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Stock markets rally on economy recovery hopes

July 07, 2020: Stock markets rallied again Monday, with fresh signs of economic recovery resonating with investors more than a surge in coronavirus infections worldwide.

The easing of lockdowns is providing hope the global economy will bounce back quickly from an expected recession this year, with England's pubs reopening at the weekend and tourist attractions around Europe now either open or planning to.

Last week, better-than-forecast data on US job creation and factory activity provided a boost to confidence, as did hopes for a vaccine, which observers say is key to kick starting any recovery.

Data Monday showing the massive US services sector grew in June after the coronavirus pandemic caused its steepest-ever contraction in the prior month, supported the post-holiday rally on Wall Street.

That data along with the belief that US cities and states will not reimpose strict lockdown measures despite surging virus cases fueled a healthy day for stocks, with the broad S&P 500 finishing up 1.6 percent.

"The market is showing more resilience than I expected. I didn't think we'd be immune from these bad virus numbers," Karl Haeling of LBBW said.

Tech stocks were among the big winners, with the Nasdaq hitting its third straight record close and Amazon shares finishing above $3,000 for the first time.

Investors on both sides of the Atlantic also took a cue from equities in China, "with the world's second largest economy seeing a huge uptick" with its main stocks index closing with a gain of nearly six percent, noted Joshua Mahony, senior market analyst at IG trading group.

Traders have piled back into stocks in recent months -- with the help of vast government and central bank support -- and analysts have suggested the gains are also being helped by a fear of missing out on the rally.


PSX, MUFAP appreciates Capital Market reforms by government

July 06, 2020: Pakistan Stock Exchange (PSX), Mutual Funds Association of Pakistan (MUFAP), the Capital Market entities and participants on Monday appreciated the government and relevant institutions including the Ministry of Finance for carrying out long overdue Capital Market reforms.

Pakistan Stock Exchange (PSX), Mutual Funds Association of Pakistan (MUFAP) and the Capital Market entities hailed the Ministry of Finance, the Director General (Debt), DPCO, Finance Division, Government of Pakistan and Securities and Exchange Commission of Pakistan (SECP) for carrying out Capital Market reforms, said a press release issued here.

Managing Director (MD) Pakistan Stock Exchange, Farrukh H. Khan felicitating the government on this step, said, “We appreciate the Ministry of Finance, SECP and Debt Office for starting the reform of National Savings Scheme (NSS)”.

He further stated, “NSS is ultimately a scheme for the individual and vulnerable members of the society and it is best invested in by these citizens."

The reform process initiated would reduce the cost and managing the maturity of the debt with greater certainty, he said.

He added that this would also help to develop a proper yield curve and grow the capital markets in Pakistan, which was essential to improve the very low savings and investment rates in the country.

The MD said that PSX and MUFAP were greatly encouraged by the initiatives and reforms undertaken recently for Capital Market development.

“We believe that this demonstrates the commitment shown by the Government of Pakistan, Ministry of Finance and Securities and Exchange Commission and its Policy board towards development of Capital Markets” he said.

Chairperson, MUFAP, Ms. Maheen Rahman appreciating the initiatives taken by the government stated, “the recent changes in various regulatory requirements will greatly help the mutual fund industry gain a wider footprint across the country."

She said the mutual funds industry stood ready to grow, expand and dedicate collective efforts and resources towards the establishment of a wider presence of investment through mutual funds which would help contribute towards increasing the savings rate and expansion of capital markets in the country.

She said the recent initiatives and reforms include, but are not limited to, the discontinuation of institutional investment in National Savings Scheme in line with international best practices, regulatory amendments for launch of ETFs, revamping of the REIT Regulations.

And reduction in annual monitoring fees for mutual funds and pension funds, the removal of tax anomalies for the mutual funds industry, book building of the PHL Energy Sukuks through competitive book building at the PSX platform in line with international best practices and the expansion in allowable expenses on mutual funds.

The chairperson, MUFAP said these changes would go a long way towards development of vibrant capital markets and greater investor participation in the same.

It is hoped that in the same vein, the Government and Regulators, would accept the other proposals presented to streamline and reform the Capital Markets, including revamping the NBFC regulatory structure in line with international best practices, introducing regulatory framework and instruments for infrastructure funds, continuing reforms in the National Savings Schemes with respect to pricing which will help reduce the interest rate / pricing risk of the government, and better manage its debt maturity profile.


Govt borrowing jumps to Rs 2.23 trillion as of...

July 06, 2020 (MLN): 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.

According to the State Bank of Pakistan's weekly estimates in this regard, this year's overall net borrowing as of this week has increased by Rs.591.88 billion over the year as last year's net borrowing for the same period stood at Rs.1.64 trillion.

The government sector borrowings are divided into three broad categories based on the purpose of loan which are budgetary support, commodity operations and others.

Split three ways between these broad categories, the cumulative net borrowing for budgetary support was Rs.2.15 trillion, that for commodity operations stood at Rs.73.31 billion. whereas Rs.3.65 billion (net) were borrowed for other miscellaneous operations.

The two biggest source of financing for budgetary support are the State Bank of Pakistan and the Scheduled Banks. This fiscal year, the central bank has been retired a net sum of Rs.7.67 billion by the government, out of which the Federal Government borrowed Rs.257.3 billion whereas, the Provincial Government retired Rs.237.79 billion, AJK Government retired Rs.17.87 billion, and the GB Government retired Rs.9.3 billion.

On the other hand, the Scheduled Banks have lent out a net total of Rs.2.16 trillion out of which the Federal Government borrowed Rs.2.21 trillion while the Provincial Government retired Rs.49.74 billion.

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Private sector borrows another net sum of Rs 28.3...

July 06, 2020 (MLN): 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 weekly data released by the State Bank of Pakistan, the sector's borrowing has dropped by Rs.706.58 billion over the year since the borrowing as of corresponding period of last year was recorded at Rs.1012.88 billion.

The non government sector is divided into three broad categories namely, the Private Sector, the Public Sector Enterprises and NBFI. Commercial banks are the main source of financing for the private sector, incuding conventional banks, islamic banks and islamic branches of conventional banks.

This fiscal year, the private sector borrowed a net sum of Rs.186.4 billion, whereas the PSE's have borrowed Rs.117.46 billion and NBFI has borrowed Rs.2.45 billion.

As we disintegrate the inflows and outflows within the private sector, we see that Conventional Banks lent a cumulative sum of Rs.23.7 billion, Islamic Banks lent Rs.29.79 billion and lastly the Islamic branches of Conventional Banks lent Rs.132.91 billion.


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Domestic cement consumption declines almost one percent in 2019-2020,...

July 6, 2020: 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.

According to the data released by the All Pakistan Cement Manufacturers Association (APCMA), the domestic cement uptake increased by a massive 19.63 percent to 3.835 million tons in June 2020 from 3.206 million tons in June 2019. Moreover, exports also increased by 123.89 percent from 0.351 million tons in June 2019 to 0.787 million tons in June 2020.

The domestic cement consumption in the North was 3.384 million tons in June 2020 against 2.750 million tons in June 2019, however, exports from North declined to 46,025 tons this June compared with 0.145 million tons last June. The scenario was opposite in the South where domestic consumption declined to 0.451 million tons from 0.455 million tons in June 2019, but exports increased from 0.206 million tons in June 2019 to 0.742 million tons in June 2020.

Overall the cement consumption during July-Jun 2019-20 inched up by 1.98 percent to 47.81 million tons solely on the strength of higher export growth of 19.8 percent that crossed 7 million tons mark after a long time.  The domestic consumption however contracted by almost one percent, the first such decline in the last six years.

The performance of cement units in different zones depicted the strength of the south zone in exports and the north zone in local consumption. In fiscal 2019-20 the mills in North Zone despatched 34.327 million of cement to the local market that grew by 6.07 percent over the consumption in the previous fiscal. However, it lost 22 percent of the export market by exporting only 1.97 million tons of cement. The region lost the Indian market due to the protective policies of the Indian government and the Afghan market due to a decline in construction activities in the landlocked country.

In the South Zone, the mills were badly hit by low consumption in the region as their dispatches declined by 29.37 percent to only 5.637 million tons. However, its exports registered a healthy increase of 46.47 percent as it exported 5.877 million tons of cement in 2019-20. In fact, the cement exports were higher than the local consumption perhaps for the first time in history.

“The higher uptake in June has provided a hope that the new fiscal year would be better as a result of the incentives provided to the construction sector,” said a spokesman of APCMA. He appreciated the reduction in excise duty on cement but has asked for a complete withdrawal of excise on the commodity as excise is a punitive duty imposed to curb the use of harmful items. Cement, he reminded, is the backbone of the construction industry that this government wants to promote.

Press Release


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