Good Morning
As anticipated, the government has hiked petroleum prices by over PKR 25/liter to closer reflect prevalent international oil prices. While this hike is antcipated to ease off the recent petroleum shortage within the country, it is expected to push inflationary pressures onwards. Nevertheless, we feel interest rates will likely remain near current levels (7.0%) for FY21 as the monetary policy has shifted its focus towards economic recovery.
Moreover, as the date for passing of the Finance Bill 2020 inches close, we witness certain last minute ammendments including an additional reduction in cement FED, and lowering the expense disallowance for sale to unregistered persons. Additional concessions have also been granted in the guise of relief.
Market View: The KSE100 ended the earlier week up by 501 points, to close at 33,939 points. The market found a semblance of excuberance from the 100bps cut in interest rates, causing cylical stocks to drive the index. We feel the current week may follow a similar trend with interests in cyclical stocks.
Commodities:
Brent oil (USD/bbl): 40.13 (-2.17% D/D)
WTI oil (USD/bbl): 37.67 (-2.13% D/D)
Gold (USD/oz): 1,772.20 (+0.69% D/D)
National News
PTI govt decides to introduce more tax concessions in Finance Bill before final voting
The federal government has decided to introduce more tax concessions for industrialists and businesses in the Finance Bill before final voting on it by the national assembly aimed at soothing some unnerved lobbies and reversing some aggressive taxation measures.
Govt confident about passage of Finance Bill
The battle lines were drawn on Sunday as the government vowed to get the budget passed from National Assembly on Monday (today) at all costs after opposition parties rejected the budget for the new fiscal year 2020-21.
Govt gets $7.5 billion in loans
Pakistan has received $7.5 billion in foreign loans in first 11 months of the outgoing fiscal year amid a sharp rise in non-project borrowing that rose to 80% of total receipts, heightening risks of a debt trap.
Pakistan receives $1.725bln from IFIs this week
Pakistan has received $1.725 billion in financial support from multilateral international financial institutions (IFIs) during the week, the central bank said on Friday. This financing will support the government efforts to handle the impacts from the coronavirus pandemic. “SBP has received $500 million from Asian Infrastructure investment Bank on 25th June 2020.
PTI govt increases petrol price by Rs25 per liter
The federal government has decided to increase the price of petrol by Rs25.58 per litre for month of July in line with the hike in global crude oil prices.
Govt to collect approx Rs75bn in July from POL consumers
The government is expected to collect approximately Rs75 billion on account of different taxes, levy, duty etc from consumers of petroleum products in July.
KE purchase, Shanghai Electric withdrew offer
Shanghai Electric Power Company Limited has withdrawn its offer to buy K-Electric, a private company supplying electricity to Karachi. As per details, the sale of KE to Shanghai Electric could not be completed. Shanghai Electric withdrew the offer at the end of the contract period. In this regard, the manager of Shanghai Electric has written a letter to K Electric.
Fuel Shortage: Country may face severe power crisis
The country is likely to face severe power crisis as fuel oil stocks of around one dozen Independent Power Producers (IPPs) are only for a few days. The IPPs, sources said, have conveyed to the government that they are unable to purchase fuel due to liquidity crunch. In addition, RLNG supply has also been reduced to the power plants.
Capacity payments projected at Rs1.5tr
The annual capacity payment for not utilising surplus power plants is projected to soar to an unsustainable level of Rs1.5 trillion over the next two years as Pakistan continues to add more dirty and expensive capacity, mostly under the Thar coal and CPEC projects.
Centre to provide additional 500MW to KE, denies fuel shortage claim
The federal government announced on Friday that it was ready to provide 500MW additional electricity to K-Electric (KE) from the national grid to end prolonged power cuts in Karachi.
Govt body starts talks with IPPs
The newly-appointed committee headed by Chairman Federal Land Commission, Babar Yaqoob Fateh Muhammad, has started marathon deliberations with the Independent Power Producers (IPPs), hinting at shifting from take or pay (ToP) to take and pay (TaP) contract terms and indexation from USD to PKR.
‘Pharma sector mafia too, remitting profits’: Govt acts like a silent witness, says Supreme Court
The Supreme Court (SC) on Friday observed that the pharmaceutical sector was a huge mafia in Pakistan. A two-member bench of the apex court comprising Chief Justice Gulzar Ahmed and Justice Ijaz Ul Ahsan heard the case. During the course of proceedings, the Chief Justice remarked that the federal cabinet takes no decision regarding the prices of medicines.
