PSX has witnessed a shock and awe decline in the last few weeks. Continuing on the negative momentum due to the ongoing JIT investigations, the markets have suffered dramatically.
The market during the day has shed more than 1000 points, falling below the 46000 point for the first time in the last six months.
July 12, 2020 (MLN): The highlight of the departed week was the exports number as per which Pakistan left India, Bangladesh behind. Advisor for Commerce, Textile, Industry and Production, and Investment of Pakistan, Abdul Razak Dawood has appreciated exporters for showing good performance during the Fiscal Year 2019-2020 as compared to the regional counterparts.
Apart from this, the other important economic and business events that took place during the last week are in order so as to become acquainted with the recent developments in Pakistan’s economic and public policy.
Events of Importance through the Week:
Taking cognizance of the negative fallout of COVID-19 Pandemic for the economy, SBP curtailed the end-user markup rates on Temporary Economic Refinance Facility (TERF) to 5% from the existing 7% and on Long Term Financing Facility (LTFF) for the non-textile sector to 5% from 6%. In addition to this, SBP also extended the availability of Deferment of Principal Amount of Loans facility till September 2020.
On equity front, The Organic Meat Company Limited (TOMC) closed its Book Building successfully. The company received total participation of Rs. 1,371,162,584 against an issue size of Rs. 720,000,000 at the floor price of Rs. 18 per share. The issue has been oversubscribed by 1.9x.
On the upside, German Fashion House Hugo Boss placed its first order of sportswear to a Pakistani company.
Also, Ambassador of Japan Matsuda Kuninori has shown keen interest in developing mutual agricultural research and importing Basmati rice from Pakistan in order to further strengthen bilateral trade between the two countries.
Moreover, Pakistan’s e-commerce and digital economy has registered a huge boost in sales during the coronavirus pandemic as shoppers’ physical mobility is limited, Arab News report said.
On energy front, Pakistan and China signed an agreement for the construction of the Azad Pattan Hydel Power Project. With an investment of 1.5 billion dollars and 700.7 megawatts of electricity, Azad Pattan will involve no fuel import, enabling the country to move towards cheaper and greener power while generating local job opportunities.
Another breakthrough was witnessed as DG Khan Cement won cement export orders to Philippines.
With regards to matter pertaining to K-Electric, Prime Minister Imran Khan directed Federal Minister Asad Umar, Special Assistant Shehzad Qasim and Governor Sindh to resolve issues of K-Electric at earliest.
Moreover, US IDFC will provide financial support to Pakistan in PPP mode, as per statement issued from CEO of U.S. International Development Finance Corporation (IDFC), Mr. Adam Boehler, “the funds are available through both debt & equity to finance projects in Pakistan and for infrastructure projects in PPP mode.”
Meanwhile, Federal Secretary Ministry of IT & Telecom Shoaib Ahmad Siddiqui chaired a meeting between the Ministry of IT & Telecom and Huawei Technologies on Wednesday to discuss a broad range of initiatives being taken by Huawei Technologies to increase the scope of Information Technology and Telecom in Pakistan.
On the downside, the U.S. Department of Transportation said it has revoked permission for Pakistan International Airlines (PIA) to conduct charter flights to the United States, citing Federal Aviation Administration (FAA) concerns over Pakistani pilot certifications.
Lastly, the International Monetary Fund (IMF) in its recent report under the head of policy tracker which summarizes the key economic responses governments are taking to limit the human and economic impact of the COVID-19 pandemic, said that a gradual recovery in Pakistan is expected in FY 2021 as the economy reopens.
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July 12, 2020 (MLN): The KSE-100 index gained around 1,139 points during the departed week and closed 36,190-mark i.e. nearly 3.25% percent higher than the closing of the previous week.
According to Arif Habib Limited, the market commenced on a positive note due to the flattening of the COVID-19 curve along with the higher recovery rate of patients. Moreover, an increase in SBP’s foreign exchange reserves, reduction in mark-up on Long Term Financing Facility and Temporary Economic Refinance Facility helped in boosting market sentiments.
Commercial Banks emerged as the best performing sector during the week, as it contributed about 494 points to the benchmark index, followed by sectors such as Cement, E&P, and Automobile, which combinedly contributed 427 points to the index.
Company-wise, the scrips of HBL, PPL, UBL, NBP, and INDU were the most desirable ones as they contributed 141, 70, 65, 46, and 43 points, respectively.
Figures released by NCCPL showed that foreign investors dumped USD 9.45 million worth of stocks during the week with foreign corporates doing the bulk of the selling.
On the local front, Insurance Companies picked up USD 4.5 million worth of stocks, followed by USD 2.7 million worth of stocks purchased by Local Companies.
Forex:
PKR, which had ended its 7-week run of depreciation against the dollar last week, resumed losing in value as the inflows received by the SBP failed to provide any reprieve to the struggling currency.
While the Rupee closed just 14 paisa or 0.09 percent lower it had depreciated by 75 pasia or 0.45% in the first two days of trading before recovering some of the losses in the remaining sessions of the week.
The dollar traded in a range of 85 paisa, hitting weekly high (bid) of 167 and a low (offer) of 166.15 before closing at 166.3525.
10 Day volatility declined slightly from 5.61 percent to 4.77 percent.
However, some solace can be taken from the fact that PKR has appreciated by Rs.1.70 or 1 percent since the start of FY21.
Money Market:
In the absence of any auctions, the yields in the secondary market displayed a mixed trend with 6-month yields decreasing by 6 basis points while 3 and 12-month yields came down by 17 bps.
However, longer-term yields for 3, 5, and 10 years increased by 20, 6, and 7 basis points.
There is an MTB and PIB (Floating Rate) auction scheduled for Wednesday, July 15, 2020.
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| Weekly Performance | ||
|---|---|---|
| Jul 10, 2020 | Jul 03, 2020 | |
| PKR InterBank | 166.3525 | 166.211 |
| KSE100 Index | 36,190.40 | 35,051.38 |
| Avg Daily Volume | 348,797,285 | 250,739,223 |
| Gold (Karachi) Rs/10 gm | 93,364 | 89,850 |
| KIBOR 6M | 6.78 | 6.88 |
| 10Y PIB | 8.72 | 8.65 |
| EUR | 1.1299 | 1.1243 |
| GBP | 1.2621 | 1.2484 |
| CHF | 0.9412 | 0.9454 |
| JPY | 106.89 | 107.411 |
| GOLD | 1798.22 | 1774.74 |
| NY Light Crude | 40.57 | 40.58 |
| Open Market Rates | ||
| Jul 10, 2020 | Jul 03, 2020 | |
| USD | 168.00 | 168.00 |
| EUR | 189.97 | 188.61 |
| GBP | 212.21 | 207.44 |
| JPY | 1.5726 | 1.5685 |
| AED | 45.78 | 45.78 |
| SAR | 44.82 | 44.79 |
| SBP Data | ||
| T-Bill Auction Cutoff Yield | Jun 30, 2020 | Jun 17, 2020 |
| 3M | 6.8488 | 7.7999 |
| 6M | 6.6599 | 7.4847 |
| 12M | 6.8500 | 7.3600 |
| PIB Auction Cutoff Yield | Jun 24, 2020 | May 28, 2020 |
| 3Y | 7.9700 | 7.6400 |
| 5Y | 8.4400 | 8.0500 |
| 10Y | 8.9900 | 8.6900 |
| 15Y | 9.9000 | 9.9699 |
| 20Y | 10.5100 | Bids Rejected |
| Interest Rate Corridor | Jun 26, 2020 | May 18, 2020 |
| SBP Policy Rate | 7.00 | 8.00 |
| SBP Reverse Repo Rate | 8.00 | 9.00 |
| SBP Repo Rate | 6.00 | 7.00 |
| Weekly Indicators | ||
| Jul 03, 2020 | Jun 26, 2020 | |
| SBP FX Reserves * | 12,041.60 | 11,231.00 |
| Bank FX Reseves * | 6,748.50 | 6,740.00 |
| Total FX Reserves * | 18,790.10 | 17,971.00 |
| Jul 09, 2020 | Jul 02, 2020 | |
| SPI (Combined Group) ** | 133.62 | 132.32 |
| Change - WoW (pct) | 0.98 | 2.29 |
| Change - YOY (pct) | 11.02 | 9.77 |
| Monthly Indicators | ||
| June | May | |
| Consumer Price Index (Base 2015-16) | 132.08 | 131.01 |
| Change - MOM (pct) | 0.82 | 0.32 |
| Change - YOY (pct) | 8.59 | 8.22 |
| WholeSale Price Index (Base 2015-16) | 135.80 | 136.23 |
| Change - MOM (pct) | -0.32 | -2.08 |
| Change - YOY (pct) | 0.93 | 1.50 |
| Sensitive Price Indicator (Base 2015-16) | 128.46 | 127.76 |
| Change - MOM (pct) | 0.55 | 1.70 |
| Change - YOY (pct) | 9.33 | 9.58 |
| June | May | |
| Exports * | 1,592.00 | 1,396.00 |
| Imports * | 3,715.00 | 2,863.00 |
| Trade Balance * | -2,123.00 | -1,467.00 |
| May | April | |
| Home Remittances * | 1,872.86 | 1,790.03 |
| May | April | |
| Total Foreign Investment * | 9.44 | -511.54 |
| Quarterly Indicators | ||
| Mar 31, 2020 | Dec 31, 2019 | |
| Pakistan's External Debt * | 109,948.92 | 110,719.33 |
| Annual Indicators | ||
| FY20 | FY19 | |
| GDP Growth Rate | -0.38 | 1.91 |
| Agriculture | 2.67 | 0.58 |
| Manufacturing | -0.27 | 5.43 |
| Commodity Sector | -0.05 | -0.90 |
| Services Sector | -0.59 | 3.75 |
| Trade Balance * (July - June) | -23,183.00 | -31,805.00 |
| Worker Remittances * (July - May) | 20,654.48 | 20,103.03 |
| Foreign Investment * (July - May) | 1,873.58 | -132.61 |
| Annual Inflation Rate % (July - June) | 10.74 | 6.80 |
| * Amount in USD Million | ||
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July 12, 2020 (MLN): The financial snapshot of the country is brought to light with the economic and financial data releases over the course of the week.
The Weekly Sensitive Price Indicator (SPI) for the Combined Group increased by 0.98% during the week ended Jul 09, 2020 while the SPI increased by 11.02% compared to the corresponding period from last year.
The foreign investors took a step back from investing in local markets, as the total purchase of securities via Specially Convertible Rupee Accounts (SCRA) stood at Rs.11.1 billion, which is 45.9 percent lower than the prior week.
Pakistan witnessed an inflow of $15.11 million by foreign investors via Special Convertible Rupee Account (SCRA) in government debt securities in the first three days of FY21.
Pakistan's Forex Reserves increased by USD 819.10 Million or 4.56% and the total liquid foreign reserves held by the country stood at USD 18,790.10 Million on Jul 03, 2020.
Under the refinance scheme, SBP has lowered the end-user mark-up rates from existing 7% to 5%.
Oil & Gas Development Company Limited (OGDCL) as operator with (56.45% share), Pakistan Petroleum Limited (PPL) (28.55%) & Government Holdings (Private) Limited (GHPL) (15%) in a joint venture of Mela Drilling & Production Lease (D&PL) Block has successfully tested, completed, injected development well Mela # 07 into the production stream.
In the month of June 2020, the total deposits held by commercial banks have increased to Rs 16.22 trillion, depicting a growth of 12% YoY and 5% MoM. The same is up by 11% YTD.
The total money supply circulating within the economy in May 2020 has been recorded at around Rs.24.196 trillion, according to provisional accounts on Monetary Aggregates for the month, maintained by the State Bank of Pakistan.
The export remittances from the IT & ITES sector have jumped to $1.11 billion, showing a growth of 21% & fetching over a billion dollars in foreign exchange during Jul-MayFY20.
The government of Pakistan has acquired an additional debt of Rs.206.68 billion during the week ended June 19, 2020, which brings its total net borrowing for ongoing fiscal year 2020 to Rs.2228.41 billion. As of prior week, the government had borrowed a net sum of Rs.2021.73 billion.
The non-government sector has borrowed another net sum of Rs.28.38 billion during the week ended June 26, 2020, which brings the cumulative net borrowing for ongoing fiscal year FY2020 to Rs.306.3 billion. The net borrowing as of prior week was recorded at Rs.277.92 billion.
According to official data, the price of cotton in Punjab has fallen by Rs. 400 to Rs. 8,600 per maund, while the price in Sindh has fallen by Rs. 150 to Rs. 8,350 rupees per maund.
Punjab government is providing a sixty percent subsidy on the installation of sprinkle or drip irrigation systems to farmers of the province for the year 2020-21.
The government has released funds amounting to Rs287.289 million during the last fiscal year to execute seven petroleum projects under the Public Sector Development Programme (PSDP 2019-20) against the total allocation of Rs 304.997 million.
After posting a decrease for three consecutive months, cement despatches increased by 29.94 percent in June 2020 to 4.623 million tons from 3.557 million tons in June 2019, ending the fiscal year 2019-20 on a positive note.
Sazgar Engineering Works Limited has released the Production and Sales data for its three-wheelers, including Auto Rickshaw for the month of June 2020.
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July 10, 2020 (MLN): The Weekly Sensitive Price Indicator (SPI) for the Combined Group increased by 0.98% during the week ended Jul 09, 2020 while the SPI increased by 11.02% compared to the corresponding period from last year.
According to data released by the Pakistan Bureau of Statistics (PBS) the Combined Index was at 133.62 compared to 132.32 on Jul 02, 2020 while the index was recorded at 120.36 a year ago, on Jul 11, 2019
Out of the 51 monitored items, the average price of 18 items increased, 11 items decreased whereas 22 items registered no change during the week.
The weekly SPI percentage change by income groups showed that SPI increased across all quantiles ranging between 0.86% and 1.27%.
The Lowest Income Group witnessed a weekly increase of 1.27% while the highest income group recorded an increase of 0.86%.
On an yearly basis, analysis of SPI change across different income segments showed that SPI increased across all quantiles ranging between 9.43% and 14.33%.
Yearly SPI for the Lowest Income Group increased by 14.33% while the highest income group recorded an increase of 9.43%.
The average price of Sona urea stood at Rs.1637 per 50 kg bag which is 0.37% higher than last week’s price and 16.69% lower when compared to last year.
Meanwhile, average Cement price was recorded at Rs.551 per 50 kg bag, which is 0.55% higher than the previous week and 12.4% lower than prices last year.
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