May 23, 2019 (MLN): The State Bank of Pakistan announced that it will conduct an 8 day OMO (Reverse Repo) to inject funds into the market.
Quotes timing is up to 11:15 PST while result will be announced at 12:00 PST
Settlement is same day – May 23, 2019
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February 28, 2021 (MLN): The highlights of the 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:
Pakistan remained in FATF’s grey list, however, the Financial Action Task Force (FATF) Thursday appreciated Pakistan for the significant progress made on the entire action plan as Pakistan completed with 24 out of 27 items rated as largely addressed and the remaining 3 items partially addressed.
On Friday, Pakistan, Qatar sign a 10-year LNG supply agreement as per which Qatar will provide Pakistan three million tons of Liquified Natural Gas (LNG) for 10 years
On Thursday, the National Electric Power Regulatory Authority (NEPRA) reserved its decision into fuel price adjustments (FCA) for month of January on a petition filed by Central Power Purchase Agency (CPPA-G) on behalf of power distribution companies.On Friday, the Economic Coordination Committee (ECC) of the Cabinet approved revocation of Neelum Jhelum surcharge with immediate effect.
On Wednesday, Fitch Solutions made downward revisions to Pakistan’s coal power growth forecasts for the ongoing quarter, given the slow progress on China-Pakistan Economic Corridor coal-powered projects of late, and increasing downside risks to the sector from the moratorium on coal.
On the upside, Kyrgyzstan has shown interest in getting access to Gwadar and Karachi ports by using the rail and road links being constructed under China-Pakistan Economic Corridor.
Furthermore, Ministry of Commerce on Friday informed that on February 24, 2021, Pakistan joined the Madrid Trademark System of World Intellectual Property Organization (WIPO)..
Financial Results:
Apart from this, several listed companies announced their financial results amid the ongoing earnings season last week, some of which are as follows:
Lotte Chemical Pakistan (LOTCHEM) earned Rs. 2.12 billion (EPS: 1.4) during the year ended December 31, 2020, i.e. nearly 61% lower as compared to the earnings of same period last year.
Pakistan Petroleum Limited (PPL) disclosed its financial performance for 1HFY21 as per which the company posted a mere 6.79% YoY increase in net profits to Rs 26 billion (EPS: Rs 9.59/sh) as opposed to the profits of Rs 24.4 billion (EPS: 8.98/sh) reported in the corresponding period last year.
Hub Power Company Limited (HUBC) posted earnings of Rs. 16.88 billion (EPS: 12.60) for the half-year ended December 31, 2020, i.e. around 48% higher than the earnings recorded in same period of last year.
Indus Motor Company Limited (INDU), announced its financial results for 1HFY21 today, wherein the company reported more than twofold increase in net profits to Rs 4.8 billion from Rs 2.3 billion in the corresponding period last year.
Standard Chartered Bank earned profits of Rs. 13.13 billion (EPS: 3.39) during the year ended December 31, 2020, i.e. around 18% lower as compared to the earnings recorded in same period of last year.
General Tyre and Rubber Company (GTYR) posted net profits of Rs 405.9 million during 1HFY21, which is 13.8x higher than the profits of Rs 29.29 million earned in the corresponding period last year.
Nestle Pakistan Limited earned 21% higher profits in CY20 compared to CY19. The net profits of the company during the year recorded at Rs 8.9 billion as opposed to Rs 7.35 billion reported in 2019.
Nishat Chunian Power Limited (NCPL) witnessed a 32% YoY decline in net profits to Rs 1.42 billion during 1HFY21, compared to the profits of Rs 2 billion in the corresponding period last year.
Pioneer Cement Limited (PIOC) reported profits of Rs. 606.5 million (EPS: 2.67) for the half-year ended December 31, 2020, against losses of Rs. 111.6 million (LPS: 0.49) reported during the same period of last year.
Maple Leaf Cement Factory Limited earned profits of Rs. 1.62 billion (EPS: 1.48), as opposed to the losses of Rs. 1.76 billion (LPS: 2.42) recorded during the same period of last year.
United Bank Limited (UBL) unveiled its financial performance for the CY20, wherein the bank witnessed 9% YoY growth in consolidated profits to Rs 20.79 billion from Rs 19 billion earned in the previous year.
Oil and Gas Development Company Limited (OGDCL) reported 20.5% YoY decline in net profits to Rs 42.2 billion with Earnings per share (EPS) of Rs 9.82/sh during 1HFY21, against the profits of Rs 53 billion (EPS: Rs 12.35/sh) earned in the corresponding period last year.
Byco Petroleum earned net profits of Rs 621.95 million (EPS: Rs 0.12/sh) during 1HFY21, compared to the corresponding period last year when a company incurred a loss of Rs 22 million (LPS: 0.004/sh).
Habib Metropolitan Bank Limited (HMB) reported 77% YoY increase in CY20 profits to Rs 12.335 million against the profits of Rs 6.96 billion earned in CY19.
Hi-Tech Lubricants (HTL) disclosed its financial results today for the 1HFY21, wherein the company witnessed a turnaround in its bottom-line as it reported net profits of Rs 304.8 million compared to the loss of Rs 134.36 million in the same period last year.
Announcements
On the equity front, Pakistan State Oil Company Limited (PSO) signed a Long Term LNG Sales and Purchase Agreement (SPA) with Qatar Petroleum (QP), pursuant to Federal Cabinet’s approval of bilateral Government to Government Agreement (G to G) which shall augment cooperation in the Energy Sector between Pakistan and Qatar.
Azgard Nine Limited ceased to exercise control over the activities of Montebello S.R.L (MBL), previously a 100% owned subsidiary of the company, as a result of ongoing bankruptcy proceedings and management of the liquidation process of MBL by the Court appointed trustee.
The Board of Directors of Unity Foods Limited, in its meeting held on February 25, 2021, approved in-principle acquisition of 16,467,818 (31%) shares of Sunridge Food (Private) Limited at Rs. 28 per share.
The Board of Directors of Gul Ahmed Textile Mills Limited has authorized the company to re-formulate and propose the terms for a carve-out/hive-out of its local business segment (including retail business along with related assets) into a wholly owned subsidiary which was put on hold last year due to COVID Pandemic, along with a reorganization of other related assets by means of a merger / demerger and upon finalization of the same by the management, be presented to the BoD for their consideration.
The Economic Coordination Committee of the Cabinet removed the cap on the distribution of dividend by Mari Petroleum Company Limited (MPCL).
The SECP granted the extension of ninety days to make a Public Announcement of Offer (PAO) by AKD Securities, on the behalf of the acquirers, ARY Communications Limited and ARY Digital FZLLC, which now may be made till May 05, 2021.
The Board of Directors of Hascol Petroleum Limited, in their Extraordinary Meeting held on February 23, 2021, granted its approval to raise the authorized share capital of the company from Rs. 10 billion to Rs. 50 billion.
Netsol Technologies Limited issued a clarification to Pakistan Stock Exchange, wherein it has denied having any connection with a recent article containing price-sensitive information, written by an independent blogger that is being circulated on social media platforms.
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February 28, 2020 (MLN): The latest weekly roundup is here to update few financial and economic releases, providing a guide to monitor trends in the upcoming week.
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February 28, 2021 (MLN): The inflationary relief that has been seen for the past two months (Dec’20 and Jan’21) will no longer be sustained as the headline inflation for the month of February 2021, is likely to witness a sharp rebound after slipping to a two-year low of 5.65% on high-base effect and muted food inflation in Jan’21.
Going by the projections put forth by various brokerage houses, the inflation is expected to clock in at around 8.15%-9.1% with an average estimate of 8.48% YoY compared to 5.65%YoY in the last month and 12.40%YoY in February 2020. This would bring 8MFY21 average inflation to 8.23% as against 11.70% in the corresponding period last year.
On monthly basis, inflation is expected to escalate with an average estimate of 1.56% MoM compared to the decrease of 0.21% MoM in January 2021.
The expected resurgence in the cost of living is driven by an increase in electricity and food prices as indicated by the Sensitive Price Index (SPI) data so far. The food index which is expected to inflate by around 12.81% YoY during Feb’21, the major contributors to the upsurge in food inflation include; wheat flour (13.59% YoY), rice (7.71% YoY), meat (10.37% YoY), chicken (32.70% YoY), fresh milk (14.35% YoY), cooking oil (12.94% YoY), vegetable ghee (16.60% YoY), sugar (19.59% YoY) and condiments (47.21% YoY).
In addition to this, the recent revisions in electricity tariffs and fuel prices (+5.4%MoM) on account of the Oil bull cycle are also likely to pull up inflation for Feb’21. To note, the Government has notified an increase in base tariff of PKR1.95/unit across all consumer categories including life-line consumers and Dec’20 fuel price adjustment of PkR1.54/unit pushing up overall housing index by 4.44%MoM, a report by AKD Securities highlighted.
Besides these, cotton cloth, education, and footwear prices also increased significantly during the month leading to an increase in Non-Food Non-Energy (NFNE) inflation.
CPI Projections for February 2021 | YOY | MOM |
|---|---|---|
Spectrum | 8.20 | 1.33 |
Next Capital | 8.20 | 1.3 |
Pearl Securities | 8.40 | 1.5 |
Abbasi and Company Ltd | 8.80 | 1.90 |
Foundation Securities | 9.10 | 2.10 |
Ismail Iqbal Securities | 8.50 | 1.60 |
Aba Ali Habib Securities | 8.15 | 1.29 |
Darson Securities | 8.30 | 1.43 |
AKD Securities | 8.70 | - |
Range | 9.1 - 8.15 | 2.1 - 1.29 |
Mode | 8.20 | - |
Median | 8.40 | 1.47 |
Average | 8.48 | 1.56 |
Expected Average Inflation in 8MFY21 | 8.23% | |
INFLATION OUTLOOK:
With the end of the higher base effect in Mar'21, the headline inflation is expected to start peaking up, further increase in oil prices, upcoming Ramadan season and hovering food prices expected to take inflation towards the north.
Furthermore, in the medium run, IMF directives to increase tax revenues in FY22 to PkR5.9 trillion vs. revised PkR4.7 trillion for the current year should result in inflationary pressure jacking up. To this end, the Govt. is already considering withdrawing sales tax exemptions worth PKR 360 billion which would push up consumer end prices.
IMF and Pakistan authorities completed a staff-level agreement which is yet to be approved by the IMF Board. The resumption of the IMF program is clearly positive from the market’s perspective as it will keep the external account in a comfortable position despite potential pressure from the pickup in imports in line with economic activity and rising commodity prices, pushing SBP to maintain interest rates at the current level, AKD Securities cited.
Moreover, it will open ways to raise /rollover debt through Eurobond, Sukuk, and Panda Bonds and provide stability on the external as well as the fiscal front, another report by Pearl Securities said.
Next Capital sees inflationary pressures continuing and expects the readings to reach double-digit by the end of the current fiscal year, with higher energy and food prices where some ease is being witnessed in vegetable prices.
On the monetary policy side, Pearl Securities perceives no signs of early increase and decrease in policy rates. Similarly, AKD Securities expects SBP to keep interest rates on hold in at least the next two monetary policy meetings based on a stable external account outlook (USD 750 million-1bn Eurobond planned next month).
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| Weekly Performance | ||
|---|---|---|
| Feb 26, 2021 | Feb 19, 2021 | |
| PKR InterBank | 158.1007 | 159.1023 |
| KSE100 Index | 45,865.02 | 46,227.65 |
| Avg Daily Volume | 589,297,783 | 594,931,762 |
| Gold (Karachi) Rs/10 gm | 93,664 | 94,264 |
| KIBOR 6M | 7.65 | 7.57 |
| 10Y PIB | 10.20 | 10.20 |
| EUR | 1.207 | 1.2109 |
| GBP | 1.3922 | 1.4005 |
| CHF | 0.9081 | 0.8966 |
| JPY | 106.53 | 105.548 |
| GOLD | 1734.5 | 1783.32 |
| NY Light Crude | 61.5 | 59.24 |
| Open Market Rates | ||
| Feb 26, 2021 | Feb 19, 2021 | |
| USD | 158.50 | 159.60 |
| EUR | 191.58 | 193.64 |
| GBP | 220.95 | 223.82 |
| JPY | 1.4888 | 1.5152 |
| AED | 43.18 | 43.49 |
| SAR | 42.33 | 42.64 |
| SBP Data | ||
| T-Bill Auction Cutoff Yield | Feb 24, 2021 | Feb 10, 2021 |
| 3M | 7.2486 | 7.1799 |
| 6M | 7.5498 | 7.4900 |
| 12M | Bids Rejected | 7.7989 |
| PIB Auction Cutoff Yield | Feb 03, 2021 | Jan 06, 2021 |
| 3Y | 8.9934 | 8.4999 |
| 5Y | 9.5890 | 9.5298 |
| 10Y | 10.0500 | 9.9900 |
| 15Y | No Bids Received | Bids Rejected |
| 20Y | 10.5800 | 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 | ||
| Feb 19, 2021 | Feb 12, 2021 | |
| SBP FX Reserves * | 12,908.70 | 12,889.70 |
| Bank FX Reseves * | 7,132.90 | 7,168.90 |
| Total FX Reserves * | 20,041.60 | 20,058.60 |
| Feb 25, 2021 | Feb 18, 2021 | |
| SPI (Combined Group) ** | 147.09 | 143.63 |
| Change - WoW (pct) | 2.41 | 0.55 |
| Change - YOY (pct) | 13.89 | 9.92 |
| Monthly Indicators | ||
| January | December | |
| Consumer Price Index (Base 2015-16) | 140.56 | 140.86 |
| Change - MOM (pct) | -0.21 | -0.68 |
| Change - YOY (pct) | 5.66 | 7.98 |
| WholeSale Price Index (Base 2015-16) | 153.53 | 149.79 |
| Change - MOM (pct) | 2.50 | 0.34 |
| Change - YOY (pct) | 6.37 | 5.67 |
| Sensitive Price Indicator (Base 2015-16) | 140.08 | 140.68 |
| Change - MOM (pct) | -0.43 | -1.32 |
| Change - YOY (pct) | 6.44 | 7.92 |
| January | December | |
| Exports * | 2,132.00 | 2,366.00 |
| Imports * | 4,733.00 | 5,005.00 |
| Trade Balance * | -2,601.00 | -2,639.00 |
| January | December | |
| Home Remittances * | 2,273.57 | 2,436.98 |
| January | December | |
| Total Foreign Investment * | 240.55 | 202.39 |
| January | December | |
| Current Account Balance * | -229.00 | -652.00 |
| FY21 | 912.00 | 1,141.00 |
| FY20 | -2,544.00 | -2,032.00 |
| December | November | |
| Large Scale Manufacturing Index | 167.21 | 147.31 |
| Change - MOM (pct) | 13.51 | 1.34 |
| Change - YOY (pct) | 11.39 | 14.44 |
| Quarterly Indicators | ||
| Dec 31, 2020 | Sep 30, 2020 | |
| Pakistan's External Debt * | 115,755.84 | 113,798.10 |
| 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 - June) | 23,120.97 | 21,739.40 |
| Foreign Investment * (July - June) | 2,038.21 | -54.80 |
| Annual Inflation Rate % (July - June) | 10.74 | 6.80 |
| * Amount in USD Million | ||
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February 28, 2021: Kyrgyzstan has shown interest in getting access to Gwadar and Karachi ports by using the rail and road links being constructed under China-Pakistan Economic Corridor.
Talking to business community in Lahore, Kyrgyzstan's Ambassador to Pakistan Erik Beishembiev said his country wants to develop short transportation links through its territory between Central Asia, China and Pakistan.
The Ambassador said his country greatly values relations with Pakistan and wants to further diversify and strengthen bilateral relations.
He said direct flights between the two countries on regular basis would help improve trade and cooperation in tourism sector.
Radio Pakistan
