Throughout the week, the market hovered around the 48k mark and was unable to sustain the level because of absence of any notable upside triggers. Moreover, the stocks came under pressure in the last trading session over MSCI’s proposal for reclassifying Pakistan as a Frontier Market. Towards the end, news had surfaced that Pakistan retained its Gray list status on the FATF front, further compelling investors to liquidate their positions.
KASB Market View
We believe the market will continue deciphering the impact of Pakistan maintaining its Gray-list status and potential downgrading to frontier markets, likely limiting the index’s upside potential. Moreover, economic numbers also painted a grim picture with the country’s CAD registering at USD 632mn, sharply diminishing the likelihood of a positive CA surplus in FY21. These figures may raise questions over the government achieving its high growth target without instigating external account imbalances.
National News
Pakistan to stay on FATF grey list for another year
Even after ‘largely completing’ 26 of the 27 targets, Pakistan will remain in the grey list of the Financial Action Task Force (FATF) for at least another year and deliver on seven new parallel action points to address deficiencies in its Anti-Money Laundering/Combating the Financing of Terrorism (AML/CFT) regime.
https://www.dawn.com/news/1631498/pakistan-to-stay-on-fatf-grey-list-for-another-year
Several taxes cut to provide relief to people, back industry
The government has reduced a number of taxes in the Finance Bill 2021-22 to provide relief to people and support agriculture, textile, information technology and other industries.
https://www.dawn.com/news/1631497/several-taxes-cut-to-provide-relief-to-people-back-industry
Govt gets walkover in key National Assembly session
Despite making tall claims of making every effort to block the passage of the budget in parliament, the opposition on Saturday for the second consecutive year literally provided a walkover to the government in the National Assembly which approved 49 demands for grants worth over Rs3 trillion and rejected 967 cut motions of the opposition members with a majority vote.
https://www.dawn.com/news/1631694/govt-gets-walkover-in-key-national-assembly-session
PM shares ‘good news’ as RDA inflows cross $1.5bn mark
Prime Minister Imran Khan said on Sunday that inflows from the Roshan Digital Account had crossed the $1.5 billion mark.
https://tribune.com.pk/story/2307615/pm-shares-good-news-as-rda-inflows-cross-15bn-mark
Govt asked to recover profits made by oil firms during ‘artificial shortage’
The Lahore High Court (LHC) on Friday directed the federal government to take steps for the recovery of illegal profits the oil marketing companies (OMCs) made by creating an artificial shortage of petroleum products in the country during the first half of 2020.
Textile exporters threaten to move overseas on gas shortages
Textile exporters on Saturday threatened to move their production bases to overseas unless power shortages are resolved in a move to mount pressure for withdrawal a decision to cut gas supplies to industrial units in Karachi.
https://www.thenews.com.pk/print/855598-textile-exporters-threaten-to-move-overseas-on-gas-shortages
Urea sales swell 109pc in May
The country’s fertilizer sector relating to urea and DAP sales posted impressive growth in May, but urea inventory levels of these products remained in negative territory during January-May 2021.
https://www.dawn.com/news/1631503/urea-sales-swell-109pc-in-may
KE imports 25,000 ton fuel oil to avert outages
Given the recent supply issues, K-Electric (KE) has imported 25,000 metric ton (MT) furnace oil to ensure all available generation capacity is maximised, a statement said on Saturday.
https://www.thenews.com.pk/print/855603-ke-imports-25-000-ton-fuel-oil-to-avert-outages
Current account deficit accelerates to $632m in May
The country witnessed the sixth consecutive current account deficit (CAD) of $632 million in May, leaving a meagre $153m surplus in the first 11 months of the outgoing fiscal year (11MFY21), the State Bank of Pakistan (SBP) data showed on Friday.
https://www.dawn.com/news/1631506/current-account-deficit-accelerates-to-632m-in-may
Suspension of gas causing heavy losses: FPCCI
The country’s exports are facing a daily loss of $44 million due to the suspension of gas supply to export-oriented units by the Sui Southern Gas Company Ltd (SSGCL) since June 11, the Federation of Pakistan Chambers of Commerce and Industry (FPCCI) said on Friday.
https://www.dawn.com/news/1631505/suspension-of-gas-causing-heavy-losses-fpcci
IT exports increase 47pc to $1.9bln in 11 months
Pakistan’s information technology exports increased 47 percent to $1.9 billion during 11 months of the current fiscal year of 2020/21, the central bank data showed on Friday.
https://www.thenews.com.pk/print/855009-it-exports-increase-47pc-to-1-9bln-in-11-months
SPI up 15.29pc YoY, 0.82pc WoW as food, power prices rise
Weekly sensitive price indicator (SPI) for the combined income group increased 0.82 percent week-on-week, whereas it jumped 15.29 percent year-on-year during the 7-day period ended June 24, 2021, data showed.
https://www.thenews.com.pk/print/855599-spi-up-15-29pc-yoy-0-82pc-wow-as-food-power-prices-rise
Chinese JV contracted for Tarbela 5th Ext work
Pakistan on Friday awarded a $241.1 million contract for electro-mechanical (E&M) works of 1,530MW Tarbela 5th Extension Hydropower Project to a joint venture comprising Harbin Electric International Company and Harbin Electric Machinery Company (HEIC-HEMC) via international competitive bidding.
https://www.thenews.com.pk/print/855010-chinese-jv-contracted-for-tarbela-5th-ext-work
Closure of Engro LNG Terminal: Law Division rejects postponement of dry docking
The much-awaited legal opinion of the Law Division that has been submitted with the authorities concerned is not in favor of postponement of the dry docking of existing floating storage and regasification unit (FSRU) Exquisite at the Engro LNG Terminal till August, rather it is in favor of Excelerate Energy, which is a US company and owner of the FSRU. The government wanted the EETPL to defer the dry docking till the month of August.
More Norwegian firms willing to invest in Pakistan
Norwegian Ambassador Kjell Gunnar Eriksen has said that Norway and Pakistan have great potential to boost mutual trade as various Norwegian companies including Telenor are operating here and more are ready to invest.
https://tribune.com.pk/story/2307304/more-norwegian-firms-willing-to-invest-in-pakistan
Loan repayments to surge 81% in FY22
The government on Friday sought National Assembly’s authorization to borrow Rs26.3 trillion in the next fiscal year to repay and service loans, which were 81% higher compared to the original demand in the outgoing year and indicated indebtedness of the country.
https://tribune.com.pk/story/2307316/loan-repayments-to-surge-81-in-fy22
Oil transporters call off strike, resume supplies
Petroleum oil transporters called off their strike on Friday and resumed fuel supplies with immediate effect after the government and private sector stakeholders accepted their demands and assured them of measures to resolve their issues.
https://tribune.com.pk/story/2307313/oil-transporters-call-off-strike-resume-supplies
