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February 16, 2020 (MLN): The attractive returns offered by government-backed securities has enticed foreign investors to invest more as the total inflows in government short-term Securities (T-bills) has exceeded USD 3.134 billion (net) since the beginning of the current fiscal year till February 13, 2020.

This translates into Rs.483.223 Billion which is 8.30 percent of the total outstanding MTB’s in the market, according to data compiled by Mettis Global. The total Outstanding MTB (market treasury bills) amount is around 5.807 trillion

Furthermore, the inflows of USD3.134 billion is accounted for 25.21 percent of SBP’s FX Reserves.

The data on daily SCRA position issued by SBP suggests that these inflows was almost exclusively from two countries United Kingdom (UK) and United States (USA) as inflows of $2.2 billion in T-bills came from UK and $871.9 million from the USA.

While the cumulative amount from UAE amounted to $106.5 million.

 In the first 13 days of February, the T-bills attracted $370.7 million, in which $219.6 million came from UK and $99 million from UAE.

In a single day session on February 13, 2020, Pakistan witnessed net inflows of USD 215.4 million in T-bills.

meanwhile, Foreign Investments in Pakistan’s Equities have seen a net inflow of $12 million so far this month. Cumulatively, foreign outflows of $20.45 million have been recorded in domestic equities so far from July 2019.

Similarly, inflows in PIBs from July 1, 2019 to February 13, 2020 amounted to $35.8 million (net).

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February 16, 2020 (MLN): The trading activity on the floor remained flat during the week as the KSE-100 index closed at 40,243 level, i.e. up by 0.25% WoW in comparison to the previous closing of 40,143 points.

According to a research report by JS Global, the 2^nd review by IMF remained the focal news this week. As per news flows, mini-budget might not materialize now. On the other side, the IMF seemed to be in an unrelenting mood due to the tax revenue collection target.

Towards the latter part of the week, news about FATF started to surface, with Pakistan taking some steps to improve its chances of being included in the grey list.

During the week, Commercial banks made the highest contribution to the benchmark index with a gain of 121 points, followed by Cement and Power Generation as they contributed 64 points and 55 points respectively while sectors such as Food & Personal Care Products, Inv.Banks/Inv.Cos/Securities Cos, Oil & Gas Marketing Companies pulled the index down by a total of 110 points.

Company-wise, HBL (+91), HUBC (+83), LUCK(+45), MCB (+38) and PAKT (+26) captured the highest gains, whereas NESTLE (-52), DAWH (-29), FABL (-25), COLG (-22) and KAPCO (-18) emerged as the losers during the week.

Likewise, the All-Share Market Index declined by $1.49 million during the week, before settling at $49.06 billion.

Foreign investors were the net sellers during the week, with the total sale of securities being recorded at $11.15 million. Amongst these, Foreign Corporates emerged as the largest group of sellers as they sold securities worth $10.97 million.

On the contrary, local investors were the net buyers, with Insurance Companies that appeared as the largest buyers as they purchased securities worth $8.81 million, followed by other organizations that purchased securities amounting to $5.58 million.

Forex Roundup:

PKR appreciated the 7^th successive week against the dollar, gaining 23 paisa which is the largest increase since the week ending Oct 11, 2019 concluded the week at 154.17 per USD.

PKR continued to appreciate against the Dollar on the back of higher inflows and higher demand of Rupee than its supply as per traders.

While Pak Rupee’s Real Effective Exchange Rate Index for the month of December decreased by 0.15 percent it has increased by 5.13 percent in FY20. However, the SBP has clarified “Appreciation (depreciation) of REER is confused with the concept of currency overvaluation (undervaluation) while these are two separate concepts and not necessarily interpreted in the same direction.”

On a monthly basis, PKR has appreciated against the dollar throughout FY20.

PKR’s Monthly Performance against the Dollar

* Current Date Feb 14, 2020

Fixed Income:

The inverted yield curve flattened slightly for the short-term instruments as the 3- and 6-month yields decreased by 13 and 5 basis points while those for 12 months increased by 17 basis points during the week.

Cut off Yield for the 12-month MTB in the auction conducted on Feb 12, 2020 went up by 39 basis points while the 3 and 6-month cut-offs were relatively unchanged.

Further, Secondary market yields for 12-month T-bills have overtaken 3 month yields for the first time since October 2019.

Regarding PIBs, no noticeable changes in the yields were observed.

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Feb 16, 2020: The Sui Southern Gas Company (SSGC) has started connecting newly developed fields with its production gathering system to bridge the increasing demand and

supply gap of the commodity.

“During this winter, the company faced shortfall of around 80-85 MMCFD gas, which was approximately 40-45 MMCFD during the last winter,” according to an official document available with APP.

To meet the increased demand, the company has recently laid 48-kilometer pipeline of 12-inch diameter and started injected around 15 Million Cubic Feet per Day (MMCFD) gas in the system from the Rehman Gas Field, while 20 MMCFD more would be added from the same field after completion of some formalities.

Similarly, the SSGC laid 28-kilomter pipelines of 8-inch diameter to connect two matured wells, Ayesha and Amina, of the Badin IV South Field with the system from where around 23 MMCFD additional gas would be injected as the pipelines testing was in the progress.

Earlier, a senior official told APP that the Petroleum Division would continue to work in national interest and was cognizant of its responsibilities to ensure uninterrupted supply in the country.

The official said it was on record that most of the discoveries made during last 10 years in Sindh and Balochistan had been allocated to Sui Southern Gas Company.

“There is a nominal difference between the gas being produced and consumed in Sindh. There is a little volume that is going out from the province.”

He said around 2,200 million cubic feet gas per day (MMCFD) was being produced from Sindh, out of which currently12,24 MMCFD was being given through SSGC system, while estimated 750-800 MMCFD gas directly went to three power plants and fertilizers units in Sindh directly.

Replying a query, he said the government had supplied overall 50 percent additional gas to the country’s domestic sector year on year basis, while 12 percent additional gas in the overall sector.

He said Liquefied Natural Gas terminals were operating with their full capacity to ensure better supply of the commodity in the cold weather, adding the government was ensuring supply of gas to domestic consumers on priority.

APP

February 16, 2020 (MLN): The departed week witnessed several important developments on regional and international front that would serve as a gateway for Pakistan to economic development.

Among various developments, the most important one was the statement issued by IMF mission Chief Ernesto Ramirez Rigo at the conclusion of the visit that Pakistan has been made considerable  progress in the last few months and all end-December performance criteria were met, and structural benchmarks have been completed.

Another major development was the assurance by Turkish President Tayyip Erdogan on Friday he would help Pakistan stay off a terrorism financing blacklist at a meeting of a global finance watchdog, a move he suggested would counter “political pressure” from Islamabad’s critics.

Meanwhile, Spokesperson of Power Division while commenting on the current status of Power Sector Circular debt said the addition to circular debt is expected to be reduced to Rs. 130billion in 2019-2020 compared to the target of 130bn in the Circular Debt capping plan.

Furthermore, to provide much needed liquidity to power sector, the govt of Pakistan will issue the second Energy Sukuk worth Rs 200 billion through the consortium of Islamic Banks, aiming at easing off the burden of longstanding circular debt issue faced by Pakistan’s economy.

Besides, Employees' Old-Age Benefits Institution (EOBI) to pay increased pension following the approval of the Board of Trustees and Federal Cabinet, the raise would be Rs 2000 per month.

On the upside, Asian Infrastructure Investment Bank (AIIB) expressed interest in financing to development projects of National Transmission and Dispatch Company Limited (NTDC) in line with the government priorities.

On Thursday, Morgan Stanley Capital International (MSCI)  announced the results of the February 2020 Quarterly Index Review of the MSCI Equity Indexes as per which there were no changes in the MSCI Pakistan Index under MSCI global standard indexes and MSCI Global Small Cap Index

On Wednesday, talks between the IMF and the government concluded with the understanding that there will be no mini budget and no new taxes before June. However, the tax collection target for FY20 has not be revised down and the government has agreed to make all out efforts to achieve the target with the focus on non-tax revenue which will require the government to speed up the privatization process and raise Rs. 400 billion from it.

The same day , Federal Cabinet  gave approval to a subsidy of two billion rupees per month for a period of five months to Utility Stores Corporation for provision of edible items of daily use to the people at affordable rates.

On Tuesday, Adviser to the Prime Minister on Finance and Revenue, Dr Abdul Hafeez Shaikh has assured the American Business Council full support of the government for their business endeavors and said the government would continue to interact with the business community and investors to further streamline the business and investment regime in the country.

Additionally, the government chalked out a comprehensive plan to boost flow of foreign remittance in the country by incentivizing the Pakistani expatriates, using legal channels to send money to their homes.

Also, Pakistan and France signed a grant financing agreement of zero point five million Euros to finance technical assistance for capacity building of the Private Power and Infrastructure Board, the project of Ministry of Energy.

With regards to privatization of power plant, the delegation from Mitsui & Co. and a delegation from Thailand Investment Company, Global Power Synergy Public Company Limited (GPSC), on Monday, were briefed about the power plants and their existing and future status and current efficiency level as well.

Lastly, a report by Bloomberg revealed that the government is planning to raise Rs 200 billion through the selling of Sukuk to ease off the burden of the power sector’s astounding circular debt.

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February 16, 2020 (MLN): The latest weekly roundup is here to update the financial and economic data releases as they provide a guide to keeping an eye on trends in the upcoming week.

• Foreign investors continued to be net buyers during the week ended on February 07, 2020, as the total purchase of securities outweighed total sales by nearly Rs. 22.024 billion.

• The overall output of LSMI decreased by 3.35% for July-December, 2019-20, as compared to July-December, 2018-19.

• The Weekly Sensitive Price Indicator (SPI) for the Combined Group decreased by 0.38% during the week ended Feb 13, 2020, while the SPI increased by 16.38% compared to the corresponding period from last year.

• Pakistan has posted a 6-month budget deficit of 2.3 percent of GDP, according to the data compiled by Finance Ministry.

• Pakistan's Forex Reserves increased by USD 90.90 Million or 0.49% and the total liquid foreign reserves held by the country stood at USD 18,735.40 Million on Feb 07, 2020.

• The non-government sector has borrowed another net sum of Rs.32.76 billion during the week ended January 31, 2020, which brings the cumulative net borrowing for ongoing fiscal year FY2020 to Rs.173.71 billion. The net borrowing as of prior week was recorded at Rs.140.95 billion.

• The government of Pakistan has accumulated Rs.64.9 billion during the week ended January 31, 2020, which brings its total net retirement for ongoing fiscal year FY2020 to Rs.30.11 billion. As of prior week, the government had retired a net sum of Rs.95.01 billion.

• Overseas Pakistanis remitted USD 1.91 billion in the month of January 2020 compared to USD 2.1 billion in December 2019 showing a decrease of USD 189.91 million over the previous month.

• Foreign Currency Deposits during the month of January 2020 stood at $7.6 billion, increased marginally as compared to deposits recorded in January 2019.

• Pak Rupee's Real Effective Exchange Rate Index (REER) decreased by 0.15 percent in December 2019 to a provisional value of 95.65 from the revised value of 95.79 in November 2019.

• Federal Cabinet has given approval to a subsidy of two billion rupees per month for a period of five months to Utility Stores Corporation for the provision of edible items of daily use to the people at affordable rates.

• Pakistan and France have signed a grant financing agreement of zero point five million Euros to finance technical assistance for capacity building of the Private Power and Infrastructure Board, the project of Ministry of Energy.

• The Federal government has so far authorized the release of Rs 429.17 billion for various ongoing and new social sector uplift projects under its Public Sector Development Programme (PSDP) 2019-20, as against the total allocation of Rs 701 billion.

• The total money supply circulating within the economy during the month of December 2019 stood at around Rs. 22.41 trillion, as per the provisional accounts on Monetary Aggregates maintained by the State Bank of Pakistan.

• The Oil and Gas Regulatory Authority (OGRA) on Monday notified revised prices of Regasified Liquefied Natural Gas (RLNG) for the SSGC and SNGPL for the current month. According to a notification, there is a $ 0.73 per MMBtu (Million British Thermal Unit) increase in the sale price of imported RLNG on the system of Sui Southern Gas Pipelines Company (SSGC) for the month of February as compared to January.

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