Among various economic and policy-oriented developments that took place during the departed week, the event which caused excitement within E&P sector and nudged the stock market towards gains was the news on drilling at Kekra-1 well at offshore Indus G-Block.
Experts believe that the offshore exploration might lead to discovery of massive hydrocarbon reserves, sufficient for 50-year needs of the country.
Building on the enthusiasm and instilling further hope within markets, a US-based multinational company and the global giant of food and agriculture production, Cargill pledged to invest more than $200 million in the next three-to-five years in Pakistan.
In addition to this, in an effort to promote the growth of textile industry, the Economic Coordination Committee (ECC) decided to abolish tax and customs duty on import of cotton, from February to June, hence ensuring sufficient supply of cotton for the industry.
Similarly, Minister of State for Revenue Hammad Azhar, agreed to abolish withholding tax (WHT) on cash withdrawal from bank accounts by filers with a view to encourage ease of doing business.
Meanwhile, Pak-China Joint Chamber of Commerce and Industry planned to bring investment from China in the eight potential industrial sectors including furniture, handicrafts, textile, fertilizers, cement, glasswork energy and pharmaceuticals.
However, on the low side, Fitch Solutions Macro Research maintained its outlook for the broad economy and the industries within Pakistan to deteriorate over coming quarters. Nevertheless, the research house recognized that Pakistani banking sector appears to be on sound footing.
Among other event of importance, Prime Minister Imran Khan appointed Nadeem Afzal Gondal as his Spokesperson in an honorary capacity.
Concurrently, a number of statistical records maintained by the State bank of Pakistan (SBP) and Pakistan Bureau of Statistics (PBS) were released this week, echoing the economical standing of the country at present. These records apprised that:
• The Federal Government has borrowed up to Rs.835.7 billion in the last six months (July to January 4) for budgetary support. As compared to last year, the borrowed amount is higher by Rs.482.3 billion, showing that the figure has more than doubled over the year. – SBP
• Scheduled Banks’ borrowing during December 2018 has increased by nearly 8% as compared to deposits made last year (Rs.12.4 trillion), and by around 3% over previous month (Rs.13.1 trillion). – SBP
• Current Account Deficit (CAD) for July-Dec 2018 has shrunken by 4.43% or $370 million, YoY. – SBP.
• Total liquid foreign reserves held by the country stood at USD 13,489.20 million on January 11, 2019. – SBP
• The over-all output of LSMI for July-November, 2018-19 decreased by 0.90%, YoY. Particularly in November 2018, the LSMI output decreased by 0.6% YoY and 4.98% MoM. – PBS
• Overall foreign investment for July – December period amounted to $899 million, demonstrating a fall of 77 percent, YoY. During the month of December alone, the total foreign investment stood at $230 million, showing a decline of 5.1% MoM. – SBP
• Net purchase of securities via SCRA, during the week ended January 11, 2019 stood at Rs.89 million. The last time total purchases of securities exceeded total sales was around six months ago, on 22nd June 2018. – SBP
• Pakistan’s Weekly Sensitive Price index (SPI) has dipped by 0.21% over the week, as compared to the one ended on January 10, 2019. On the contrary, the combined SPI has increased by 6.65% against the corresponding week last year. – PBS
Within equity market, the KSE-100 index closed at 39,306 points by the end of week, demonstrating an increase of 257 points over the week. This week’s trading started off on a positive as investors eagerly awaited mini budget to shore up reserves of the country. Moreover, assurance by the Finance Minister to provide a conducive environment for encouraging ease of doing business and attracting foreign investment to uplift the economy also triggered positive sentiments within investors.
The upward trajectory continued after the news regarding the drilling at Kekra-1 well at offshore Indus G-Block emerged, as experts believe that the offshore exploration might lead to discovery of massive hydrocarbon reserves, sufficient for 50-year needs of the country.
However, by mid-week the index lost momentum as lack of triggers prompted investors to resort to profit taking. Finally, the benchmark index ended the week in consolidation, as absence of trigger forced the markets to remain neutral.
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