Economic Revival Plan | Morning Newsletter | September 25, 2023

 Market Outlook: Economic Revival Plan

• Over the weekend, the air was abuzz with ministers and government officials actively advocating for the revitalization of our economy. Army chief wholeheartedly pledged support for the ministries diligently working on a targeted economic recovery plan. The discussions were centered on crafting precise and tangible strategies aimed at steering our economy onto the path of resurgence.

• In an effort to stimulate economic growth, the Minister of Commerce and Industries engaged in a candid dialogue with business leaders in Karachi. He shared his insights on reducing interest rates in the foreseeable future and fostering an environment conducive to boosting exports. Additionally, the SIFC executive body has entrusted the Secretary of Commerce and the Secretary of Petroleum with the crucial task of outlining a definitive timeline for the implementation of the WACOG initiative.

• Meanwhile, the Finance Ministry has been hard at work, formulating meticulous plans to bolster revenues while maintaining prudent control over expenditures. Furthermore, a significant development on the federal front is the proposal to mandate provinces to shoulder 50% of the cost of PSDP projects within their respective domains. This move is poised to alleviate some of the financial burden on the federal balance sheet.

• As we embark on this week, we eagerly anticipate the release of annual corporate results from the remaining companies. Concurrently, the onset of the future rollover week commences today, extending over four days due to a public holiday on Friday. We strongly recommend keeping a keen eye on stock-specific themes, as the advent of the corporate results season in October 2023 is set to reignite interest in sectors such as banking and independent power producers (IPPs). Anticipation is high for quarterly payouts, with major players like UBL, MCB, and MEBL scheduled to announce their dividends. Furthermore, companies like HUBC, NPL, and NCPL are also potential candidates for quarterly dividend declarations.

• Moreover, the oil marketing companies (OMCs) are expected to deliver improved results thanks to inventory gains, while ATRL is poised to post robust earnings driven by enhanced gross refining margins (GRMs). Overall, we anticipate an uptick in market performance, driven by the excitement surrounding corporate results and the corresponding investment opportunities they present.

• Top Picks: OGDC, MARI, POL, MEBL, BAFL, FABL, BAHL, HMB, LUCK, MLCF, CHCC, PIOC, FCCL, HUBC, NPL, MUGHAL, ISL, AGP, CPHL, PSMC, SYS, ILP, GATM, EFERT and FFC

• Board Meetings: Buxly Paints Limited, Punjab Oil Mills Limited, Nimir Resins Limited, Javedan Corporation Limited, Artistic Denim Mills Limited, Pakistan PVC Ltd, Ahmad Hassan Textile Mills Limited

• Minority shareholders’ plight in SEPL

• MUGHAL declares Rs3.20 DPS despite a 36% drop in profits for FY23

• Fatima Fertilizer approves Rs7.66bn equity investment in REITS

• TPLI acquires Pakistani branch of NHIC

• BAHL to set up an exchange company with Rs1bn paid-up capital

• Saudi Arabia’s GDP surpasses $1tr mark, joins trillion-dollar club

• Finance Minister urges for enhanced governance, accountability in SoEs

• Pakistan, UK explore avenues to expand cooperation

• Eurozone economy shrinks further in September

• MoC calls for tougher measures against smuggling via Afghan transit trade

• Govt launches Centralized Gateway Portal

• OMO Result: SBP injects Rs316.3bn

• Asia turns to fossil fuels as hydropower dwindles

Asian Stocks Decline on Fed Outlook as Oil Gains: Markets Wrap

Asian stocks fell and US Treasuries crept lower as investors weighed the Federal Reserve’s higher-for-longer stance. Oil gained for a second day.

https://www.bloomberg.com/news/articles/2023-09-24/asian-stocks-set-for-cautious-open-dollar-mixed-markets-wrap#xj4y7vzkg

Oil Resumes Rally as Hedge Funds Join Increasingly Bullish Bets

Oil climbed for a second day as hedge funds piled on bets that tightening supplies will see a resumption of the rally after a pause last week.

https://www.bloomberg.com/news/articles/2023-09-25/latest-oil-market-news-and-analysis-for-sept-25#xj4y7vzkg

Goldman Sachs Predicts $100 Oil As Renewable Transition Falters

Energy transition efforts, including decreased investment in hydrocarbon production, have contributed to rising oil prices and increased reliance on fossil fuels in backup scenarios.

https://oilprice.com/Energy/Energy-General/Goldman-Sachs-Predicts-100-Oil-As-Renewable-Transition-Falters.html

CGS of KSA Armed Forces meets President; More cooperation in trade, economy & defence sectors reiterated

Pakistan and the Kingdom of Saudi Arabia (KSA) have reiterated their desire to further improve bilateral cooperation in the areas of trade, economy, and defence.

https://epaper.brecorder.com/2023/09/23/10-page/972743-news.html

COAS pledges unwavering support; Ministries tasked to prepare targeted economic revival plan

The federal government has tasked all ministries to prepare comprehensive economic revival plan with targets amid Chief of the Army Staff (COAS), General Syed Asim Munir’s pledge of unwavering support to back the government’s efforts, well-informed sources in the Finance Ministry told Business Recorder.

https://epaper.brecorder.com/2023/09/24/1-page/972763-news.html

Policy rate kept unchanged on economic indicators: SBP official

The latest episode of the SBP Podcast series offers insights into the factors leading to the decision, economic indicators considered by the Monetary Policy Committee (MPC), future trajectory of inflation and economic outlook in light of the recent developments.

https://epaper.brecorder.com/2023/09/24/1-page/972768-news.html

‘Diamond’ category in Sohni Dharti Remittance Programme launched

The State Bank of Pakistan (SBP) has announced to launch of Diamond Category in the Sohni Dharti Remittance Programme to enhance inflows.

https://epaper.brecorder.com/2023/09/23/10-page/972744-news.html

ML-1 cost being revised as officials head to Beijing

China is reported to have agreed to a revised cost of $6.6bn for Mainline-1 (ML-1) — the 1,872km Karachi-Peshawar railway track — and would submit a modified design plan for the project to Pakistan latest by October 31.

https://www.dawn.com/news/1777365/ml-1-cost-being-revised-as-officials-head-to-beijing

Govt plans brand moot to attract foreign buyers

Caretaker Commerce Minister Gohar Ejaz has said a brand conference will be held in the next 90 days in which the top 100 brands will be invited to boost the confidence of foreign buyers and improve exports.

https://www.dawn.com/news/1777424/govt-plans-brand-moot-to-attract-foreign-buyers

Pakistan seeks disbursements on pledged flood-relief funds

Pakistan is striving to get donors to release $10 billion in pledges to help it recover from devastating floods by launching rebuilding projects that hinge on the funding, caretaker Prime Minister Anwaar-ul-Haq Kakar said on Friday.

https://epaper.brecorder.com/2023/09/23/1-page/972696-news.html

Even elites are losing due to ‘untenable’ economic status quo: UK expert

Stefan Dercon, professor of Economic Policy at Oxford University, has said that Pakistan’s economic status quo is ‘untenable’ and even elites are losing because of it.

https://www.dawn.com/news/1777543

Debt piling up; Borrowing reliance surging to finance twin deficits: WB

The World Bank on Friday said Pakistan’s economic model is unsuitable because the country’s borrowing reliance has been increasing to finance the twin deficits – fiscal and current account – and consequently, the debt level was piling up.

https://epaper.brecorder.com/2023/09/23/9-page/972739-news.html

Weekly inflation hits 38.6pc

The short-term inflation hit a new high for the third week in a row as the retail price of petroleum products soared, according to official data released on Friday.

https://www.dawn.com/news/1777427/weekly-inflation-hits-386pc

Provincial nature PSDP projects; Centre decides to make it mandatory for provinces to share 50pc cost

The caretaker federal government has reportedly decided to make it mandatory for the provinces to share 50 per cent of total cost of provincial nature projects in Public Sector Development Program (PSDP), well informed sources told Business Recorder.

https://epaper.brecorder.com/2023/09/25/1-page/972823-news.html

Minister hints at reducing petrol price

Caretaker Minister for Information Murtaza Solangi on Saturday hinted at reducing the petrol price in the next fortnight’s review as the Pakistani rupee gained massively against the US dollar.

https://epaper.brecorder.com/2023/09/24/8-page/972810-news.html

OGRA warns 27 OMCs over poor performance, flags supply risks

The Oil and Gas Regulatory Authority (OGRA) has found that 27 oil marketing companies (OMCs) have failed to meet the required benchmark for sales, stocks and imports of petroleum products, raising concerns over possible fuel shortages in the country.

https://www.thenews.com.pk/print/1112896-ogra-warns-27-omcs-over-poor-performance-flags-supply-risks

Pakistan to discuss long-term Russian oil deal next month

Pakistan will hold talks with Russia next month on a long-term arrangement for importing Russian crude oil, as the country seeks to diversify its energy sources and cope with high prices of petroleum products

https://www.thenews.com.pk/print/1112482-pakistan-to-discuss-long-term-russian-oil-deal-next-month

Pakistan to engage with Iran to explore oil, gas imports

Work on Pakistan-Iran gas pipeline has already started, and we are ready to fully explore the option of importing gas and oil from neighbouring countries, Caretaker Federal Minister for Energy Muhammad Ali said on Friday.

https://www.thenews.com.pk/print/1112438-pakistan-to-engage-with-iran-to-explore-oil-gas-imports

Nepra allows Rs3.28 tariff hike for six months

The National Electric Power Regulatory Authority (Nepra) on Friday allowed the federal government to increase electricity rates by Rs3.28 per unit for all consumers across the country for six months — October 2023 to March 2024 — with additional revenue impact going beyond Rs200bn.

https://www.dawn.com/news/1777384/nepra-allows-rs328-tariff-hike-for-six-months

Govt urged to renegotiate capacity charges

Businessmen ask for halt to sales tax collection, reduced tax on electricity

https://tribune.com.pk/story/2437530/govt-urged-to-renegotiate-capacity-charges

Auto price cuts unlikely despite cheaper dollar

Amid the rupee strengthening and the government’s intention to bring down the dollar rate to Rs250-260 soon, the country’s auto assemblers appear a bit reluctant to pass on the benefit of the currency appreciation to the consumers.

https://www.dawn.com/news/1777578/auto-price-cuts-unlikely-despite-cheaper-dollar

Spare part maker completes share buyback

Synthetic Products Enterprises Ltd (SPEL) has completed its share buyback consisting of 9.9 million shares at spot prices representing 20 per cent of the free float, which is the shareholding available for the public to trade on the stock exchange.

https://www.dawn.com/news/1777580/spare-part-maker-completes-share-buyback

Customs’ values on import of lubricating oils increased

The Directorate General of Customs Valuation, Karachi has increased customs values on the import of 42 types of lubricating oils from China, Turkey, Korea, and the Middle East for collection of enhanced duties and taxes from the said item.

https://epaper.brecorder.com/2023/09/23/1-page/972694-news.html

Cement exports up by 130.24 percent in two months

The ex­ports of cement witnessed an increase of 130.24 per cent during the first two months of the financial year 2023-24, as against the ex­ports of the correspond­ing month of last year.

https://www.nation.com.pk/24-Sep-2023/cement-exports-up-by-130-24-percent-in-two-months

Banks turn to long-term floating-rate debt to hedge against rate volatility

Banks increased their investments in long-term local currency bonds in the second quarter of 2023, with most of them opting for floating-rate instruments to hedge against a potential rise in interest rates, data from a local brokerage showed on Saturday.

https://www.thenews.com.pk/print/1112893-banks-turn-to-long-term-floating-ratedebt-to-hedge-against-rate-volatility

Banks score low on human rights policies: report

Pakistani banks score high on average for their anti-corruption policies but perform poorly on human rights policies, according to a policy assessment conducted by Fair Finance Pakistan, a coalition of civil society bodies, think tanks and advocacy groups that seeks to strengthen the commitment of financial industry to environmental, social and human rights standards.

https://www.dawn.com/news/1777571/banks-score-low-on-human-rights-policies-report

Finance Minister launches ‘Centralized Gateway Platform’

As a unique initiative in Pakistan’s financial landscape, “The Centralized Gateway Platform” has been formally inaugurated by Federal Minister for Finance Dr Shamshad Akhtar and Chairman SECP Akif Saeed in a ceremony at CDC House.

https://epaper.brecorder.com/2023/09/23/10-page/972750-news.html

REAP expects record rice export of $3 billion in 2023

Rice Exporters Association of Pakistan (REAP) expected that this year, the export of rice will be above the record $3 billion, which is very encouraging.

https://www.nation.com.pk/24-Sep-2023/reap-expects-record-rice-export-of-dollar-3-billion-in-2023

Fertiliser industry; Govt mulling ending cheaper gas facility

The caretaker government is likely to unify feed gas prices of fertiliser industry at par with industrial rate of Rs 1,260/ MMBTU instead of subsidized rates, amid accusations that fertiliser industry is not passing on subsidy to the farmers, sources close to Energy Minister told Business Recorder.

https://epaper.brecorder.com/2023/09/25/1-page/972825-news.html

Zero Percent Tax Amnesty Scheme; FBR finally releases data of beneficiaries

The Pakistan Information Commission’s (PIC) landmark order has been implemented by the Federal Board of Revenue (FBR), which disclosed the number of individuals and companies who availed benefits from the ‘Zero Percent Tax Amnesty Scheme’ given during the tenure of former premier Nawaz Sharif.

https://epaper.brecorder.com/2023/09/25/12-page/972883-news.html

Declaration against foreign assets; ‘Taxpayers not filing CVT being held liable to default’

Tax authorities are holding taxpayers liable to default for not filing capital value tax (CVT) declaration against their foreign assets, said sources.

https://epaper.brecorder.com/2023/09/23/9-page/972735-news.html

Duplex, packaging boards; Customs’ values revised

The Directorate General of Customs Valuation Karachi has revised customs values on the import of one-side coated duplex board and two-side coated packaging boards from Korea, China, Hong Kong, Taiwan, Indonesia, Malaysia, Europe, USA, Canada and Middle East.

https://epaper.brecorder.com/2023/09/24/1-page/972761-news.html

Amendments to NBFC rules notified

The Securities and Exchange Commission of Pakistan (SECP), with the approval of the federal government, has notified amendments to the Non-Banking Finance Companies (Establishment & Regulations) Rules 2003.

https://www.dawn.com/news/1777426/amendments-to-nbfc-rules-notified

FBR set to roll out new system to check sugar smuggling, tax evasion

After the failure of the Track and Trace System (TTS) laun­ched in 2021, the Federal Board of Revenue has rolled out a new software-based sales tracking system to monitor the movement of sugar from mills to the consumer market to control tax evasion in the industry.

https://www.dawn.com/news/1777569/fbr-set-to-roll-out-new-system-to-check-sugar-smuggling-tax-evasion

‘Fair’ elections can take place without Imran: PM

Prime Minister Anwaarul Haq Kakar has said “fair” elections were possible without PTI Chairman Imran Khan, who is currently incarcerated in a graft case, and his party leaders jailed following violent riots in the country on May 9.

https://epaper.brecorder.com/2023/09/25/1-page/972816-news.html

ECP approves changes to election rules

The Election Commission of Pakistan (ECP) on Saturday approved changes to 18 clauses of the Election Rules, besides issuing five new forms.

https://epaper.brecorder.com/2023/09/24/1-page/972759-news.html

ECP notifies changes in election law

Commission asks parties to file objections or suggestions by Oct 17

https://tribune.com.pk/story/2437467/ecp-notifies-changes-in-election-law

PTI, PPP demand exact date for polls

PTI says ECP shouldn’t hide behind technicalities; PPP seeks level-playing field for all

https://tribune.com.pk/story/2437560/pti-ppp-demand-exact-date-for-polls

Nawaz to be treated as per law on return: minister

Caretaker minister says Nawaz had been 3 times PM of country and was the Quaid of a big political party

https://www.thenews.com.pk/print/1112757-nawaz-to-be-treated-as-per-law-constitution-on-his-return-interim-govt

NAB seeks reinforcements amid push to reopen cases

Bureau looking for deputationists from investigating agencies, other government departments to fill gaps in its ranks

https://www.dawn.com/news/1777506/nab-seeks-reinforcements-amid-push-to-reopen-cases

Saudi FM warns of regional instability if Kashmir issue unresolved

Prince Faisal says Riyadh ‘unremitting in its efforts to mediate’ to achieve a peaceful settlement

https://tribune.com.pk/story/2437354/saudi-fm-warns-of-regional-instability-if-kashmir-issue-unresolved

‘Technical’ reasons for not giving poll date: official

With criticism growing over the Election Commission of Pakistan’s (ECP) failure to announce a specific date for general elections, a senior ECP official told Dawn on Friday that it was “not technically possible” to do so.

https://www.dawn.com/news/1777386

Nawaz Sharif to arrive to rousing welcome on Oct 21: Shehbaz Sharif

Shehbaz Sharif said he had dashed to London to discuss legal and political steps ahead of Nawaz Sharif’s arrival back home on October 21

https://www.thenews.com.pk/print/1112432-nawaz-to-arrive-to-rousing-welcome-on-oct-21-shehbaz