May 19, 2019 (MLN): The local equity market once again ended the week on a negative note as the benchmark index closed in red with a loss of 4.5% WoW. The market lost 1,550 points WoW, closing at 33,166 points. Turbulence at the equity market was a result of anticipation of further interest rate increases and rupee devaluation, moreover, the expectation of positive sentiments upon agreement of IMF Program did not materialize.
Investors remained cautious due to tough measures attached with the IMF program. Concerns were reinforced as the rupee lost 6.5 rupees against the greenback during the week. However, investors were relieved in the middle of the week owing to Pakistan’s emerging market status being retained and approval of amnesty scheme by the cabinet.
However, this impetus was short lived as the Pak-Rupee witnessed depreciation against USD and concerns persisted over a significant rate hike in the upcoming monetary policy statement.
Furthermore, the past week brought along a series of economic events both in terms of data releases and developments in public policy.
On Sunday, Adviser to Prime Minister on Finance, Revenue and Economic Affairs Dr Abdul Hafeez Shaikh announced that the technical teams of the government and the International Monetary Fund (IMF) reached an agreement on a bailout package of US$6 billion for Pakistan.
On Wednesday, Prime Minister Imran Khan approved the asset Declaration Scheme, 2019, which gives Pakistani citizens another opportunity to declare and legalize previously undisclosed assets within and outside the country by paying just four percent taxes on all assets other than real estate.
Meanwhile, the Economic Coordination Committee (ECC) on Wednesday approved procurement of 5.15 million tons of wheat target with financial limit of 158.5 billion rupees this year. The ECC also approved additional supply of 150 MW of power through National Grid to K-Electric to address power shortage in Karachi.
On Thursday, the State Bank of Pakistan through a press release informed that the Monetary Policy for the next two months will be announced on Monday, May 20, 2019.
On Friday, in a frantic attempt to avoid a market meltdown, the government of Pakistan decided to launch a ‘Disaster Support Fund” worth Rs.15 to Rs.20 billion, work on which is reported to begin on Monday. This fund will be operated under the National investment Trust (NIT), as informed by the sources.
Meanwhile, the same day, OGRA recommended increase in gas tariff for the upcoming Fiscal Year 2019-20 and the final decision would be taken after approval of federal government. Earlier, the Sui Northern Gas Pipelines Limited (SNGPL) and Sui Southern Gas Company (SSGC), in their petitions, had sought an increase of 144 per cent and 30 per cent for gas prices, respectively.
On the upside, Morgan Stanley Capital Index (MSCI)’s semi-annual index review took place on Monday and its results toned down markets’ anxiety levels by many folds as it announced no change in Pakistan’s status within the MSCI Emerging Market (EM) Index. All 3 constituents of Pakistan (HBL, OGDC, and MCB) managed to secure a status within the Standard Index.
Furthermore, Pakistan has been ranked 3rd in the world for newly installed hydropower capacity. This was declared by the International Hydropower Association (IHA) in its recently issued report titled “2019: Hydropower Status Report – Sector Trends and Insights”.
Moreover, the statistical data released this week apprising the economic standing of the country are listed below:
- As per the weekly data released by SBP, Pakistan's non-government sector has retired a net sum of Rs.28.9 billion during the week ended May 10, 2019, which brings the cumulative net borrowing for ongoing year to Rs.860.11 billion.
- The government of Pakistan accumulated an additional net debt of Rs.127.24 billion during the week ended May 10, 2019, which brings its total net borrowing for ongoing fiscal year (FY19) to Rs.1.08 trillion.
- Pakistan's Forex Reserves decreased by USD 78.20 Million or 0.49% and the total liquid foreign reserves held by the country stood at USD 15,894.40 Million on May 10, 2019.
- According to the weekly report on SCRA released by the State Bank of Pakistan, the gross sale of securities during the week was recorded at Rs.5.7 billion, which is around 47.1 percent higher than the figures recorded last week. Similarly, the total purchase of securities stood at Rs.7.8 billion, which is 75.7 percent higher than the prior week. Consequently, the net purchase of securities for the week ended May 10, 2019 clocked in at Rs.2.12 billion, i.e. around Rs.1.55 billion higher than last week's numbers.
- Pakistan’s external debt increased by USD 6.755 billion between Jan – March 2019 taking the country’s total debt liabilities to USD 105.841 billion, the highest level in the nation’s history.
- The overall output of Large-Scale Manufacturing Industries (LSMI) decreased by 2.93% for July-March 2018-19 compared to July-March 2017-18. According to data released by the Pakistan Bureau of Statistics, the LSMI output decreased by 10.63% for March 2019 compared to March 2018 and increased by 1.81% if compared to February 2019.
- Pakistan's trade deficit for 10 months (July-April) FY19 was USD 26.30 billion compared to a deficit of USD 30.17 billion from the corresponding period from FY18. As per Pakistan Bureau of Statistics (PBS), the trade deficit for the month of April 2019 was recorded at USD 2.659 billion compared to a deficit of USD2.176 billion from March 2019 showing that the deficit worsened by 22.2 percent.
- The Weekly Sensitive Price Indicator (SPI) for the Combined Group increased by 1.16% during the week ended May 9, 2019 while the SPI increased by 13.32% compared to the corresponding period last year. Meanwhile, the Combined Index was at 254.38 compared to 251.47 on May 02, 2019 while the index was recorded at 224.47 a year ago, on May 10, 2018
- Over 17.07 thousand passenger car units were sold during the month of April 2019, as per a report by Pakistan Automotive Manufacturer’s Association (PAMA). The cumulative sale of passenger cars during the 10 months ending April 2019 were reported to be 177.4 thousand. On a monthly basis, the sales came down by 14.1%, whereas on a year-on-year basis, the figure declined by 20.7% for the month of April.
- The total money supply circulating within the economy during March 2019 was around Rs.20.5 trillion, as per provisional statistics of Monetary Aggregates for the month, released by the State Bank of Pakistan.
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