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Weekly Market Roundup

January 24, 2021 (MLN): The KSE-100 index lost 62.96 points during the departed week and closed 45,868-mark i.e. nearly 0.14% percent lower than the closing of the previous week.

According to AKD Securities, lackluster news on macro levels led to profit taking during the outgoing week, offsetting the result season driven exuberance. Major news included hike in Discos’ unified base tariff by Rs. 1.95/KWh vs. proposal of PkR3.34/KWh; Rs200 billion impact calculated, indicating towards inflationary uptrend in upcoming months.

The decision to disconnect gas supply to captive power plants from Feb 01st and Mar 01st for industries and export oriented industries, respectively encouraging industries to shift towards grid electricity also had an impact on benchmark index’s performance.

Moreover, SBP kept policy rate unchanged at 7%, wherein MPC said the monetary policy settings shall remain unchanged in the near term as economy heads towards recovery phase, the report added.

The benchmark index was led down by the performance of Oil and Gas Exploration Companies, which snatched around 143 points to it. This was followed by Fertilizer, Oil and Gas Marketing, and Automobile Assembler which took away 44, 33, and 25 points, respectively.

Company-wise, the scrips of PPL, OGDC, POL, ENGRO and MCB closed the week in the red zone, as they lost 65, 59, 59, 31, and 22 points, respectively.

Meanwhile, the KSE All Share Market Cap decreased by $87.70 million or 0.17% over the week, being recorded at $51.72 billion as compared to a Market Cap of $50.81 billion recorded last week.

Figures released by NCCPL showed that foreign investors purchased USD 5.5 million worth of stocks during the week with Overseas Pakistanis doing the bulk of the purchasing @ USD 6.99 million. On the local front, Individual Investors bought USD 15.47 million worth of stocks. Excessive selling was witnessed locally as well as Mutual Funds sold stocks worth USD 19.89 million.

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Weekly News Roundup

January 24, 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:

The Monetary Policy Committee (MPC) of the State Bank of Pakistan (SBP), in its meeting held on Friday, in Karachi, decided to maintain the Policy Rate at 7 percent.

The same day, a meeting of the Cabinet Committee on Energy (CCOE) was held under the Chairmanship of Federal Minister Asad Umar, wherein the committee approved a proposal for discontinuation of natural gas supply for power generation.

Meanwhile, the Executive Committee of the National Economic Council (ECNEC) approved the largest health care project ever done by the federal government worth Rs. 70 billion.

Minister for Science Technology Fawad Chaudhry on Friday hoped that the government will soon finalize the mechanism for the successful implementation of 'EV Policy for 4-Wheelers' in the country to boost the economy, reduce pollution levels and generate employment in the transport sector.

On the vaccine front, Pakistan's Foreign Minister Shah Mehmood Qureshi said on Thursday that China has agreed to provide half a million doses of the Chinese Sinopharm COVID-19 free of cost to Pakistan by January 31.

On Thursday, the government increased the electricity tariff by 1.95 rupees per unit against the proposed raise of 2.18 rupees per unit, due to the burden that capacity charges will reach 1,455 billion rupees by the end of 2023, Minister for Power Division Omar Ayub announced on Thursday.

Furthermore, Federal Minister for Privatization Mohammed Mian Soomro chaired the Privatization Commission (PC) Board meeting on Thursday, in Islamabad, wherein the board approved committees for pre-qualification of potential bidders for HBFCL, JCC, and FWB.

Besides, the government on Thursday issued revised profit rates for National Saving Schemes certificates, which will be put into effect from January 21, 2020.

On Wednesday, Adviser to Prime Minister for Commerce and Investment, Abdul Razak Dawood informed that the Temporary Economic Refinance Facility (TERF) providing long-term concessionary refinance at 5% for manufacturers and exporters has shown excellent results.

In addition, he also informed that Government approved Rs. 213 million for Duty Drawback of Local Taxes and Levies (DLTL) payments of the non-textile sector.

Moreover, in a bid to attract investments in Panda Bonds, the Federal Government exempted the payment of principal and profits on such bonds from all kinds of tax.

On the upside, in a major achievement towards ensuring ease of doing business, Pakistan improved 31 positions, from 142nd to 111th, on the rank of Trading Across Border Index.


On the equity front, Sazgar Engineering Works Limited submitted a progress report in respect of utilization of proceeds of Right Issue of Rs. 710 million for the setting up of the company’s four-wheeler project, up to December 31, 2020.

Shell Pakistan Limited, in response to an inquiry letter sent by PSX, clarified that the MoU signed with K-Electric to explore the possibility of electric charging stations, initially at three locations in Karachi, is only preliminary and nothing concrete has been finalized as of the date hereof.

K-Electric Limited (KEL), welcomed the landmark decision by the Sindh High Court, under which all petitions challenging the privatization of the company have been dismissed in favor of KE, its shareholders, and the Privatization Commission (GOP), as announced in the open court on Thursday.

Furthermore, the Pakistan Stock Exchange, on Wednesday and Thursday, issued a series of notifications to various companies inquiring about the unusual changes in the price and volume of their shares.

Besides, Hi-Tech Lubricants Ltd. (HTL) and Hyundai Nishat Motor (Pvt.) Ltd. (HNMPL) through its After-Sales Department entered into an agreement on January 18, 2021, for the Sale, Supply & Branding of ZIC Brand Lubricants to all the Authorized / Designated Dealers of HNMPL.

Also, the Board of Directors of Cherat Cement Company Limited, in its meeting held on January 18, 2021, decided to undertake BMR for Cement Line 1 and install the main Crusher.

In addition, Samin Textiles Limited received a notice of Public announcement of intention from potential Acquirer i.e. Mr. Haroon Ahmad Khan to acquire more than 30% shares of the company, together with Management control.

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Weekly Economic Roundup

January 24, 2021 (MLN): The weekly economic roundup summarizes the country's key economic and financial data for the week from various sectors to keep an eye on next week's trends. 

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Key Pakistan Market Stats and Economic Indicators

Market Data and Economic Indicators

Weekly Performance
 Jan 22, 2021Jan 15, 2021
PKR InterBank160.7495160.3320
KSE100 Index45,868.0445,931.00
Avg Daily Volume509,763,908682,133,634
Gold (Karachi) Rs/10 gm96,70896,794
KIBOR 6M7.357.36
10Y PIB10.1110.20
NY Light Crude52.2752.36
Open Market Rates
 Jan 22, 2021Jan 15, 2021
SBP Data
T-Bill Auction Cutoff YieldJan 13, 2021Dec 30, 2020
12MBids Rejected7.2900
PIB Auction Cutoff YieldJan 06, 2021Dec 09, 2020
5Y9.5298Bids Rejected
10Y9.9900Bids Rejected
15YBids Rejected10.0000
20YBids Rejected10.5800
Interest Rate CorridorJun 26, 2020May 18, 2020
SBP Policy Rate7.008.00
SBP Reverse Repo Rate8.009.00
SBP Repo Rate6.007.00
Weekly Indicators
 Jan 15, 2021Jan 08, 2021
SBP FX Reserves *13,013.8013,400.00
Bank FX Reseves *7,106.507,119.00
Total FX Reserves *20,120.3020,519.00
 Jan 21, 2021Jan 14, 2021
SPI (Combined Group) **140.15139.70
Change - WoW (pct)0.32-0.22
Change - YOY (pct)6.545.77
Monthly Indicators
Consumer Price Index (Base 2015-16)140.86141.83
Change - MOM (pct)-0.680.82
Change - YOY (pct)7.988.35
WholeSale Price Index (Base 2015-16)149.79149.28
Change - MOM (pct)0.34-0.94
Change - YOY (pct)5.675.00
Sensitive Price Indicator (Base 2015-16)140.68142.56
Change - MOM (pct)-1.321.47
Change - YOY (pct)7.927.98
Exports *2,352.002,174.00
Imports *5,035.004,311.00
Trade Balance *-2,683.00-2,137.00
Home Remittances *2,436.972,338.64
Total Foreign Investment *202.45-36.25
Current Account Balance *-662.00513.00
Large Scale Manufacturing Index147.32145.36
Change - MOM (pct)1.354.65
Change - YOY (pct)14.457.38
Quarterly Indicators
 Sep 30, 2020Jun 30, 2020
Pakistan's External Debt *113,803.35112,858.18
Annual Indicators
GDP Growth Rate-0.381.91
Commodity Sector-0.05-0.90
Services Sector-0.593.75
Trade Balance * (July - June)-23,183.00-31,805.00
Worker Remittances * (July - June)23,120.9721,739.40
Foreign Investment * (July - June)2,038.21-54.80
Annual Inflation Rate % (July - June)10.746.80
* Amount in USD Million


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US Fed holds first policy meeting of Biden administration

January 24, 2021: With a new year and a new administration in the White House, the US central bank nonetheless faces an unprecedented challenge in guiding the post-pandemic economic recovery.

One thing Federal Reserve Chair Jerome Powell is unlikely to face from President Joe Biden is the barrage of Twitter attacks he was subject to, sometimes daily, under former president Donald Trump.

White House spokeswoman Jen Psaki last week said Biden "clearly has a great deal of respect and value for the Federal Reserve and role they play."

But even absent political pressures, the outlook is daunting.

The initial rollout of Covid-19 vaccines has raised hopes companies will be able to open for business and shoppers will open their wallets, improving the economy's prospects.

But the historic nature of the job losses during the pandemic -- more than 10 million US workers remain unemployed -- coupled with the likelihood inflation in some sectors could spike once the recovery takes hold, will test the Federal Reserve's limited toolkit.

These challenges could be discussed when the Fed's policy-setting Federal Open Market Committee (FOMC) opens its first two-day policy meeting of the year on Tuesday.

After slashing the benchmark lending rate to zero early in the coronavirus crisis, and massively increasing bond purchases to pump cash into the economy, the FOMC has signaled will not change policy in the near future.

"I think they've set their course pretty clearly," Stephanie Aaronson, a vice president at the Brookings Institution and former Fed research economist, told AFP. "I would be surprised if that really changed throughout the spring."

- Unprecedented scenario -

Business shutdowns imposed to contain the spread of the virus caused immediate, massive job losses in 2020, and at the end of the year, four million people had been unemployed for six months or more, comprising 37 percent of total unemployment.

The expectation for more government aid under the Biden administration -- which has proposed a massive $1.9 trillion rescue package -- will give the central bankers hope for a more solid rebound and improved hiring, Aaronson said.

Still, so much about the pandemic-induced recession has been historic, and the recovery too will present policymakers with scenarios they have never encountered.

When the recovery does begin, the Fed's main nemesis -- inflation -- is likely to flare up in areas that bounce back first, like hotels, restaurants and air travel.

"There are many aspects of our current economy that are still unprecedented. And that means that their job is incredibly challenging," George Washington University economist Tara Sinclair said in an interview.

The Fed last year announced a new framework that gives officials flexibility to address the situation.

The central bank pledged to allow inflation to exceed its two percent goal for a time to ensure the unemployment rate drops from its 6.7 percent level at the end of 2020.

That is a radical shift from the past, when central bankers would raise rates early to head off inflation.

"They can see the whites of inflation's eyes before they need to be necessarily thinking about really changing policy" under the new framework, Sinclair said.

But Aaronson noted that Powell will have to communicate clearly to both Wall Street and small businesses to calm concerns.

Overshooting on inflation "shouldn't induce a loss of credibility, as long as they are able to convince people say that it's transitory and that this is absolutely part of what they're aiming for," she said.

The Fed's preferred inflation measure, the PCE price index, is running at just over one percent as of November.


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