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Weekly Market Roundup

May 31, 2020 (MLN): The KSE-100 index gained merely 94 points in the last two days of the departed week and closed 33,931-mark i.e. nearly 0.28% percent higher than the closing of the previous week.

The two-day trading week saw no substantial activity from the investors’ side due to lack of triggers and market drivers. While there was some excitement in the air on account of the upcoming budget, the expectations of which most pertain to the upliftment of the economy. However, there was no major news regarding the budget either, which kept the sentiments of the investors at bay.

The benchmark index was mainly led down by the performance of sectors such as Commercial Banks, Fertilizer, Food & Personal Care, Chemical, and Tobacco, as they looted the index by 43, 41, 29, 17 and 13 points, respectively.

Technology & Communication, and Pharmaceutical Sector emerged as the best performing sectors during the week, as both of them contributed about 47 points each to the benchmark index, followed by sectors such as Cement, Power Generations and Textile, which combinedly contributed 85 points to the index.

Company-wise, the scrips of TRG, OGDC, LUCK, SEARL and SYS were the most desirable ones as they contributed 29, 24, 22, 20 and 17 points, respectively. On the other hand, the shares of ENGRO, UBL, NESTLE, MCB and EFERT were the unwanted ones, as they took away 50, 32, 26, 22, and 20 points, respectively.

Figures released by NCCPL showed that foreign investors dumped USD 2.4 million worth of stocks during the week with foreign corporates doing the bulk of the selling.

On the local front, Individual Investors picked up USD 3.9 million worth of stocks, whereas the Mutual Funds sold approximately USD 2.2 million worth of stocks over the week.

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Weekly Economic Roundup

May 31, 2020 (MLN): The latest wrap of financial and economic data releases over the course of the week is here to provide you insights on what is coming up.  

  • The Weekly Sensitive Price Indicator (SPI) for the Combined Group increased by 0.13% during the week ended May 28, 2020 while the SPI increased by 9.63% compared to the corresponding period from last year.

  • Pakistan's Forex Reserves decreased by USD 20.40 Million or 0.11% and the total liquid foreign reserves held by the country stood at USD 18,597.90 Million on May 21, 2020.

  • Petroleum, Agriculture Products & Chemicals, Machinery, and Food are the commodities that Pakistan imported heavily during Jul-Apr FY20 as they accounted for 23%, 16%, 14%, and 11% of the total import respectively.

  • Just like the previous month, Pakistan’s export performance remained miserable in the month of April 2020, as the exports of major commodities continued to fall in the aftermath of the Covid-19 outbreak. Cumulatively, during Jul-April FY20, the overall exports declined by 2% YoY to $19.65 billion as compared to $20.135 billion recorded during Jul-April FY19.

  • Total exports of Pakistani goods as per Balance of Payment (BoP) fell by 23.5% MoM and 33.2% YoY to $1.39 billion in April’20, showing the international trade disruptions due to the ongoing pandemic.

  • The Economic Coordination Committee (ECC) of the cabinet Saturday approved the criteria for disbursement of Rs.200 billion in the power sector received through Islamic Sukuk.

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Weekly News Roundup

May 31, 2020 (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.

On Friday, the Pakistan Water and Power Development Authority (WAPDA) awarded the consultancy contract worth Rs. 156.226 million to a joint venture headed by NESPAK for a feasibility study, detailed engineering design, preparation of tender documents, and PC-I of Murunj Dam Project.

Meanwhile, SEARL company informed that it has been entered into an exclusive licensing & marketing agreement with Beximco Pharmaceuticals for Remdesivir.

Moreover, the Oil and Gas Regulatory Authority (OGRA) asked Oil Marketing Companies (OMCs) to furnish a three-month data regarding depot-wise sales and stocks of petrol and high speed diesel by June 1.

On Thursday, Advisor to Prime Minister on Commerce Razak Dawood said that Pakistani exporters have obtained large orders of face masks from United States, Canada and Europe. In his tweets, he described it a major breakthrough and congratulated the exporters for the achievement. 

Furthermore, President, Islamabad Chamber of Commerce and Industry (ICCI) Muhammad Ahmed Waheed on Thursday urged the government to cut high taxes on rental income to 10 percent in the forthcoming budget that would facilitate the growth of business activities and improve tax revenue of the government as well.

The same day, a delegation of Nishat Group called on Adviser to the Prime Minister on Finance and Revenue Dr Abdul Hafeez Shaikh to apprise him of the damage done by COVID-19 related economic downturn to large-scale manufacturers.

Besides, International Monetary Fund (IMF) resumed discussions with Pakistan to complete the second review for extended fund facility program, which was deferred last month due to outbreak of the pandemic.

On the downside, Fitch Ratings made further cuts to world GDP forecasts in its latest Global Economic Outlook (GEO), but the slump in global economic activity is close to reaching its trough.

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Govt focusing on attracting FDI, transfer of technology in...

May 31, 2020: The Advisor to Prime Minister on Commerce and Investment, Abdul Razak Dawood has said the government was prioritizing development of Special Economic Zones (SEZs) for attracting Foreign Direct Investment (FDI) and transfer of technology into the country.

“The SEZs are primarily focused on industrialization that result in export promotion, import substitution, transfer of technologies and employment generation, which are the primary targets of our government as well,” Abdul Razak Dawood told APP here.

The advisor said the establishment of SEZs was critical to resolving Balance of Payment Issues as ”we tend to give priority to enterprises which are involved in export generation or import substitution” he said.

Talking about the criteria, the advisor said that only those economic zones are given status of SEZ which are successful in export generation and import substitution while at zone enterprise level, the admission into an SEZ is based on the economic viability of the business proposal.

Razak Dawood said this economic viability was gauged through the expected employment generation, domestic raw material consumption, imported raw material, and local and imported machinery at the time of consideration of the zone entry application.

He said as more and more zone enterprises are coming into production the monitoring of these commitments has become indispensable, informing that instead of leaving it up to the developers or SEZs for that matter, the SEZ Secretariat at BOI was working to not only consolidate the data for gauging the actual benefits at zone enterprise level.

He added that the BOI was also working towards amendments in the SEZ Act 2012 to streamlines these objectives and provide a conducive environment for the enterprises to meet these objectives.

Replying to question on changes expected in SEZ Act and rules, he said the SEZ Act in its current form could not effectively contribute towards industrialization of Pakistan in its true spirit due to some inherent shortcomings, like slow pace of development and lack of utilities in the SEZs, complicated approval process, cumbersome procedures for availing the incentives, lack of clear policy objectives, absence of one window operations and others.

The advisor said the proposed amendments aim to cater for the government’s vision to promote the entire Service Sector such as knowledgeand Information Technology (IT) SEZs, tourism ,:including faith, health, cultural, and geographic etc, through Integrated Tourism Zones.

He further said that considering that regulatory and bureaucratic hurdles pose the biggest challenge to Industrialization, One Stop Services Act is proposed to be promulgated to ensure the requisite Ease of Doing Business and to provide quality services to the investors with legal backing.

Razak Dawood said that with digital world becoming a reality, the SEZs are to be transformed to meet the challenge and create space for IT SEZs.

For this to materialize, the proposed amendments also include a special provision for IT SEZs that relaxes the minimum land requirement of 50 acres,he added.

He informed that an incentives package to attract meaningful export led, import substituting and labour intensive industrialization through local and foreign investors including the expected Chinese relocation of industries in the SEZs has been prepared by our team at Board of Investment, which has been submitted for the approval of the Economic Coordination Committee (ECClesiastic) of the Cabinet.

He said this package not only includes extension of the already provided incentives but also some additional benefits for the developers and zone enterprises subject to the approval of the ECC.

While replying to a question on the role of SEZs in industrial development under China Pakistan Economic Corridor(CPEC ), he said that CPEC , SEZs can be a true catalyst to industrialization in Pakistan.

The advisor said that due to various shifts in global economy and the changes in international relations, many manufacturing businesses are relocating from China to other destinations.

An Industrial Development Cooperation Project (CPEC-ICDP) project is already working at full pace at the Board of Investment (BOI) with a mandate to fast track industrial cooperation between China and Pakistan, he said.

He informed that China is developing first state of the art CPEC-SEZ (Rashakai Special Economic Zone) in Nowshehra, KPK and more international developers are being solicited through international bidding to develop SEZs in Pakistan.

He said Chinese companies (State Owned as well as Private) are showing keen interest to develop SEZs in Pakistan and hope that having Chinese units in CPEC, SEZs, Pakistan will become part of Global Value Chains (GVCs).

Exports, import substitution, transfer of technologies, and employment generation are the expected outcomes from CPEC-SEZs,he said.

While in his message for foreign investors to lure investment in SEZs, he said Pakistan offers liberal investment regime to local as well as foreign investors.

He said thar Investment Laws, Investment Policy, along with the SEZ Act, regulate foreign investments in Pakistan. Important considerations regarding Pakistan’s

Investment Regime for the foreign investors are and emphasised to equal treatment for local and foreign Investors.

Razak Dawood said said that all Sectors are Open for Investment , except arms, explosives, radioactive substances, securities, mint/currency and consumable alcohol).

He further Up to 100% Foreign Ownership allowed and no minimum investment is required or restrictions on currency convertibility and repatriation of profits and capital.

The government offered the Investment Protection through laws of the Parliament on Online Visa Facility, International Arbitration is allowed and full ownership and lease of land is allowed, he said.

The advisor said that in Ease of Doing Business, Pakistan has improved from 136 to 108 number of EoDB rank which shows government’s commitment to improving business environment.

 

APP

Key Pakistan Market Stats and Economic Indicators

Market Data and Economic Indicators

Weekly Performance
 May 29, 2020May 22, 2020
PKR InterBank163.1022160.9217
KSE100 Index33,931.2333,836.61
Avg Daily Volume213,880,658205,507,325
Gold (Karachi) Rs/10 gm82,13381,447
KIBOR 6M7.887.89
10Y PIB8.518.29
EUR1.11011.0896
GBP1.23431.2165
CHF0.96160.9709
JPY107.76107.591
GOLD1727.811734.02
NY Light Crude35.3333.56
Open Market Rates
 May 29, 2020May 22, 2020
USD163.00161.50
EUR181.22176.11
GBP201.51196.67
JPY1.51351.5020
AED44.4144.00
SAR43.4843.05
SBP Data
T-Bill Auction Cutoff YieldMay 20, 2020May 06, 2020
3M8.14968.3879
6M7.80507.9997
12M7.74997.7500
PIB Auction Cutoff YieldMay 28, 2020Apr 15, 2020
3Y7.64008.5600
5Y8.05008.8300
10Y8.69009.0000
20YBids Rejected10.7000
Interest Rate CorridorMay 18, 2020Apr 17, 2020
SBP Policy Rate8.009.00
SBP Reverse Repo Rate9.0010.00
SBP Repo Rate7.008.00
Weekly Indicators
 May 21, 2020May 15, 2020
SBP FX Reserves *12,073.9012,129.30
Bank FX Reseves *6,524.006,489.00
Total FX Reserves *18,597.9018,618.30
 May 28, 2020May 21, 2020
SPI (Combined Group) **128.32128.15
Change - WoW (pct)0.130.66
Change - YOY (pct)9.639.65
Monthly Indicators
 AprilMarch
Consumer Price Index (Base 2015-16)130.59131.69
Change - MOM (pct)-0.840.04
Change - YOY (pct)8.5310.24
WholeSale Price Index (Base 2015-16)138.23141.92
Change - MOM (pct)-2.60-0.88
Change - YOY (pct)5.059.19
Sensitive Price Indicator (Base 2015-16)125.63128.98
Change - MOM (pct)-2.60-1.13
Change - YOY (pct)8.5112.18
 AprilMarch
Exports *957.001,814.00
Imports *3,088.003,316.00
Trade Balance *-2,131.00-1,502.00
 AprilMarch
Home Remittances *1,790.031,894.38
 AprilMarch
Total Foreign Investment *-511.54-1,628.62
Quarterly Indicators
 Mar 31, 2020Dec 31, 2019
Pakistan's External Debt *109,948.92110,719.33
Annual Indicators
 FY20FY19
GDP Growth Rate-0.381.91
Agriculture2.670.58
Manufacturing-0.275.43
Commodity Sector-0.05-0.90
Services Sector-0.593.75
Trade Balance * (July - April)-19,497.00-26,233.00
Worker Remittances * (July - April)18,781.6217,801.01
Foreign Investment * (July - April)1,864.14-402.74
Annual Inflation Rate % (July - April)11.246.52
* Amount in USD Million

 

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