March 17, 2020 (MLN): Pakistan can lose a major chunk of its exports, especially textile exports which account for 60% of total exports due to disruption in global supply chains as a result of coronavirus related transportation restriction.
According to the recent yearly data on Trade Development Authority of Pakistan, the major textile export destinations are the EU, US, and China with a share of 46%, 24%, and 7% respectively, as per the research note by BIPL securities.
As per news flows, the challenging situation which Pakistani exporters have been facing is due to the sizeable reduction in the order book specifically from EU and risks involved in consignment payment which have been shipped so far, the report added.
To assess the impact of the textile exports, BIPL did extensive research for every 10% decline in textile exports annually to major export destinations and according to which Nishat Mills Limited (NML) and Kohinoor Textile Mills Limited (KTML) might not retain their highest exposure in international markets as the rapid increase in global coronavirus epidemic has heightened uncertainty and shaken faith in policies that have worked in recent years.
It is prudent to mention that NML has the highest market exposure in the EU with a share of 41% while KTML’s share in the US and Canada market accounts for 72% as per F19 financial records.
The research anticipated that the textile sector may feel the burden in the short term to medium term as the export is the main driver for revenue generation for companies. However, on the brighter side, the government’s efforts to support and boost exports may not derail the textile sector from its path.
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