Morning News: IMF reveals stringent conditions for second loan tranche – By WE Research
Dec 3 2024
- The Pakistani finance ministry has acknowledged its failure to meet three key targets under the $7 billion Extended Fund Facility (EFF) from the IMF, including revenue collection targets for the Federal Board of Revenue (FBR) and spending on health and education. Provincial governments missed the deadline to amend agriculture income tax legislation by October 2024. The legislation aims to align provincial agricultural income tax regimes with federal tax policies, with implementation set for January 2025. Additional reforms include introducing a Federal Excise Duty on pesticides and fertilizers, expanding tax efforts at the provincial level, and increasing contributions for higher education and social protection. Provinces are also required to improve tax compliance, reduce corruption, and enhance digitalization. Finance Minister Muhammad Aurangzeb stressed the urgency of simultaneous reforms in population control, climate change, and education, while working on a 10-year partnership with the World Bank. Meanwhile, the National Assembly Standing Committee on Finance debated the IMF programme, with opposition protests over asset declaration requirements for government officials. The committee was briefed on the 22 structural benchmarks of the EFF, with most focusing on federal and State Bank of Pakistan reforms.
- Prime Minister Shehbaz Sharif reviewed the progress of Saudi Arabia's $2.8 billion investment in Pakistan, highlighting the conversion of seven out of 34 signed Memorandums of Understanding (MoUs) into formal contracts, worth $560 million. During a meeting to assess bilateral cooperation, the prime minister praised Saudi Arabia’s continued support for Pakistan, especially in challenging times. This update follows Saudi Arabia's October announcement to increase its investment by an additional $600 million, bringing the total commitment to $2.8 billion. The investment surge followed discussions between PM Shehbaz and Saudi Crown Prince Mohammed bin Salman, with Saudi Investment Minister Khalid bin Abdulaziz Al Falih noting that 34 MoUs were signed, initially valued at $2.2 billion before the additional investment.
Annual Strategy: Market Strategy 2025 Inflation likely to remain in single digits for most of CY2025 – By Chase Research
Dec 20 2024
- Inflation expected to remain in single digits for most of CY2025.
- Central Bank to continue easing. We consider single digit interest rates a high possibility in 2025.
- Current Account should not present a challenge as improved remittances, recovering exports and administrative measures to keep balance in check.
- Pakistan Credit Ratings could improve in 2025 unlocking flows and strengthening PKR.
Tri-Pack Films Limited (TRIPF): 9MCY24 Corporate Briefing Takeaways – By Taurus Research
Dec 20 2024
Taurus Securities
- Tri-Pack Films Limited (TRIPF) is a subsidiary of Packages Limited which holds 69.3% of the Company. TRIPF produces Biaxially Oriented and Cast Polypropylene (BOPP & CPP) packaging films for food and beverage applications such as snacks, confectionery, dairy food, fresh cut vegetables, beverages etc., and non-food applications such as overwrapping, lamination, bag making etc. TRIPF has annual capacities of 78,000 tons for BOPP, 14,400 tons for CPP, and 32,600 tons for Metallizers.
- TRIPF boasts a product portfolio of 19 specialized films, these include: Low Sealing Temperature Film, Ultra Low Temperature Sealable Film, Tobacco Non-Coated Transparent Wrap, Anti-Fog Films, Perforated Film, Matt Film, In Mould Labels, Low Density Label Film, High Gloss Label Film, Broad Seal High Barrier, Ultra High Barrier Metallized Film, Heat Resistive BOPP Film, Cold Seal, BOPE, BOPP Super Barrier Film, CPP High Speed Lamination Film, Paper Bond Film, CPP Metallized Low Temperature Heat Sealable Film, and CPP Metallized High Barrier Film.
- As of 9MCY24, TRIPF’s revenue increased to PKR 21.8Bn compared to PKR 18.5Bn during the SPLY. Gross margin was recorded at 13% compared to 18% during the SPLY. The loss for the period was recorded at PKR 291Mn compared to a net profit of PKR 830Mn in the SPLY. The main reason cited for the loss during the year by the management was finance costs. Finance costs during 9MCY24 were recorded at PKR 1.7Bn compared to only PKR 700Mn in the SPLY. In addition to these, the gas tariff also increased by 110%.
Annual Strategy: Pakistan Market Strategy 2025 Breaking Barriers: KSE-100 Marches Toward 148K – By Sherman Research
Dec 20 2024
Sherman Securities
- Pakistan’s KSE 100 index is all set to generate total return of 40%, breaching 148k level during CY25. Market is expected to reach target PE of 8x in line with last 10-year average PE versus current PE of 6.1x. Target PE of 8x is justified considering Pakistan’s economic outlook as most of the indicators are in line with average of last 10 years.
- After meeting all the key performance indicators specially during last 2 years (maintaining primary budget surplus, tight monetary policy, energy sector reforms and regulating FX market), Pakistan is now looking at raising tax to GDP which is expected to be key performance criterion for timely disbursement under new IMF Program of US$7bn.
- With inflation to remain below historical average and lower risk to external accounts during IMF Program, we expect policy rate to remain around 10% during next 2 years. Considering ample institutional liquidity, we expect diversion of Rs1.2-1.5trn funds (40% of the free float of KSE-100 Index) during CY25 from fixed income to equity market. Not only this, stable currency and cheap valuations will induce Foreigners’ interest in Pakistan market as they have been net sellers so far.
Economy: Recent PSX rally led by local funds buying Thanks to the falling return on fixed income instruments – By Topline Research
Dec 20 2024
Topline Securities
- Pakistan Market since Sep 2024 to-date has returned 35% in both Rs and US$ terms, thanks to the strong net inflows of Rs58bn (US$207mn) of local mutual funds during the same period mainly due to conversion from fixed income to equities. In this note, we have tried to gauge the expected quantum of further liquidity market can receive due to conversion from fixed income to equities.
- The funds/investors are converting from Fixed income to equities as yields on fixed income instruments have fallen by 1253bps-1261bps from peak of 24.73% and 24.51% on 12M and 6M Treasury Bills in Sep 2023 to 12.20% and 11.9% on Dec 19, 2024.
- Equities will remain the preferred choice for investors: Unlike previous years where investors use to buy dollars, real estate, gold, prize bonds etc. for earning higher returns, we believe, in this cycle equities will get some portion of liquidity due to (1) higher restrictions on purchase of dollars, (2) increase in taxations, compliance and FBR valuation rates of properties, and (3) discontinuation of high denomination unregistered prize bonds.
Textiles: Increased imports vital for export growth – By JS Research
Dec 20 2024
JS Global Capital
- The United States Department of Agriculture (USDA) has raised cotton demand forecasts for India, Pakistan, and Vietnam, likely offsetting the projected decline in Chinese demand as Western importers continue diversifying their sourcing away from China and Bangladesh. Consequently, Pakistan's prospects for value-added exports, such as knitwear and ready-made garments, have improved, albeit at the expense of lower yarn exports to China.
- During 5MFY25, exports of knitwear, bedwear, and garments are up ~20% YoY while yarn exports are down 39%. On the other hand, Pakistan’s domestic cotton output is expected to fall to around 6-8mn bales (-36% to -17% YoY) due to 17% decline in cotton sowing area and lower crop yields.
- To meet the cotton requirement for the export demand, Pakistan is expected to import 5mn bales of raw cotton, costing ~US$2bn (at current avg import prices) compared to merely 1.2mn bales or US$0.45bn in FY24.
Morning News: Pakistan’s exports rise 9.06% in five months, imports edge up 1.06%: PBS – By WE Research
Dec 20 2024
- Exports from Pakistan increased by 9.06% in the first five months of FY2024-25, reaching Rs. 3,816,094 million, compared to Rs. 3,499,216 million in the same period last year. In November 2024, exports rose 7.17% year-on-year to Rs. 787,152 million. Key export commodities included knitwear, rice, readymade garments, and bedwear. Imports during July–November FY2024-25 totaled Rs. 6,248,611 million, a 1.06% increase from the previous year. November imports declined by 1.03% to Rs. 1,255,209 million. Key imports included petroleum products, LNG, palm oil, plastic materials, and mobile phones. Month-on-month, both exports and imports showed modest changes.
- Pakistan and China agreed to build an expressway linking Gwadar Port with the new Gwadar International Airport and initiate feasibility studies for new motorways, including the Mirpur-Muzaffarabad and Karachi-Hyderabad routes, under the China-Pakistan Economic Corridor (CPEC). The agreement was made during a meeting between Pakistan’s Federal Minister Ahsan Iqbal and China’s Vice Minister of Transport Li Ying in Beijing. Iqbal emphasized expediting major projects, including the KarachiHyderabad Section and ML-1 railway upgrade. He also proposed the Mashkhel-Panjgur Highway in Balochistan. Iqbal later met the President of the Export-Import Bank of China to discuss economic recovery and space projects. Both sides reaffirmed their commitment to strengthening the CPEC partnership for sustainable development and prosperity.
Technical Outlook: KSE-100; Testing the support range – By JS Research
Dec 20 2024
JS Global Capital
- The KSE-100 index witnessed another negative session, closing at 106,275, down 4,795 points DoD. Volumes stood at 1,167mn shares compared to 1,112mn shares traded in the previous session. The index is expected to test support at 105,937; a fall below this level will extend the decline towards 105,510, followed by 103,048. However, any upside will face resistance in the range of 107,980-110,040 levels. The Stochastic Oscillator and the RSI are heading down, supporting a corrective view. We recommend investors to stay cautious on the higher side and wait for dips. The support and resistance levels currently stand at 104,226 and 110,034, respectively.
Morning News: Pakistan, Türkiye Set Sights on $5 Billion Bilateral Trade Target – By Vector Research
Dec 20 2024
Vector Securities
- Prime Minister Mohammad Shehbaz Sharif held a bilateral meeting with the Turkish President Recep Tayyip Erdogan on the sidelines of 11th D-8 Summit in Cairo today
- The World Bank’s Board of Executive Directors is likely to approve “Sindh Flood Emergency Housing Reconstruction Project” worth $450 million on Friday (Dec 20), aimed at delivering beneficiary-driven, multi-hazard resilient reconstruction of core housing units affected by the 2022 floods in select districts of Sindh.
- Bangladesh’s interim leader Muhammad Yunus said Thursday he had “agreed to strengthen relations” with Pakistan, a move likely to further test his country’s frosty relations with India.
Morning News: Pakistan, Türkiye Set Sights on $5 Billion Bilateral Trade Target – By Darson Research
Dec 20 2024
Darson Securities
- Prime Minister Mohammad Shehbaz Sharif held a bilateral meeting with the Turkish President Recep Tayyip Erdogan on the sidelines of 11th D-8 Summit in Cairo today
- The World Bank’s Board of Executive Directors is likely to approve “Sindh Flood Emergency Housing Reconstruction Project” worth $450 million on Friday (Dec 20), aimed at delivering beneficiary-driven, multi-hazard resilient reconstruction of core housing units affected by the 2022 floods in select districts of Sindh.
- Bangladesh’s interim leader Muhammad Yunus said Thursday he had “agreed to strengthen relations” with Pakistan, a move likely to further test his country’s frosty relations with India.
Pakistan Petroleum Limited (PPL): Deriving value from improved cash positions –By Alpha - Akseer Research
Dec 19 2024
Alpha Capital
- We revise our stance to “Buy” on Pakistan Petroleum Limited (PPL) with our Dec-25 price target (PT) of PKR 278/sh, which projects a capital upside of 44% along with a dividend yield of 3.3%. The stock is currently trading at a discounted P/B of 0.7x along with a FY26 P/E of 5.6x against its historical 10-year average of 1.5x and 6.8x, respectively.
- Improved cashflow amid structural reforms: Under the IMF agreement, the Government of Pakistan implemented multiple price hikes to eradicate the longstanding issue of circular debt. Consequently, the gas system went from an OGRA estimated shortfall of PKR 171.2bn in FY24 to a projected surplus of PKR 78.9bn in FY25.
- Reko Diq – A tier-one asset ready to be realized: Reko Diq’s enormous copper and gold reserves yield a project NPV of USD 18.5bn, which may improve both PPL and Pakistan’s future prospects. Utilizing Barrick’s projections and timelines regarding the project, our base case for Reko Diq estimates a valuation impact around PKR 191bn (PKR71/sh) for PPL.
Morning News: Pakistan’s exports rise 9.06% in five months, imports edge up 1.06%: PBS – By WE Research
Dec 20 2024
- Exports from Pakistan increased by 9.06% in the first five months of FY2024-25, reaching Rs. 3,816,094 million, compared to Rs. 3,499,216 million in the same period last year. In November 2024, exports rose 7.17% year-on-year to Rs. 787,152 million. Key export commodities included knitwear, rice, readymade garments, and bedwear. Imports during July–November FY2024-25 totaled Rs. 6,248,611 million, a 1.06% increase from the previous year. November imports declined by 1.03% to Rs. 1,255,209 million. Key imports included petroleum products, LNG, palm oil, plastic materials, and mobile phones. Month-on-month, both exports and imports showed modest changes.
- Pakistan and China agreed to build an expressway linking Gwadar Port with the new Gwadar International Airport and initiate feasibility studies for new motorways, including the Mirpur-Muzaffarabad and Karachi-Hyderabad routes, under the China-Pakistan Economic Corridor (CPEC). The agreement was made during a meeting between Pakistan’s Federal Minister Ahsan Iqbal and China’s Vice Minister of Transport Li Ying in Beijing. Iqbal emphasized expediting major projects, including the KarachiHyderabad Section and ML-1 railway upgrade. He also proposed the Mashkhel-Panjgur Highway in Balochistan. Iqbal later met the President of the Export-Import Bank of China to discuss economic recovery and space projects. Both sides reaffirmed their commitment to strengthening the CPEC partnership for sustainable development and prosperity.
Morning News: Cotton industry faces crisis as rising imports, policy gaps strain sector – By WE Research
Dec 16 2024
- Pakistan's cotton industry is facing a crisis due to unchecked imports and ineffective policies, threatening its agricultural and textile sectors. Farmers, ginners, and textile mills are struggling with high input costs and falling cotton prices, exacerbated by an 18% sales tax on domestic cotton and yarn, alongside duty-free imports. Cotton imports surged to 1.1 million bales by November 2023, with projections suggesting a historic high of 5 million bales in 2024-25. Domestic cotton sales have stalled, and prices have dropped sharply, leaving large quantities unsold. Ihsanul Haq, Chairman of the Cotton Ginners Forum, warned that the situation could mirror the recent wheat crisis and called for policy changes, including imposing sales tax on imports and removing duties on local production to save the industry
- The price of Liquefied Petroleum Gas (LPG) in Karachi has risen by Rs10 per kilogram, reaching Rs290 per kg, which is Rs36 above the official rate set by the Oil and Gas Regulatory Authority (OGRA) at Rs254 per kg. Shopkeepers attribute the hike to increases imposed by marketing companies, while consumers blame profiteers and the government for failing to control inflation. The price surge comes after recent hikes in the cost of chicken and vegetables, further burdening household budgets. Residents are concerned that essential commodities are becoming unaffordable, especially for the underprivileged, leaving them deprived of basic necessities and worsening financial pressures for many.
- The Pakistani government has announced revised fuel prices for the upcoming fortnight, effective December 16, 2024. The price of petrol remains unchanged at Rs252.10 per litre, while the price of High-Speed Diesel (HSD) is reduced by Rs3.05, bringing it to Rs255.38 per litre. Kerosene oil sees a decrease of Rs3.32, now costing Rs161.66 per litre, while Light Diesel Oil (LDO) is reduced by Rs2.78, bringing its price to Rs148.95 per litre. Market speculation had earlier suggested a potential reduction of up to Rs3.97 for HSD, kerosene oil, and LDO, and a slight increase in petrol prices. In the previous review, petrol and HSD prices had been raised by Rs3.72 and Rs3.29, respectively.
Morning News: KP approves 32 development projects worth over Rs40 billion – By WE Research
Dec 13 2024
- The Khyber Pakhtunkhwa Provincial Development Working Party (PDWP) has approved 32 projects worth over Rs40 billion, spanning sectors like housing, infrastructure, energy, and youth development. Key initiatives include the Ehsaas Apna Ghar scheme, offering interest-free housing loans, and solar energy systems for 300 non-Muslim worship places. Infrastructure projects include road dualization, motorway land acquisition, and irrigation restoration. Energy initiatives focus on solar mini grids and transmission line feasibility studies. The sports sector received investments in equipment and facility upgrades, while healthcare and education projects include a monitoring unit and medical equipment procurement. Special focus is on enhancing merged districts, integrating them into national development with improved infrastructure and economic opportunities.
- Karachi Chamber of Commerce and Industry (KCCI) President Muhammad Jawed Bilwani has called on the State Bank of Pakistan (SBP) to reduce the policy rate by 400 basis points in the upcoming Monetary Policy Committee (MPC) meeting. He highlighted the sharp decline in inflation to 4.86% in November, marking the fourth consecutive month of single-digit inflation. Bilwani emphasized that further policy rate cuts would align real interest rates with sustainable levels, making borrowing more affordable for businesses and consumers. He also pointed out that Pakistan's current interest rate remains high compared to regional peers, hindering economic growth and competitiveness.
- Finance Minister Muhammad Aurangzeb stated that Pakistan has effectively addressed its economic challenges and is on track toward macroeconomic stability and sustainable growth. Speaking at the Second International Islamic Capital Markets Conference, he highlighted the pivotal role of Islamic finance in achieving stability, noting that instruments like sukuk, equity funds, and Shariah-compliant investments reduce reliance on interest-based borrowing. He emphasized that 56% of PSX market capitalization and significant portions of assets in mutual funds, pension funds, and REITs are Shariahcompliant. Aurangzeb called for an economic system aligned with Islamic values, which supports inclusive growth. He also emphasized Pakistan's potential to become a global hub for Islamic finance, driven by rising global demand for ethical financial solutions.
Morning News; ADB approves $200mn loan to modernise power distribution infrastructure in Pakistan – By WE Research
Dec 12 2024
- The Asian Development Bank (ADB) has approved a $200 million loan to modernize Pakistan's power distribution infrastructure. The Power Distribution Strengthening Project aims to reduce energy losses, enhance resilience against climate change, and meet the growing electricity demand. It will support three major distribution companies: LESCO, MEPCO, and SEPCO. The project includes the installation of 332,000 advanced meters, 15,800 transformer monitoring systems, and the upgrade of four grid stations. It will also replace high-loss feeder lines and improve grid configurations. These upgrades will reduce losses, and improve revenue collection.
- Pakistan’s business confidence improved by 9%, rising from negative 14% in March-April 2024 to 5% in October-November 2024, despite challenges like high inflation, political instability, and rising fuel prices. This improvement was driven by a stable exchange rate, declining inflation, and positive economic growth. The services sector saw the most significant recovery, moving from negative 14% to positive 2%, while manufacturing improved from negative 15% to negative 3%. However, the retail and wholesale sectors faced a decline. Optimism for the next six months grew, with 43% of respondents expressing positive expectations. Despite cautious optimism, new investment plans remained negative at 23%, highlighting ongoing challenges.
- K-Electric (KE) is advancing its renewable energy initiatives with the development of 150 MW solar projects at Winder and Bela in Balochistan. Despite attracting record-low bids for the projects, KE received praise for integrating sustainable energy into its power generation mix. The lowest bid for Winder was Rs11.65 per unit, and for Bela, it was Rs11.20 per unit, both from Master Textile Mills Ltd. These projects are part of KE’s broader plan to integrate 1,300 MW of renewable energy by 2030. The projects are expected to save Karachi consumers Rs2.5 billion annually. KE is also progressing with other renewable initiatives, including a 220 MW hybrid solar-wind project in Sindh. Nepra will review the proposals before making a final decision.
Morning News: OGRA approves export of additional 80,000MT furnace oil amid declining local demand – By WE Research
Dec 11 2024
- The Oil and Gas Regulatory Authority (Ogra) has approved the export of an additional 80,000 metric tonnes (MT) of furnace oil, granting permissions to Pak-Arab Refinery Limited (Parco) and National Refinery Limited (NRL), following an earlier approval for Cnergyico Pakistan Limited (CPL) to export 40,000MT. Parco will export 50,000MT, and NRL will export 30,000MT, splitting its shipments between Port Qasim and Kemari Port. The surplus stock is a result of declining domestic demand as power plants reduce furnace oil usage due to high costs. In response, refineries are increasingly turning to exports. Electricity generation from furnace oil has dropped by 87% compared to last year, reflecting a policy shift toward more sustainable energy sources.
- Citi Pharma Limited (CPHL) and Martin Dow have partnered with China’s Kingbo Pharmatec to advance biotech and biologic manufacturing. The collaboration, formalized through a Memorandum of Understanding (MoU), aims to reduce Pakistan's reliance on imported medicines by fostering local production for both domestic and export markets. The trio plans to build a state-of-the-art manufacturing facility in Indonesia, adhering to global quality standards. Kingbo Pharmatec will lead the technical aspects, while CPHL and Martin Dow explore export opportunities. This venture will lower healthcare costs, conserve foreign exchange, and strengthen Pakistan’s pharmaceutical market. Additionally, it promises broader economic benefits, including new revenue streams from international exports.
Morning News: SECP registers 3,024 new companies in November, boosting corporate sector growth – By WE Research
Dec 10 2024
- In November 2024, the Securities and Exchange Commission of Pakistan (SECP) registered 3,024 new companies, bringing the total to 236,611. This growth reflects an expanding corporate sector and increased confidence in Pakistan’s business environment. Notably, 99% of the registrations were processed digitally, promoting transparency and ease of doing business. Private Limited Companies made up 58% of new registrations, with sectors like IT, e-commerce, services, and trading leading the growth. Foreign investment showed positive signs, with 79 companies attracting international capital, mainly from China, Afghanistan, and Norway. SECP’s efforts to enhance digital infrastructure and streamline processes aim to foster entrepreneurship, attract investment, and support sustainable economic growth, creating a more business-friendly environment in Pakistan.
- The International Cotton Association (ICA) has blacklisted 84 Pakistani textile mills for failing to honor cotton purchase agreements, barring them from trading in global cotton markets. The mills, located mainly in Karachi, Lahore, and other cities, face severe operational disruptions, with some already closed or partially ceased operations. Notable defaulters include Acro Spinning & Weaving Mills, Crescent Fibres, and Din Industries. Many mill owners are linked to industry bodies such as APTMA and FPCCI. The blacklist exacerbates challenges in Pakistan’s textile sector, already struggling with rising costs and operational issues. Industry experts warn that this move could worsen the financial troubles of the affected mills and damage the global reputation of Pakistan’s textile industry.
Morning News: S. Arabia rolls over $3bn deposit for another year – By WE Research
Dec 6 2024
- Saudi Arabia has agreed to extend its $3 billion deposit in Pakistan's State Bank for another year, providing essential support to Pakistan's foreign exchange reserves. The deposit, initially agreed upon in 2021 and renewed in 2022 and 2023, was set to mature on December 5, 2024, but will now remain in place for an additional year. This extension is crucial for Pakistan's economic stability, particularly as it faces a $26 billion debt servicing obligation this fiscal year. Pakistan's foreign exchange reserves have been steadily increasing, bolstered by inflows like the $500 million from the Asian Development Bank, reaching $12.038 billion by November 29, 2024. This growth in reserves has contributed to a stable exchange rate and renewed confidence among exporters. The government aims to reach a reserve target of $13 billion by the end of the fiscal year.
- As of November 29, 2024, Pakistan's total liquid foreign reserves reached $16.6 billion, with $12 billion held by the State Bank of Pakistan (SBP) and $4.6 billion held by commercial banks. The SBP's reserves increased by $620 million, mainly due to a $500 million inflow from the Asian Development Bank. Additionally, Saudi Arabia extended the $3 billion deposit in Pakistan's SBP for another year, reinforcing its support for Pakistan’s economy. In the currency market, the Pakistani rupee remained stable against the US dollar, with a minor depreciation of 0.01%. Economic indicators such as a reduced trade deficit, declining inflation, and growing political stability are fostering investor confidence. Meanwhile, gold prices in Pakistan increased, following a rise in international rates. Locally, the price of gold per tola rose by Rs500 to Rs275,700, reflecting global trends, with gold futures showing a slight decrease.
Morning News: China-Pakistan strengthen trade ties with nine agreements worth RMB 1.918 Billion – By WE Research
Dec 5 2024
- Chinese and Pakistani enterprises have signed nine agreements worth RMB 1.918 billion (around $263.8 million) to strengthen bilateral trade ties. The agreements were signed during the Strategic Cooperation Summit on E-Commerce in Kunming, China, with a focus on "Unleashing the Digital Potential of CPEC." The agreements span various sectors, including overseas investment, mineral and ore trading, agriculture, and the digital economy. Key participants include Yunnan Yunshangyun Big Data Industry Development Co., Ltd, Jinhu International Trade (Kunming) Co., Ltd, and Northern Frontier Mines Pakistan. Raja Nasir Ali Khan, Minister for Planning and Development in Gilgit-Baltistan, emphasized the potential for boosting trade, investment, and growth in digital technologies under the China-Pakistan Economic Corridor (CPEC).
- The government’s Task Force on Energy has reached an agreement with 17 Independent Power Producers (IPPs) under the 1994 and 2002 power policies on a hybrid "take and pay" model. The revised agreements, which are pending cabinet approval, are expected to save the government Rs200-300 billion. Key changes include rebased tariffs, profit-sharing adjustments, and updated indexation mechanisms. Nishat Chunian Power Limited has approved amendments effective November 1, 2024. The agreements also address outstanding receivables, with the government committing to clear them within 90 days. Arbitration clauses will now be handled locally. The government expects a reduction of Rs3.50 per unit in tariffs, potentially rising to Rs6.50 per unit after re-profiling Chinese IPP debts.
Morning News: Buoyed by inflation dip, PSX tops 104,500 as rate cut bets gain traction – By WE Research
Dec 4 2024
- The Pakistan Stock Exchange (PSX) continued its record-breaking momentum, with the KSE-100 Index rising by 1,284.13 points (1.24%) to reach 104,559.07, fueled by economic optimism and a sharp decline in inflation. The market’s performance reflects improved macroeconomic conditions and expectations of monetary easing. Key factors driving the rally include a drop in inflation to 4.9%, the lowest in six-and-a-half years, and a narrowing trade deficit, which improved market sentiment. Prime Minister Shehbaz Sharif’s optimism about further interest rate cuts also contributed to the bullish trend. Analysts expect sustained growth, driven by favorable economic policies, stabilizing fundamentals, and a strong market outlook.
- Cement sales in Pakistan rose by 5.58% in November 2024, with total dispatches reaching 4.146 million tons, driven by strong domestic sales and a 21.27% increase in exports. Domestic sales saw a slight rise of 2.39%, while export dispatches surged significantly. North-based mills dispatched 2.925 million tons, with exports up by 16.90%, while South-based mills saw a 15.21% increase in total dispatches, with exports rising 22.48%. For the first five months of the fiscal year, total cement dispatches declined by 5.24%, despite a 28.73% rise in exports. APCMA urged government intervention to reduce duties and taxes to lower consumer costs and stimulate sector growth.
- Pakistan's petroleum product sales rose 15% YoY to 1.58 million tonnes in November FY25, driven by a 17% increase in petrol sales and a 21% rise in high-speed diesel (HSD) sales. However, furnace oil (FO) sales dropped 55% YoY due to lower demand in power generation. The increase in sales was attributed to a crackdown on smuggled fuel and a reduction in petrol and HSD prices. On a MoM basis, sales rose by 6%, with higher HSD demand. In the first five months of FY25, total petroleum sales increased 5% YoY, with petrol and HSD up, while FO dropped. PSO saw a 12% YoY sales increase but a decline in market share, while Shell and HASCOL reported growth. PDL collections also grew.
Morning News: IMF reveals stringent conditions for second loan tranche – By WE Research
Dec 3 2024
- The Pakistani finance ministry has acknowledged its failure to meet three key targets under the $7 billion Extended Fund Facility (EFF) from the IMF, including revenue collection targets for the Federal Board of Revenue (FBR) and spending on health and education. Provincial governments missed the deadline to amend agriculture income tax legislation by October 2024. The legislation aims to align provincial agricultural income tax regimes with federal tax policies, with implementation set for January 2025. Additional reforms include introducing a Federal Excise Duty on pesticides and fertilizers, expanding tax efforts at the provincial level, and increasing contributions for higher education and social protection. Provinces are also required to improve tax compliance, reduce corruption, and enhance digitalization. Finance Minister Muhammad Aurangzeb stressed the urgency of simultaneous reforms in population control, climate change, and education, while working on a 10-year partnership with the World Bank. Meanwhile, the National Assembly Standing Committee on Finance debated the IMF programme, with opposition protests over asset declaration requirements for government officials. The committee was briefed on the 22 structural benchmarks of the EFF, with most focusing on federal and State Bank of Pakistan reforms.
- Prime Minister Shehbaz Sharif reviewed the progress of Saudi Arabia's $2.8 billion investment in Pakistan, highlighting the conversion of seven out of 34 signed Memorandums of Understanding (MoUs) into formal contracts, worth $560 million. During a meeting to assess bilateral cooperation, the prime minister praised Saudi Arabia’s continued support for Pakistan, especially in challenging times. This update follows Saudi Arabia's October announcement to increase its investment by an additional $600 million, bringing the total commitment to $2.8 billion. The investment surge followed discussions between PM Shehbaz and Saudi Crown Prince Mohammed bin Salman, with Saudi Investment Minister Khalid bin Abdulaziz Al Falih noting that 34 MoUs were signed, initially valued at $2.2 billion before the additional investment.