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Submerged by debt: Emerging economies at risk from virus

April 7, 2020: The COVID-19 pandemic has piled pressure on the finances of many emerging countries, leading to calls for some debt payments to be postponed or canceled altogether.

Last month, Lebanon declared a default on debt payments, and this week Argentina said it would delay payment of almost $10 billion in debt.

Many emerging economies were already in dire straits before anybody had heard of COVID-19.

"Even before the new coronavirus arrived, we were seeing public debt close to historic highs in almost all emerging regions," noted Julien Marcilly, chief economist at the French credit-insurance group Coface.

Levels of public debt in Africa are near those seen just before huge cancellations were agreed early this century, while those in Latin America "are closing in on those of the 1980s," he told AFP.

The 1980s are often referred to as the "lost decade" for Latin American countries as they tightened belts to meet debt payments, with the International Monetary Fund (IMF) usually demanding painful reform conditions as part of its bailouts.

Christopher Dembik, head of economic research at Saxo Bank, said emerging countries have fuelled "market suspicion" because they are squeezed between the need to increase public spending now and implacable debt-repayment schedules.

The unprecedented shutdown of economic activity many nations have imposed to slow transmission of the coronavirus means governments will soon be facing a revenue crunch as tax earnings decline.

The need to make payments on foreign loans means that there will be less revenue to support public health measures and support the economy.                                    

- Growth shock -

"Investors anticipate the coronavirus shock to growth will be much bigger to emerging countries than developed ones," Dembik told AFP.

That is because those which are oil exporters are being struck by the plunge in global crude prices while those that fashioned themselves as holiday destinations are confronted by a collapse in tourism.

And as the pandemic unfurled institutional investors pulled enormous amounts of dollars from emerging and less developed countries to place the funds in less volatile markets.

"In March, capital withdrawn from emerging countries was four times more than in 2008-2009. That is huge," Marcilly noted.

"Many African countries are going to find themselves in a very tight situation, like Angola or Zambia," he said.

Bahrain, Oman, Sri Lanka, and Tunisia are also in a difficult situation, he said.

Ecuador is already dependent on IMF help.

- South Africa -

The economist believes some larger emerging economies might also have to ask the IMF for a bailout.

"The one that is in the worst shape is South Africa, because it combines external vulnerability with weak public finances," said Marcilly.

South Africa's sovereign debt rating was recently downgraded by Fitch and Moody's.

Some are now calling for the Group of 20 (G20) advanced countries to declare a moratorium on debt payments, or even a cancellation of debts.

In late March, the IMF and World Bank urged governments to put a hold on debt payments from the world's poorest nations so they could fight the pandemic.

Non-governmental organizations Oxfam and Save the Children argue that does not go far enough and have called on multilateral institutions to "offer an immediate cancellation of all principal, interest and charges for the remainder of 2020 for all countries in need."

Last week, G20 finance ministers approved a plan to tackle "the risk of debt vulnerabilities in low-income countries" and to "swiftly deliver... financial assistance to emerging markets and developing countries."

Dembik said that "there is now a realisation it is in the interest of all to avoid as many defaults as possible, whether they be in the private or public sectors." 

As the pandemic eases, "we cannot allow the health crisis to become an emerging country crisis," he added.

APP

Domestic tractors assembling reduced by 37.22%

April 07, 2020: Tractors manufacturing in the country during the first seven months of the current financial year decreased by 37.22 percent as compared to the manufacturing of the corresponding period of last year.

During the period from July-January 2019 to 20, some 17, 354 units of tractors were locally assembled as against the assembling of 27,644 units of the same period of last year.

According to the data of large-scale manufacturing industries, tractors manufacturing reduced by 59 percent in the month of January 2020 as compared to the manufacturing of the same month of last year.

In January 2020, about 638 tractors were assembled locally as against the assembling of 1,675 tractors of the same month of last year.

Meanwhile, trucks assembling also decreased by 52.82 percent in the last seven months as about 2,050 trucks were locally manufactured against 4,222 trucks of the same period of last year.

During the period under review about 2,050 trucks were assembled as against the assembling of 4,256 trucks of the same period of last year.

According to the data during the first seven months, the local assembling of buses decreased by 36.81 percent, whereas the manufacturing of jeeps and cars decreased by 45.99 percent respectively.

APP

Ten non-OPEC+ producers invited to Thursday talks: TASS

Apr 07, 2020: Ten oil producing nations from outside the OPEC+ alliance including the United States have been invited to a meeting aimed at reaching an agreement to reduce oversupply, Russian news agency TASS reported Tuesday.

During a meeting to be held via video conference on Thursday, OPEC and its allies will discuss oil production cuts.

The meeting comes a week after US President Donald Trump claimed that leading producers Russia and Saudi Arabia will slash output to boost tumbling prices.

Moscow has said it is prepared to discuss cutting daily global output by about 10 million barrels a day.

In addition to its OPEC+ partners including Russia, the oil cartel has invited 10 other producing nations: the United States, Canada, Britain, Norway, Brazil, Argentina, Colombia, Egypt, Indonesia and Trinidad and Tobago, state news agency TASS said.

Citing an OPEC document, TASS reported that only the United States, Britain and Canada have not confirmed their participation.

OPEC did not confirm the report and the Russian energy ministry told AFP it could not comment.

Oil prices have slumped to multi-decade lows since the beginning of the year amid the fallout from the coronavirus pandemic -- which has weighed heavily on economies and crushed demand.

A price war between Saudi Arabia and Russia, the key player in OPEC+, has further aggravated the situation.

Saudi Arabia is the biggest producer in the Organization of the Petroleum Exporting Countries. Russia is not an OPEC member.

AFP/APP

Closing Bell: A Silver Lining!

April 7, 2020 (MLN): The KSE-100 index gained around 652 points in today’s session and closed at 31,231-mark, which is 2.13% higher than the closing of the previous session. Recovery in oil prices on the back of fresh hopes an OPEC-led meeting scheduled for this week boosted investors’ confidence for today.

The Index traded in a range of 727.78 points or 2.38 percent of previous close, showing an intraday high of 31,306.30 and a low of 30,578.52.

Of the 93 traded companies in the KSE100 Index 72 closed up 20 closed down, while 1 remained unchanged. Total volume traded for the index was 142.65 million shares.

Sectors propping up the index were Oil & Gas Exploration Companies with 169 points, Commercial Banks with 118 points, Cement with 118 points, Power Generation & Distribution with 74 points and Fertilizer with 46 points.

The most points added to the index was by PPL which contributed 72 points followed by HUBC with 71 points, OGDC with 70 points, HBL with 66 points and LUCK with 51 points.

Sector wise, the index was let down by Automobile Parts & Accessories with 7 points, Sugar & Allied Industries with 4 points, Real Estate Investment Trust with 1 points and Leasing Companies with 1 points.

The most points taken off the index was by NBP which stripped the index of 9 points followed by BAHL with 9 points, THALL with 7 points, JDWS with 4 points and MUREB with 4 points.

All Share Volume decreased by 60.56 Million to 172.77 Million Shares. Market Cap increased by Rs.113.47 Billion.

Total companies traded were 335 compared to 339 from the previous session. Of the scrips traded 215 closed up, 100 closed down while 20 remained unchanged.

Total trades decreased by 21,918 to 78,978.

Value Traded decreased by 1.96 Billion to Rs.6.75 Billion

CompanyVolume

Top Ten by Volume

Maple Leaf Cement Factory20,393,000
Hascol Petroleum19,858,000
Fauji Cement Company9,848,500
K-Electric8,675,500
Pioneer Cement6,868,000
Unity Foods6,438,500
Meezan Bank5,828,000
D.G. Khan Cement Company5,113,000
Pak Elektron4,647,500
Oil & Gas Development Company4,462,233

 

SectorVolume

Top Sector by Volume

Cement54,503,200
Oil & Gas Marketing Companies23,158,437
Commercial Banks21,529,053
Power Generation & Distribution11,548,688
Technology & Communication8,677,200
Oil & Gas Exploration Companies8,508,704
Vanaspati & Allied Industries6,439,300
Engineering6,005,600
Cable & Electrical Goods4,672,150
Chemical4,554,260

 

 

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SECP achieves ISO ISO/IEC 27001:2013 Certification

April 7, 2020: The Securities and Exchange Commission of Pakistan (SECP) has successfully completed the phase 1 scope and audit of security standard certification ISO/IEC 27001:2013 for its Information Security Management System (ISMS). The one of widely accepted and globally recognized Certification enables organizations to identify, prevent and defend potential security vulnerabilities.

The ISO/IEC 27001:2013, awarded by the International Organization for Standardization encompasses the requirements for establishing, implementing, maintaining Information technology security techniques. This certification will help organizations to keeps confidential information secure, provides customers and stakeholders with confidence in how you manage risk and allows for the secure exchange of information and provide you with a competitive advantage.

Obtaining this certification demonstrates SECP’s strong commitment to the ongoing development and continuous improvement of its enterprise ISMS, making information security and data protection an integral part of all its business processes.

Aamir Khan, Chairman SECP said, “We are proud to have earned this certification, attesting that our highest level of controls is in place when handling SECP’s and its regulates information. SECP has even established a governance program that includes the Information Security –Governance, Risk Management and Compliance Council (IS- GRCC) whose job is to support the ongoing information and cybersecurity enhancements. With ISO 27001 ISMS Certification, we are effectively meeting the industry benchmark towards complying with information and cybersecurity standards.”

The ISO/IEC 27001:2013 Certification is a showcase of SECP’s overall strategy to ensure that it's key IT, Data Centre, Human Resource Security, Physical and Environmental Protection and Social Media Security services comply with the highest international and regional standards, and that its services are based on globally accepted standards and protocols. To hold this qualification as one of the regulatory body of Pakistan is a significant achievement for SECP.

Press Release

 

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