Market Wrap – News and Views

    News & Views

    Regional power grid tariff

    Nepra will take up the power acquisition contract and tariff for the import of 1,000-1,300MW from CASA-1000 project this week. Pakistan can avail up to 1,300MW of electricity from the Central Asian states at an estimated cost of US$953mn; the tariff has been worked out to US¢9.41/KWh. Nepra now has to decide if the proposed rates for power purchases and transmission line expenses are reasonable and if the provisions of the NTDC’s grid code have been incorporated in the technical grid of the project

    Source: Dawn

    Govt. offers another subsidy on fertilizer

    As per a notification issued by the Ministry of National Food Security and Research last week, subsequent to the subsidy on DAP the federal govt. has permitted a subsidy of PRs196 per 50kg bag of Single Super Phosphate (SSP) till the exhaustion of PRs20bn amount. However, considering the provincial governments’ request, the subsidy will only be obtainable on SSP manufactured using imported rock and with phosphate content not less than 18%. Moreover, the subsidy will only be provided to those commercial importers and manufacturers who are registered tax filers before 30 June 2015.

    Source: Express Tribune

    Bank Borrowing Up

    The recently released weekly statement of position of all scheduled banks issued by central bank shows that borrowing by scheduled banks rose by 4.74% WoW (up 163% YoY) to PRs1.9trn in the week ending 23rd Oct. Borrowings by commercial banks rose by 4.84% WoW to PRs1.9trn while for specialized banks it registered a decline of 1.21% WoW. Gross advances of all scheduled banks stood at PRs4.6tn, up 0.23% WoW, whereas investments stood at PRs6.5tn, down a marginal 0.02% WoW .Total assets of all scheduled banks were up by 0.78% WoW to PRs12.9tn.

    Source: Dawn

    SBP spells out steps to arrest PKR slide

    The State Bank of Pakistan has taken some damage control measures after sharp volatility seen in kerb exchange rate market, where PKR/USD crossed 107.4. In a detailed statement, SBP said that recent developments in the exchange market are in line with economic fundamentals. The central bank expects external position to strengthen and stands ready to take any measure to ensure stability.

    Source: Business Recorder

    Japan demands incentives for car makers

    According to Mr. Murtaza Khan Jatoi, Federal Minister for Industries and Production in a meeting with a Japanese delegation, the government will give concessions to pioneer industries under the revised Auto Industry Development Program (AIDP), such as Nissan and Mitsubishi. The Japanese delegation has pressed the government to give incentives to existing carmakers as well. The final approval of AIDP-II is still awaited.

    Source: The News

    Hascol Petroleum to sell 15% stake to Vitol

    According to Hascol’s Company Secretary Mr Zeeshanul Haq, a term sheet has been signed by Vitol Dubai Limited with the major shareholders to acquire 15% equity stake in Hascol Petroleum Limited, with an option to acquire a further 10% stake within one year.

    Source: Dawn

    Gas consumers to pay PRs67bn more

    OGRA has increased the UFG benchmark, after approval by ECC, to over 7% from 4.5% for SSGC and SNGPL because of continuously increasing gas losses (now slated at 11-15%). The decision would negatively impact the GDS payments to provinces for 2012-13 and increase gas tariffs with effect from Jan-15 for all consumers, leading to additional revenue impact of around PRs67bn for FY13 and FY14

    Source: Dawn

    No ''long-term'' LNG deal signed: Official

    In a latest twist to LNG saga, Secretary Petroleum and Natural Resources Arshad Mirza has denied the signing of such an agreement contrary to earlier announcement from the Ministry of Petroleum and National Resources that a long-term deal for LNG imports had been signed with Qatar. We remark that the final price or formula of LNG did not emerge in the earlier government announcement. In other news, the government has reportedly decided to keep GST on LNG sales at 17%, unlike rates on other petroleum products. It does not come as a surprise to us as final LNG price in Pakistan is almost double the FOB price, which somewhat dilutes the economics of LNG against oil, in our view, and thus limits government from raising levies on it.

    Source: Business Recorder

    Moody’s lifts Pakistan banking system outlook

    Moody’s Investors Service changed the outlook for the Pakistan banking system from negative to stable, reflecting the improvement in the country’s economic growth prospects. The rating agency forecasts Pakistan’s real GDP to grow by 4% in FY16 mainly driven by higher spending on infrastructure. Moreover, the agency also expects improvement in banks’ asset quality with NPL ratio declining to 12% of total loans by FY16 as against 12.4% in FY15. Banks are expected to maintain ample liquidity with core liquid assets at 12% of total assets while continue to benefit from large volumes of low-cost and stable customer deposits at the back of higher remittances inflow

    Source: Dawn

    Trade deficit contracts 12% in Jul-Oct

    Pakistan’s trade deficit shrank over 12.2% to US$7.7bn from Jul-Oct on the back of sinking imports and exports. Exports for 4MFY16 clocked in at US$6.88bn, down 13.4%YoY; while imports fell by 12.8% YoY to US$14.6bn. Similarly, the trade deficit narrowed down by 4% YoY to US$2.2bn in Oct-15 due to 11.4% YoY decline in exports, which stood at US$1.7bn and 7.5% YoY drop in imports, which clocked in at US$3.9bn

    Source: Express Tribune

     

    Federal Minister for Petroleum and Natural Resources Shahid Khaqan Abbasi on Friday said that government of Pakistan has at least 39 public sector organisations on its privatisation list.

    US Treasuries prices slipped on Thursday as selling linked to more corporate supply and $16 billion of 30-year bonds was mitigated by some safe-haven demand spurred by a sharp decline on Wall Street.

    European shares were set for their biggest weekly fall since September on Friday after commodity prices tumbled to multi-year lows on worries over a glut in supply and slower global economic growth.

    China wishes to shift industries to Pakistan via CPEC.

    Posted on: 2015-11-15T15:00:00+05:00