other official payments, SBP reserves increased by USD918 million.
|Foreign reserves held by||Jul 12, 2019||Jul 05, 2019||Change||% Change|
|State Bank of Pakistan||8,001.30||7,083.60||917.70||12.96%|
|Net Foreign Reserves Held by Banks||7,247.90||7,175.70||72.20||1.01%|
|Total Liquid Foreign Reserves||15,249.20||14,259.30||989.90||6.94%|
Amount in USD Million
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Jul 18, 2019 (MNL): The equity market participants pulled off an extensive sell-off on trading floors today, causing the benchmark KSE – 100 index to lose 672 points and conclude the session at 32,309 points.
Political instability due to NAB’s actions against leading political leaders over corruption, as well as monetary tightening by SBP formed a gloomy cloud over the market which casted a shadow over the index all day long.
This is the lowest the index has fallen in the last three years. The last time KSE -100 index fell below this level was in March 2016 when it closed a session at 32,147 points.
The Index traded in a range of 788.64 points or 2.39 percent of previous close, showing an intraday high of 33,014.74 and a low of 32,226.10.
Of the 91 traded companies in the KSE100 Index 5 closed up 82 closed down, while 4 remained unchanged. Total volume traded for the index was 71.67 million shares.
Sector wise, the index was let down by Commercial Banks with 115 points, Oil & Gas Exploration Companies with 101 points, Fertilizer with 97 points, Oil & Gas Marketing Companies with 58 points and Cement with 46 points.
The most points taken off the index was by ENGRO which stripped the index of 71 points followed by PPL with 64 points, HBL with 52 points, OGDC with 38 points and HUBC with 24 points.
Meanwhile, the KSE All Share Volume decreased by 24.15 Million to 87.41 Million Shares while Market Cap decreased by Rs.126.92 Billion.
Total companies traded were 320 compared to 308 from the previous session. Of the scrips traded 29 closed up, 275 closed down while 16 remained unchanged.
Total trades decreased by 12,396 to 31,506 whereas Value Traded increased by 0.05 Billion to Rs.3.76 Billion
|Lotte Chemical Pakistan||4,517,500|
|Maple Leaf Cement Factory||3,690,000|
|The Bank of Punjab||2,996,000|
|D.G. Khan Cement Company||2,416,000|
|Sui Northern Gas Pipelines||2,237,000|
|Technology & Communication||11,221,000|
|Power Generation & Distribution||9,860,000|
|Oil & Gas Marketing Companies||5,370,300|
|Vanaspati & Allied Industries||3,630,500|
|Oil & Gas Exploration Companies||2,295,820|
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July 18, 2019: Japanese Ambassador, Kuninori Matsuda called on the Minister for Economic Affairs Muhammad Hammad Azhar in Islamabad on Thursday and assured of full support going forward.
The Minster briefed the Ambassador on the key priorities of the government and structural reforms agenda that is being executed to revive the economy.
The Ambassador reiterated commitment of his country to strengthen economic cooperation to support implementation of government’s reform agenda. He expressed intention of his country to provide financial support for implementation of high value flagship projects.
The Minister thanked the Japanese Ambassador for his support and reiterated full support of the Government of Pakistan for the potential Japanese investors to facilitate their investment in Pakistan.
Jul 18, 2019: Federal Minister for Economic Affairs, Hammad Azhar Thursday urged the Asia Development Bank (ADB) to scale up its lending to Pakistan including programme lending and project financing.
He was talking to ADB Country Director, Ms. Xiaohong Yang who called on the minister here, according to press statement issued by the Ministry.
The Minister acknowledged the ADB’s support for Pakistan and discussed key priority areas and new avenues for future interventions.
The Minister reiterated that the government was keen to explore innovative financing models and mobilize investment in infrastructure and social sectors. These initiatives will not only provide fiscal space to the government but also help boost economic activities in the country, he added.
On the occasion, Yang congratulated Azhar on his appointment as Federal Minister.
Yang said that ADB and Pakistan had successfully met many development challenges and assured the Minister of the Bank’s support in the priority sectors as identified by the present government.
Yang also briefed the Minister on ADB’s ongoing interventions and pipeline projects and updated him about the bank’s Programme Lending and Special Policy-Based Loan including Trade and Competitiveness Programme, Energy Sector Resilience Programme and Capital Market Reforms Programme.
ADB was committed to expanding this partnership to increase prosperity of the people of Pakistan, she added.
The Country Director thanked the Minister and reiterated ADB’s commitment to further strengthen and expand its partnership with Pakistan.
July 18, 2019 (MLN): Pakistan's outstanding debts as of June 30, 2019 stand at a collossal amount of Rs.20.24 trillion whereas total debt at the end of prior month was Rs.19.45 trillion, meaning that around Rs.794.03 billion were additionally borrowed during this month alone.
As compared to the same period last year when outstanding credit was Rs.17.22 trillion, the current debt position is Rs.3.03 trillion higher this time around, marking a year-on-year expansion of 17.6 percent for fiscal year 2019.
The total outstanding credit is branched into the amount accumulated by government sector and that accumulated by the non-government sector. Out of the total outstanding loan, credit given to the government sector accounts for Rs.12.4 trillion while credit to non-government sectors account for Rs.7.84 trillion.
Credit to Government Sector:
The State Bank of Pakistan’s net credit to the government sector amounts to Rs.6.68 trillion which includes investments in government securities and government deposits, and other direct loans. During these 12 months, the central bank has become a bigger source of financing for the sector as the outstanding amount acredited to the SBP has grown by Rs.3.08 trillion or 85.49 percent.
Meanwhile, the second largest source of financing for the sector, the Scheduled Bank's net credit adds up to Rs.5.72 trillion which is Rs.967.39 billion lower than the outstanding credit at the beginning of the fiscal year, thus indicating that the sector retired this amount during the period.
Credit to Non-Government Sector:
The State Bank’s claim to outstanding credit of this particular sector is comparatively negligible (only Rs.25.92 billion), while on the b-side, scheduled banks have a claim to up to Rs.7.81 trillion as of the end of this month.
At the end of previous month (May 2019), the outstanding amount owed to these banks was Rs.7.75 trillion indicating that Rs.62.29 billion were additionally borrowed during the month whereas during ongoing fiscal year, Rs.913.23 billion were further accumulated.
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Jul 18, 2019: The Country Representatives of United Nations Industrial Development Organization (UNIDO) Nadia Aftab on Thursday said that 'Agro-Food and Agro-Industry Development Project' in Pakistan worth US$5.2 million would be commenced by the next month (August).
The project aims at strengthening the cattle meat and apple value chains, through the introduction of new techniques of productivity enhancement as well as by building the capacities of livestock farmers and growers, which would improve the livelihood of farmers and reduce rural poverty.
While talking to Federal Minister for National Food Security and Research, Sahibzada Muhammad Mehboob Sultan, she apprised the minister that Agro-Food and Agro-Industry Development in Pakistan and subsequent funding by Japan, which is US$5.2 million has been approved by the concerned quarters and be launched by the first week of next month.
The project, she said has been developed by UNIDO in consultation with Ministry of National Food Security and Research, provincial agriculture departments for the development of agriculture, livestock, dairy and fishery value chain.
She said that the project starting from Gilgit-Baltistan would further spread to Khyber Pakhtunkhwa and Balochistan for the development of agriculture and livestock sectors by strengthening cattle meat farming and apple value chains.
The UNIDO Representative said that two pronged approach for inception and implementation will be adopted to execute mutually agreed activities after a consultative process to address the issues of value chain for dried and fresh fruit vegetables, oil and oilseed, livestock, dairy, fisheries trout farming with piloting of new interventions with the involvement of relevant department at provincial level as well as the institutions.
The minister while appreciating the initiative of UNIDO said that government has launched Prime Minister’s agriculture emergency program and livestock is one of the major projects in order to enhance the productivity of major crops, livestock development, aquaculture and water conservation.
The minister said that in KPK the process of Foot and Mouth Disease free zones identification is also in progress and UNIDO may also collaborate as it is focusing on KPK meat markets.He said that Pakistan and UNIDO started collaboration for formulating the Country Program Framework (CPF) for inclusive and sustainable agriculture development and thereby achieve food safety and Security.
July 18, 2019: President Dr. Arif Alvi Thursday said that the proactive measures were required to enhance the quantum of trade between Pakistan and Algeria as the current volume of the bilateral trade was not commensurate to the true potential.
In a meeting with Ambassador-designate of Pakistan to Algeria Ata-ul-Munim Shahid, who called on him at Aiwan-e-Sadr, the president said that Pakistan attached high importance to its relations with Algeria.
He urged the ambassador-designate to make efforts to further strengthen the bilateral relations in all areas of mutual interest.
Underscoring the focus of the Pakistani government on bolstering its exports through mutually beneficial economic collaboration, the president directed the ambassador-designate to offer Pakistan’s manpower, experience, expertise, machinery and other related equipment to Algeria.
The president wished the ambassador-designate a successful stay in Algeria and hoped that his tenure would bring more vigor and energy to the relationship between the two countries.
July 18, 2019 (MLN): Pakistani rupee (PKR) depreciated by 21 paisa against US Dollar (USD) in today's interbank session as the currency closed the day's trade at PKR 160.03 per USD, against yesterday's closing of PKR 159.82 per USD.
The Rupee saw moderate volatility in today’s session and traded in a range of 34 paisa per USD showing an intraday high bid of 160.15 and an intraday Low offer of 159.88.
Within the Open Market, PKR was traded at 159.5/162 per USD.
Meanwhile, the currency lost 1.5 rupees to the Pound Sterling as the day's closing quote stood at PKR 199.68 per GBP, while the previous session closed at PKR 198.14 per GBP.
Similarly, PKR's value weakened by 64 paisa against EUR which closed at PKR 179.86 at the interbank today.
On another note, within the money market, the State Bank of Pakistan (SBP) conducted an Open Market Operation in which it injected Rs.1.08 trillion for 8 days at 13.32 percent.
The overnight repo rate towards close of the session was 13.40/13.60 percent, whereas the 1 week rate was 13.40/13.50 percent.
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