Pakistan Needs Another Resolution

Every year on March 23, Pakistan celebrates the adoption of the Lahore Resolution—the historic declaration that ultimately paved the way for the creation of Pakistan on August 14, 1947. For the Muslims of the subcontinent, the resolution represented far more than a political demand; it embodied the aspiration for sovereignty, dignity, and the right to determine their own future. More than eight decades later, Pakistan commemorates this milestone with pride and patriotic fervor. Yet the realities of the present compel a deeper reflection: does Pakistan today require another national resolve to safeguard its independence and strengthen its future? To read details click https://shkazmipk.com/pakistan-day-resolution/

PSX benchmark index down 2.9%WoW

Pakistan Stock Exchange (PSX) continued to witness volatility during the week amid persistent geopolitical tensions between the US and Iran, alongside Pak-Afghan conflict, before staging a recovery on Thursday with a gain of 4,267 points. The benchmark index declined by 5,108 points or 2.9% during the week, closing at 168,062 on Friday, February 27, 2026. Market participation improved during the week, with average daily traded volumes rising by 25%WoW to 1.0 billion shares, from 831 million shares a week ago.

On the macro front, developments remained supportive, with the IMF review team currently in the country. In parallel, the Finance Minister’s remarks regarding the UAE’s US$2 billion loan rollover were also encouraging, providing comfort on the country’s external financing position.

Moreover, SBP’s net FX intervention reached US$11 billion over the last 18 months as of November 2025, while SBP held FX reserves increased by US$16 million to US$16.2 billion as of February 20, 2026, despite the repayment of a US$700 million loan to the China Development Bank.

On the currency front, PKR appreciated by 0.03%WoW against the greenback during the week, closing the week at 279.47 PKR/ US$.

Other major news flow during the week included: 1) Trump hikes US global tariff rate to 15%, 2) IMF hints at phased tax cut approach, 3) Prime Minister Shahbaz Sharif and Qatari Emir agree to deepen economic cooperation, 4) Profit repatriation rises to US$1.67 billion in 7MFY26, and 5) CCP clears Abu Dhabi-based Eve Holdings’ acquisition of First Women Bank.

Vanspati & Allied Industries, Fertilizer, and Automobile Parts & Accessories were amongst the top performing sectors, while Tobacco, Synthetic & Rayon, and Property were amongst the laggards.

Major selling was recorded by Individuals and Foreigners with a net sell of US$18.0 million and US$17.3 million, respectively. Banks absorbed most of the selling with a net buy of US$33.9 million.

Top performing scrips of the week were: SSOM, AKBL, THALL, POL, and BAFL, while laggards included: UNITY, SSGC, TRG, YOUW, and IBFL.

AKD Securities expects the market to recover as domestic and geopolitical uncertainties subside, with market trading at attractive valuations of forward PE of 7.2x and Dividend Yield of 6.6%. The brokerage house anticipates the benchmark Index to reach 263,800 by end December 2o26.

Investors’ sentiments are expected to improve on the likelihood of foreign portfolio and direct investment flows, driven by improved relations with the United States and Saudi Arabia.

Top picks of the brokerage house include: OGDC, PPL, UBL, MEBL, HBL, FFC, ENGROH, PSO, LUCK, FCCL, INDU, ILP and SYS.

PSX Benchmark Index Declines 3.6%WoW

Pakistan Stock Exchange (PSX) remained volatile during the week due to persistent geopolitical tensions between the United States and Iran, coupled with domestic political noise. Benchmark index declined by 6,434 points or 3.6% during the week to close at 173,170 on Friday. Market participation also slowed with the start of Ramadan, with average daily traded volumes declined by 22%WoW to 831 million shares, as compared to 1.1 billion shares in prior week.

Developments on the economic front remained encouraging, as the country posted Current Account surplus of US$121 million in January 2026, against a deficit of US$393 million in the same period last year, primarily driven by higher workers’ remittances.

Industrial activity (LSMI) expanded by 4.8%YoY in 1HFY26, led by growth in automobile and textile sectors.

Government notified PKR5/ kWh reduction in industrial tariffs, higher than initially announced by Prime Minister.

Power generation increased by 12%YoY in January 2026, supported by the incremental industrial power tariff package and imposition of gas levy on CPPs.

Fertilizer offtakes declined by 48%YoY during January 2026, mainly due to elevated channel inventory following advance procurement in prior month.

Foreign exchange reserves held by State Bank of Pakistan (SBP) increased by US$19 million to US$16.2 billion as of February 13, 2026.

Other major news flow during the week included: 1) IMF review mission to arrive Pakistan on 25th of this month, 2) Pakistan's bonds draw biggest foreign inflows in 19 months during January this year, 3) IT exports increase by 19%YoY during January, 4) Textile exports increase by 1.3%YoY during 7MFY26, and 5) RDA inflows crosse US$12 billion mark during February 2026.

Sector-wise, Vanaspati & Allied Industries and Woollen were amongst the top performing sectors, while Refinery, Modarabas, and OMCs were the laggards.

During the first four trading sessions, major selling was recorded by Foreigners with a net sell of US$26.5 million. Individuals and Banks absorbed most of the selling with a net buy of US$14.4 million and US$12.1 million, respectively.

Top performing scrips of the week were: INIL, SSOM, THALL, BNWM, and MUREB, while laggards included: PIOC, TRG, UNITY, PSO, and MEHT.

AKD Securities expect market to recover as domestic and geopolitical uncertainties subside, with market trading at attractive valuations of forward PE of 7.3x and Dividend Yield of 6.4%.

Investors’ sentiments are also expected to improve on the likelihood of foreign portfolio and direct investment flows, driven by improved relations with the United States and Saudi Arabia.

Top picks of the brokerage house are: OGDC, PPL, UBL, MEBL, HBL, FFC, ENGROH, PSO, LUCK, FCCL, INDU, ILP and SYS.

PSX benchmark index declines 2.5%WoW

Pakistan Stock Exchange (PSX) remained bearish during the week ended on Friday, February 13, 2026, on investors’ skepticism over political developments and recent domestic security incidents. These concerns coupled with delay in the financial close of Reko Diq, weighed on Oil & Gas sector, which recorded the largest index point pullback during the week. Overall, the benchmark index declined by 4,526 points or 2.5%WoW, ending the week at 179,604 points. Market participation strengthened during the week, with average daily trading volume rising by 8%WoW to 1.1 billion shares, from 983 million shares in the prior week.

The pressure was partially eased by supportive macro developments: 1) budget surplus of PKR542 billion or 0.4% of GDP in 1HFY26 as against a deficit of PKR1.5 trillion in the same period last year, 2) a 15%YoY rise remittances sent by oversees Pakistanis to US$3.5 billion in first month of current calendar year, and 3) auto sales reaching a 43-month high during the outgoing month.

Moreover, in MSCI’s February 2026 Index review, ABOT was deleted from FM Index. In addition, SEPL and ZAL were added to the MSCI FM Small Cap Index, while LPL was removed.

Foreign exchange reserves held by State Bank of Pakistan (SBP) increased by US$21 million to US$16.2 billion as of February 06, 2026. On the currency front, PKR appreciated by 0.03%WoW against the greenback during the week, closing the week at PKR279.62/ US$.

Other major news flow during the week includes, 1) UAE extends US$2 billion lifeline to Pakistan ahead of IMF talks, 2) Moody’s changes Pakistan banking outlook to stable, 3) US approves US$1.3 billion financing for Reko Diq project, 4) Pakistan, Indonesia take fresh steps to deepen trade and investment ties, and 5) GoP announces to invest US$1 billion in AI by 2030.

Vanspati & Allied Industries, Inv. Banks/ Inv. Cos./ Securities Cos., Pharmaceuticals, Chemical and Transport were amongst the top performing sectors, while Textile Spinning, Oil & Gas Exploration, Jute, Synthetic & Rayon and Technology & Communication were amongst the laggards.

Major buying was recorded by Mutual Funds and Individuals with a net buy of US$29.6 million and US$13.0 million, respectively. Foreigners and Brokers were major sellers with net sell of US$25.9 million and US$15.9 million, respectively.

Top performing scrips of the week were: AGP, SSOM, ENGROH, SCBPL, and CPHL, while laggards included: UNITY, PPL, PKGP, BOP, and TRG.

AKD Securities expects market to recover as domestic and geopolitical uncertainties subside, and investor focus is likely to remain on upcoming financial results and improving macros. It forecasts the bench mark Index to reach 263,800 by end December 2026.

Investors’ sentiments are expected to improve on the likelihood of foreign portfolio and direct investment flows, driven by improved relations with the United States and Saudi Arabia.

Top picks of the brokerage house include: OGDC, PPL, UBL, MEBL, HBL, FFC, ENGROH, PSO, LUCK, FCCL, INDU, ILP and SYS.

 

 

 

 

 

 

PSX: Geopolitics and internal security concerns mar performance

Pakistan Stock Exchange (PXS) trended upwards for most of the week before adjusting by 3,703 points on Friday’s session, wiping out earlier gains to close the benchmark index at 184,130pts, down 45 points or 0.02%WoW. The decline was triggered by escalating geopolitical tensions over US and Iran, alongside adverse domestic security developments.

Earlier in the week, sentiments were supported by Prime Minister’s industrial relief package, coupled with record high monthly exports of US$3.06 billion during January 2026, resulting in 7%YoY drop in trade deficit. Inflation reading during the month remained lower than expected at 5.8%YoY.

Cement sector’s offtakes hit 5-year high of 4.54 million tons, up 13%YoY, driven by higher sea-exports.

OMC offtakes also increased by 6%YoY to 1.35 million tons.

Banking sector deposits expanded by 0.7%WoW, providing a positive backdrop for the sector.

T-Bill and PIB yields rose by 15 to 40 bps, in the first auction following SBP’s decision to leave policy rate unchanged.

Despite improved sentiments, market participation weakened during the week, with average daily trading volume declining by 12%WoW to 1.2 billion shares, from 1.4 billion shares in the earlier week.

On the currency front, PKR appreciated by 0.02%WoW against the greenback during the week, closing the week at 279.71 PKR to a US$.

Other major news flow during the week included: 1) UAE rolls over US$2 billion Pak loan for a month, 2) GoP requests Saudi Arabia for two-year extension in oil facility, 3) Barrick reviews Reko Diq project amid security concerns, 4) FBR collection rose 16%YoY to PKR1,015 billion in January 2026, and 5) Private sector credit expands by PKR 589 billion in FYTD.

Power Generation & Distribution, Jute, Leather & Tanneries, Inv. Banks/ Inv. Cos./ Securities Cos., and Real Estate Investment Trust were amongst the top performing sectors, while Chemical, Engineering, Tobacco, Oil & Gas Exploration Companies and Cement were amongst the laggards.

Major buying was recorded by Mutual Funds, Brokers, and Companies with an aggregate net buy of US$32 million. Banks and Foreigners were major sellers with net aggregate sell of US$25 million.

Top performing scrips of the week were: KEL, ILP, SAZEW, HMB, and TRG, while laggards included LOTCHEM, PIBTL, PPL, GADT, and KTML.

AKD Securities foresees the positive momentum at PSX to continue due to improving macros and continuous focus on reforms amid political stability. The brokerage house forecasts the benchmark Index to reach 263,800 by end December 2026.

Investors sentiments are expected to improve on the likelihood of foreign portfolio and direct investment flows, driven by improved relations with the United States and Saudi Arabia.

Top picks of the brokerage house are: OGDC, PPL, UBL, MEBL, HBL, FFC, ENGROH, PSO, LUCK, FCCL, INDU, ILP and SYS.

PSX benchmark index up 0.4%WoW despite volatility

Pakistan Stock Exchange (PSX) experienced volatility throughout the week, driven by geopolitical tensions. However, a positive momentum prevailed as geopolitical dust settled along with news of defence export deals with multiple regional partners and encouraging macro developments. The benchmark Index witnessed a weekly gain of 689 points or 0.4%WoW to close at 185,099 points on Friday January 16, 2026.

Market participation declined by 24.5%WoW with average daily trading slipping to 1.2 billion shares, from 1.6 billion shares in the prior week.

On the macroeconomic front, LSM index increased by 10.4%YoY in November 2025 while posting growth of 6%YoY during 5MFY26.

In the latest PIB auction, yields declined on all the tenors.

Fertilizer sector marked the highest ever annual urea sales in CY25.

Auto sales reported at 17,000 units in December 2025, down 6%YoY.

Foreign exchange reserves held by State Bank of Pakistan (SBP) increased by US$16 million to US$16.1 billion as of January 09, 2025.

PKR appreciated against the greenback during the week to 279.95 PKR/ US$.

Other major news flow during the week included: 1) Turkey confirms talks on defence pact with Pakistan and Saudi Arabia, 2) Petrol, diesel prices to remain unchanged for next fortnight due to the increase in Petroleum Levy, 3) Pakistan announces plan to develop Port Qasim into climate-resilient industrial complex 4) Pakistan, Saudi Arabia eye joint mining investments at Future Minerals Forum, and 5) Government announces plan 6,000 acre Export Processing Zone on Pakistan Steel Mills land.

Transport, Paper & Board, Oil & Gas Exploration Companies, Property, Automobile Parts & Accessories were amongst the top performers, while Synthetic & Rayon, Jute, Miscellaneous, Textile Weaving, and Textile Spinning were amongst the laggards.

During the week, major buying was recorded by Individuals and Mutual Funds with a net buy of US$16.1 million and US$12.8 million, respectively. Banks and Insurance Companies were major sellers with net sell of US$23.5 million and US$15.8 million, respectively.

Top performing scrips of the week were: ATLH, AKBL, LOTHCEM, OGDC, and JVDC, while laggards included IBFL, SAZEW, AICL, PABC, and YOUW.

AKD Securities foresees the positive momentum at PSX to continue due to further monetary easing driven by improving external account position and continuous focus on reforms amid political stability.

The brokerage house forecast the benchmark Index to reach 263,800 by end December 2026.

Investors’ sentiments are expected to improve on the likelihood of foreign portfolio and direct investment flows, driven by improved relations with the United States and Saudi Arabia.

Top picks of the brokerage house include: OGDC, PPL, UBL, MEBL, HBL, FFC, ENGROH, PSO, LUCK, FCCL, INDU, ILP and SYS.

 

 

 

 

US pushing gold prices to unrealistic levels

The perception that the United States is pushing gold prices to unrealistic levels is getting credence among some analysts, but the reality is more complex. Gold prices are influenced by multiple forces, many of which are tied to US policies and actions. Let us do some due diligence:

1. US Dollar and Monetary Policy

Gold is priced is quoted in US dollars around the world. When the Federal Reserve cuts interest rates, maintains low real yields, or expands liquidity through quantitative easing, investors seek gold as a hedge against dollar weakness. Conversely, when the Fed signals persistent inflation risks but avoids aggressive tightening, gold becomes attractive as a safe asset.

2. Inflation and Debt Pressures

The US is running record deficits and debt levels (over US$35 trillion). To finance this, the Fed and Treasury rely on loose monetary policies, which fuel fears of currency debasement. Gold thrives in such environments.

3. Geopolitical Strategy

Some analysts argue the US indirectly supports higher gold prices by fostering global instability - Middle East wars, tensions with China and Russia. In uncertain times, central banks and investors shift to gold. Ironically, Washington doesn’t mind if gold rises, because it pushes countries like China, Russia, and emerging economies to park reserves in gold instead of US Treasuries, reducing immediate pressure on US bond markets.

4. Central Bank Buying Trend

In recent years, especially after US sanctions on Russia’s reserves, central banks worldwide including China, Turkey, India, and even Poland have accelerated gold purchases to reduce dependence on the US dollar. The US fuels this trend by using the dollar as a geopolitical weapon, it motivates others to seek neutral reserve assets like gold, which drives its prices higher.

5. Speculation and Market Psychology

Large US-based funds and banks also influence gold prices via futures and ETFs. Speculative flows exaggerate moves, at times pushing prices well above fundamentals.

While it is being propagated that the US is not literally setting gold prices, in reality its monetary policy, sanctions strategy, and geopolitical behavior create conditions that push demand for gold. To some, this makes prices look unrealistic, but in fact they reflect rising mistrust in the US dollar system.

Following is the graph showing the hike in gold prices over the last two years (2023–2025). You can see a steady rise in 2023–2024, followed by a sharp surge in 2025 — nearly doubling from under US$2,000/ oz to over US$3,700/ oz.

China: Largest in maritime trade

Judging by the cargo flowing through Chinese maritime ports, the world’s export king still reigns despite efforts by the United States and Europe to diversify their trading relations.

That’s among the takeaways in the One Hundred Ports 2024 report this week from Lloyd’s List. China’s share of container volumes at the biggest 100 seaports globally rose to 41.3% last year, from 40.2% a year earlier, ten years ago the figure stood at 36.6%.

In a distant second place was the rest of Asia, which as a region had a 26.6% share, North America came in with 7.6% and Europe with 7.3%.

Linton Nightingale, deputy editor with Lloyd’s List, said China’s position as the Factory to the World “shows little sign of diminishing anytime soon.”

“Yes, shippers and manufacturers are looking to other countries to source goods in a bid to diversify supply chains — a trend that has accelerated off the back of the pandemic which caused a rethink on Chinese reliance,” he said. “But as our data shows, the world continues to rely heavily on its exports.”

Other key points from the report:

Of the world’s top 10 ports, measured by annual container throughput, seven are in China

The steepest climber on the list was China’s Jiaxing, which jumped 17 places to 58th

Rotterdam, a top-10 finisher in last year’s ranking, fell to 12th

Dubai climbed two spots to No. 9

The two biggest US ports each slipped two places — Los Angeles to No. 18 and Long Beach to 21st

In a world where trade is a key battlefield for opposing economic powers, the reason why rankings matter goes beyond bragging rights. Ports are on the front lines of three major transformations: protectionism, digitization and de-carbonization.

As a result, they’re neglected no more and stand to benefit from more than US$200 billion in investments annually over the next decade, according estimates reported in ‘Bloomberg’s Big Take’. The story zooms in on eight of the world’s most dynamic ports, each trying to adapt to new geopolitical and business realities.

“Trade flows are changing and are growing more complex as shippers redirect cargoes to skirt mounting geopolitical tensions,” Nightingale said.

In China’s case, “the trade war with US is the most disruptive,” he said. “However, Chinese goods are still entering the US and often via other emerging economies, whether Mexico, Vietnam or India, to circumvent tariffs.”

Those alternative routes are among the reasons that China is withstanding tariffs, export controls and other measures wielded by the US and Europe, and may continue to do so as it expands into more advanced manufacturing.

According to a new research report from Lazard Geopolitical Advisory, “China is largely undiminished as an industrial and manufacturing powerhouse.”

“Subsidies appear to be fueling a shift away from products that helped create the Chinese miracle of the 1990s and 2000s, like textiles and toys, into higher value-added products like computers and electric vehicles, driven by domestic Chinese firms,” Lazard’s report said.

“Geopolitical tension and economic struggles must therefore be weighed against the reality that China is still the largest global exporter of goods and may succeed in its pivot to more high-tech products.”

 

Democracy in Pakistan on Rough Terrain

Pakistan has survived many odds but the recent phenomenon of growing extremism, sectarian killing, elimination of political opponents and even the killing of doctors and academicians seems part of the grand agenda to plunge the country deep into anarchy. If the road to democracy leads from here, then it is quite a rough terrain.

Among the South Asian countries, Pakistan has the second largest population after India. Both the countries got independence from the British Raj with a difference of one day in August 1947. While India has earned the distinction of becoming a secular state and one of the largest democracies of the world, Pakistan has spent most of its time under autocratic rule, both military and civilian.

The younger generation often wants to know the reasons for the continuity of democratic rule in India and Pakistan staying under military rule for a very long time.

They also wish to understand the logic behind the ‘Charter of Democracy’ (CoD) that was signed between two of Pakistan’s largest political parties, PPP and PML-N.

There exist two opposite opinions about the CoD: first, it is an understanding reached between two political parties to avoid yet another military rule. Second, under the prevailing geo-political situation, the superpowers wish to keep the reins in the hands of elected representatives rather than supporting any military rule.

Some cynics say that political parties have learnt a lesson from the assassination of three elected Prime Ministers i.e. Liaquat Ali Khan, Zulfikar Ali Bhutto and Benazir Bhutto.

They also believe that PPP and PML-N now regret lack of understanding among themselves which led to dismissal of the governments of Nawaz Sharif and Benazir Bhutto. Nawaz Sharif has earned the distinction of being elected prime minister for the third time after the assassination of the charismatic leader, Benazir Bhutto.

Analysts watching geopolitics stringently believe that superpowers install and topple regimes around the world to pursue their foreign policy agenda and Pakistan is no exception.

The most talked about personalities are Anwar Sadat of Egypt, Benigno Aquino of the Philippines, Saddam Hussain of Iraq and General Zia ul Haq of Pakistan. All these political leaders were assassinated once the missions assigned to them were accomplished.

To this list, names of Indra Gandhi, prime minister of India and two Prime Ministers of Bangladesh, Sheikh Mujeeb ur Rehman and Zia ur Rehman could also be added. Sri Lanka has also been a victim of this tyranny.

While it is almost impossible to analyze Pakistan’s history spread over more than seven decades, one point is very clear – that the three military rulers were installed by the superpowers to maintain their hegemony in the region.

The rule of General Mohammad Ayub Khan (1958 to 1969) was facilitated because of the cold war. At that time Pakistan was made part of the South East Asia Treaty Organization (SEATO) and the Central Treaty Organization (CENTO), US-led defense pacts against communism.

After the fall of Dacca, Pakistan had no option but to pull itself out of SEATO during the regime of Zulfikar Ali Bhutto and CENTO died its natural death in 1979.

At one time, the USSR was highly annoyed and wanted to attack Pakistan because US spy planes were using an airbase located near Peshawar to snoop over the Soviet Union.

The second military regime of Zia ul Haq (1977 to 1988) was support by the US in the name of averting a Soviet attack on Afghanistan, termed an attempt by the USSR to get access to warm waters. The Afghan war, spread over nearly a decade, was fought from Pakistan’s GHQ and religious parties were given money to prepare the breed of Mujahedeen, now often referred to as the Taliban.

Once the decision was made to pull out the US-led troops in the belief that the USSR had been defeated, the entire military junta of the time became redundant. Zia ul Haq and his close generals died when their plane was blown up.

The killers were so desperate that one of the youngest and most outstanding ambassadors of the US and a Brigadier General also died as they were travelling with Zia ul Haq and other generals on the plane.

It is often said that General Pervez Musharraf took over after a failed attempt of the then prime minister Nawaz Sharif to get rid of him by not allowing his plane to land in Pakistan. But some cynics say Nawaz Sharif provided an opportunity to the military to topple his government.

The superpowers may not have liked Pervez Musharraf initially but he became their darling after he decided to become a partner in the US war against the Taliban regime in Afghanistan.

Pervez Musharraf got ‘red carpet’ receptions in the US and other western capitals for being their frontline partner in ‘war against terrorism’. He was kept in power till the decision was made to withdraw the majority of NATO troops from Afghanistan by 2014.

To give legitimacy to his rule, general elections were held in Pakistan. His exit from power looked a little strange to those who are not familiar with ‘conspiracy theories’. Some critics say he had also become redundant like Zia ul Haq.

The formation of an elected government under Pervez Musharraf was a replica of the elected government led by Mohammad Khan Junejo, which was termed a ‘legitimization of the Zia regime’ but an unceremonious dismissal of the Junejo government opened the Pandora’s Box.

Pakistan’s joining hands with the US during the Zia era to repel the USSR and fighting a proxy war in Afghanistan gave various ‘gifts’ to the country. These included – religious extremism, drugs and arms.

The presently prevailing precarious law and order situation in Pakistan can be termed as a combination of these stated elements. The democracy as prevalent today is also a hostage of these elements.

Some political analysts say that during the latter part of his regime and prior to the general elections, Pervez Musharraf was advised by the superpowers to join hands with Benazir Bhutto to ensure continuity of democratic rule in the country as this could also prolong his rule.

Prior to her landing in Pakistan, Benazir Bhutto was told to join hands with Pervez Musharraf. But serious differences emerged between Benazir Bhutto and Pervez Musharraf. She was later assassinated and her widower Asif Ali Zardari replaced Pervez Musharraf as the President of Pakistan.

It looked like a reenactment of the assassination of Benigno Aquino in the Philippines and his widow Cory Aquino becoming president of the country.
Though, the inference is highly sordid but the fact is that politicians in Pakistan know it very well that if they wish to come to power, they have to pursue the agenda of superpowers.

It is often an elected or autocratic government but it remains in power due to the external support that includes financial assistance from multilateral donors like IMF, World Bank and Asian Development Bank or arms supplied in the name of ‘maintaining minimum deterrence level’ against Pakistan’s enemies.

 

Pakistan Elections 2024: Likely Outcomes

According to a report by Pakistan’s leading brokerage house, Topline Securities, after a lot of uncertainties, Pakistan Elections are all set for February 8, 2024, to elect representatives for the National and Provincial Assemblies for the next five years.

Many political analysts a few weeks back were not sure about timely elections due to legal, operational, and weather-related issues. Now it seems that all these issues have been settled, and the process is likely to be completed on time.

According to detailed strategy note titled 'Stock Market Recovery Has Just Begun; Index Likely to Reach 75,000 in 2024,' dated November 18, 2023, mentioned that things are now looking stable, and elections are likely to happen on February 8, 2024, contrary to earlier fears that elections may be delayed for a few years.

A smooth transfer of power to an elected government will help overcome concerns of bilateral and multilateral lenders, including the IMF, at a time when Pakistan is facing a severe external debt repayment challenge.

IMF in its country report in July 2023, stated that the new Stand By Agreement (SBA), can play a crucial role in anchoring policies ahead of the national elections due in the fall and until a new government is formed. IMF team also met with leaders of major political parties in Pakistan to get assurances of support for key objectives ahead of final approval of US$3 billion SBA in July 2023 crucial to save the country from default.

With only two weeks left for the Elections, political activities and election campaign is not what it used to be. This could be due to lack of interest by political parties or may be due to lesser competition in most of the constituencies after PTI did not get the “Bat” symbol.

Looking at the manifestos and promises of major parties, it seems no one is addressing the key economic challenges faced by Pakistan. Most of the parties are focusing more on the popular measures to gain public confidence amid record high inflation.

Comparing the performance of three large political parties in their last tenure, PML-N and PTI have performed relatively well on key economic indicators as against PPP. This has also being endorsed by a recent news analysis by Bloomberg whereas per Misery Index, PML-N (score 14.5%) has better record on managing the economy followed by PTI (score 16.1%) and then PPP (score 17.2%).

Considering the recent developments, the question investors are interested in is not who will win the elections but whether the new government will get a majority or if it will be a weak coalition government. As reported by leading political experts, it looks like PML-N will form a new coalition government. This is also supported by few recent surveys.

The brokerage house believes that in case one party gets 50% plus seats, that will definitely boost investors' confidence and markets will react positively. This will also give a positive signal to the IMF and other lenders. On the contrary, a coalition government with support of smaller parties will remain fragile and may struggle to implement the much-needed economic reforms.

Another key area to look for is how the new government will manage economic challenges, especially to deal with the IMF for a long-term program. Considering the not-so-pleasant experience with the PML-N nominated Finance Minister in the last opposition-led government of PDM, investors are eager to see the finance team of the new government.

The new government and its Finance Minister can play a significant role in negotiating with friendly countries for debt rollover/debt re profiling and finalizing a new IMF program that requires a lot of painful reforms.

Furthermore, it will be interesting to evaluate the new government's relationship with the establishment. Pakistan has a poor history of worsening civil-military relationships that have badly affected the political continuity, with negative implications for the economy and the markets.

Pakistan Stock market recovery is likely to continue in the year 2024. The brokerage house expects benchmark KSE-100 total return index to reach 75,000 by December 2024. However this is based on current low PE multiples without assuming any re rating amid high risk of debt sustainability. Investors may also see a post election rally in line with historical trend.

Smooth transfer of power to new government after elections, new long term funding program from IMF and expected fall in Interest rate will be the key drivers of equity market in 2024.

In spite of recent rally, Pakistan market is currently trading at PE of 3.7x based on 2024 estimated earnings. This is far lower than last 5 year and 10 year average PE of 6x and 8x respectively. This is even lower than countries that have defaulted on external debt. 

The brokerage house prefers high quality private sector companies with strong cash flows. In cyclical sectors it prefers Cement and Steel due to expected decline in policy rate and better volumetric sales. It also likes Banks due to unmatched valuation.

Its 2024 top picks include Meezan Bank (MEBL), United Bank (UBL), MCB Bank (MCB), Mari Petroleum (MARI), Lucky Cement (LUCK), Maple Leaf Cement (MLCF), Fauji Cement (FCCL), Engro Corporation (ENGRO), Pak Elektron (PAEL), Indus Motors (INDU) and Interloop (ILP).

On the other hand some mid and small caps have the potential to provide above average gains that includes Pakistan Aluminium Beverage Cans (PABC), Mughal Iron & Steel (MUGHAL), Image Pakistan (IMAGE), Tariq Glass (TGL), Century Paper & Board (CEPB), Panther Tyre (PTL), and Murree Brewery (MUREB).

 

Shrinking number of OPEC members

Lately, Angola has relinquished its OPEC membership. Earlier Qatar, Indonesia had left the organization. These departures are not likely to have any considerable impact on total world market supply.

Generally, it seems OPEC is facing three challenges these days. The first one is the withdrawal of members. Over the past years, OPEC’s efforts to persuade other oil-producing countries to join it have been unsuccessful.

During the current year, OPEC repeatedly invited Guyana to become a member but the South American country rejected the invitation, apparently based on the assumption that it wants to maximize oil production and profits during an era in which oil demand could be in decline over the coming years.

Not only OPEC has not been able to attract new members it also faces new potential quits. After Qatar decided to exit the organization, at least for the past couple of years, UAE has been the largest threat to the unity of the organization.

The disarray between UAE and OPEC led by Saudi Arabia reached its climax two years ago when the country insisted on a higher baseline to its quota to allow for more domestic production.

If the UAE decides to exit the organization it could weaken the influence of the organization as far as it concerns setting oil prices because the Emirates is OPEC’s third-largest oil producer.

The second challenge of OPEC is that since more than a decade ago, three of its main members have played no role in making decisions in the ministerial meetings of the organization.

These three countries' position in OPEC, as the hawks of the organization, has declined considerably mainly due to the US sanctions.

Two of these countries are non-Arab founding members of the organization: Iran and Venezuela. And the third one is Libya as the most serious advocate of higher prices strategy among the African members of OPEC.

Libya's policies at OPEC were close to Iran and Venezuela which more and less were close to each other at OPEC against Saudi Arabia which mainly defended its market share.

When the three countries' influence eroded at OPEC either through the US sanctions or via the toppling of Qadhafi during the Arab Spring unrest, Riyadh probably felt that these developments have paved the way for its unchallenged dominance in OPEC’s decision-making meetings.

Their absence as members who are being excluded from the quota and limiting oil production mechanism may have weakened Saudi Arabia's stance in setting desired oil prices which has to cut oil production voluntarily in the hope of boosting oil prices.    

The read challenge OPEC faces is not from within but from outside. This challenge culminated at the COP28 in UAE when a great number of participating countries asked for fossil fuel phase-out.

Oil once lubricated the wheels of industrialized countries' economies and was the world's economic growth engine. Now it is considered, mostly by industrialized countries, as something redundant that humans should get rid of as soon as possible to save the planet against global warming, and OPEC’s reasoning that humans should get rid of emissions, not fossil fuels, apparently remains unheard.

 Even though the term phase out was eliminated from the final COP28 communiqué, 198 countries reached an agreement that emphasizes transitioning away from fossil fuels, and United Nations (UN) Secretary-General Antonio Guterres said, “To those who opposed a clear reference to phase out of fossil fuels during the COP28: Whether you like it or not, fossil fuel phase-out is inevitable.”

Now OPEC through cooperation with ten non-OPEC oil producers called OPEC Plus tries to maintain its influence in the oil market but without that, it faces internal and external challenges that threaten the power once it enjoyed in the world oil market. 

 

Pakistan: Understanding General Asim Munir Doctrine

Functioning as a security state, Pakistan has long formulated its foreign policy choices based on security needs and the aspiration to establish itself as a hard military power. This approach has allowed the military to play a leading role in shaping both, domestic and foreign policy decisions, often overshadowing civilian institutions. However, with changing global dynamics, the current civil-military establishment is actively signaling a shift in Pakistan’s strategic culture and foreign policy interests.

It has been just over a year since General Asim Munir took command of Pakistan's military; succeeding General (retired) Qamar Javed Bajwa in late November 2022. Apart from stepping into the most powerful role in Pakistan, Munir also inherited the legacy of Bajwa’s military doctrine, which not only shaped Pakistan's foreign policy but also presented considerable challenges for him to address.

Throughout his tenure, Bajwa orchestrated a paradigm shift in Pakistan's traditional geostrategic focus, transitioning from geopolitics to geoeconomics. This shift involved broadening the scope of Pakistan’s national security, moving beyond a primary emphasis on military defense, and recognizing economic security as a crucial factor for achieving improved traditional security outcomes.

To safeguard economic security, Bajwa aimed to enhance Pakistan's geostrategic importance by prioritizing regional connectivity and global development partnerships. He sought to position Pakistan as a key hub for trade, transit, and production in West, Central, and South Asia, intending to transition from aid-based dependencies to trade and investment partnerships.

Bajwa fell short of fully realizing his vision during his six years in office, with Pakistan continuing to rely heavily on International Monetary Fund (IMF) loans to support its declining economy. Munir now faces the challenging task of turning Bajwa’s unrealized vision into a reality. This requires cultivating positive interdependence and multi-alignment with a diverse range of partners, while also ensuring domestic stability.

An examination of Munir’s first year in office is crucial to assess his progress thus far and gain insight into the military’s current foreign policy vision.

Munir doctrine

A crucial aspect of Munir’s doctrine involves guiding Pakistan away from the strategic dilemma of choosing between the United States and China, and avoiding the significant costs it has incurred for Islamabad’s foreign policy.

Munir has made clear a preference for pursuing a hedging strategy, aiming to avoid getting entangled in global binary politics. His strategic approach is centered on maximizing Pakistan's economic gains to avoid subservience to major powers and increase its room for maneuver. He articulated this vision for defending Pakistan's sovereignty by building a robust economy, emphasizing that, “all Pakistanis must throw out the beggar’s bowl.”

At least three interrelated points characterize Munir's foreign policy vision, each representing significant challenges he must confront. These observations are drawn from his statements and actions up to this point.

First, he has expressed a commitment to project and advance a softer image of Pakistan.

Second, he has demonstrated a keen interest in elevating Pakistan as a regional middle power.

Third, he has placed a significant focus on prioritizing geo-economics over geopolitics.

Revamping Pakistan’s image

A state's image and reputation are pivotal in achieving foreign policy goals. Pakistan's global reputation is currently plagued by a host of domestic issues, all of which paint a picture of the country as a struggling democracy grappling with internal turmoil. Recent regime changes, the constitutional crisis over the next general elections, growing insecurity and the rise in terrorist attacks, escalating debt, human rights violations, political instability, socioeconomic disparities, growing inflation, and energy crises have all taken a toll on Pakistan's standing in the international community.

The country is increasingly perceived as an elitist state that struggles to address the genuine concerns of its citizens, moving closer to a praetorian state. This negative image is partly due to the hybrid governance model adopted prior to Munir's appointment, disrupting the balance of power between civilian and military authorities.

Under this system, the military has gained legal authority to govern key state institutions, but this has eroded its public image, a problem that has been exacerbated by allegations from popular leader Imran Khan of undermining democracy.

At present, there are lingering suspicions that the next general elections, currently scheduled for February 08, 2024, may not take place until Khan is absent from the political landscape. Despite being imprisoned and facing a ban from politics, Khan maintains significant popularity compared to his political rivals. As long as his Pakistan Tehreek-e-Insaf party remains a legitimate political entity, it poses a potential risk of securing a majority in parliament, a scenario the military establishment is unwilling to tolerate.

For their part, Western nations, including the United States and European Union, have issued warnings about potential consequences if the elections are delayed further or conducted unfairly. Adding to Pakistan's challenges, a group of US members of Congress recently urged the Biden administration to withhold military aid due to concerns over human rights abuses.

Dismissing such negative perceptions, Munir has pledged his commitment to upholding democracy in Pakistan. This underscores a major aspect of the Munir doctrine, which aims to restore the military's soft image both at home and abroad while retaining its influence in the country's governance.

Affirming Munir’s position, Interim Prime Minister Anwar-ul-Haq Kakar has asserted that the military's involvement in state governance is solely due to its organizational capabilities and has dismissed concerns that it might seek to manipulate the upcoming elections.

Pakistan a regional security actor

Historically, Pakistan has leveraged its advanced military capabilities as a crucial asset in its foreign relations, a reason why its defense cooperation takes precedence over economic ties with other countries. This security-centric foreign policy strategy has played a pivotal role in sustaining the functionality and institutional capacity of the military, even during the most testing periods. However, despite entering significant security and defense agreements, Pakistan has been unable to achieve much-needed stability and security.

A primary factor contributing to this challenge is the hostile internal and regional security environment in which Pakistan is situated. Munir's foreign policy vision reflects this strategic thinking, as evidenced by his statements and efforts in defense diplomacy.

He has expressed his desire to defend Pakistan against internal and cross-border terrorism while simultaneously transforming the country into a stabilizing regional security actor.

In terms of foreign policy initiatives, Munir has carved out a distinctive path, particularly in relation to India and Afghanistan. Taking a stern stance toward India, Munir has issued warnings of a swift proportional response in the event of an attack. He has also accused India of waging a proxy war against Pakistan through terrorist organizations.

Deviating from the traditional friendly ties between Pakistan's military and the Afghan Taliban, Munir has chosen to pursue a more adversarial policy toward the Kabul regime.

Accusing the Afghan government of sheltering anti-Pakistan terrorists, he has threatened a robust military response if Pakistan’s security demands are not met.

The ongoing deportation of 1.7 million Afghans residing in Pakistan is evidence of Munir’s stringent policy against the Afghan Taliban. In defense of the massive deportations, Munir has contended that the expulsion of Afghans, whom he alleges to be involved in most terrorist activities in Pakistan, would enhance the country’s internal security.

Strategic neutrality

Munir has articulated his aspiration to safeguard Pakistan's strategic autonomy and territorial integrity, with the objective of maintaining a neutral middle power status in the global context.

This vision may have taken shape as a response to the deliberate strategic maneuvers of middle powers, which have astutely capitalized on the rivalry between the West and Russia, as well as the competition between the United States and China, to bolster their bargaining positions, all while avoiding being ensnared in their confrontations.

Achieving genuine neutrality may be a tall order though and would require, first and foremost, full independence from foreign aid.

Unfortunately, at present Pakistan is highly reliant on external aid to meet its needs. Bound by geographic, geopolitical, and geo-economic constraints, Pakistan often finds itself with limited options, at times playing a subservient role to major global powers.

In the face of fervent appeals from substantial segments of Pakistani society, calling on the military to lend support to Hamas against Israel and to diplomatically boycott Western backers of Israel, including the United States, Munir has opted to abstain from such actions.

In contrast, he seems focused on navigating Pakistan's response to the demands of both the United States and China without stirring tensions with either side.

He has sought to enhance Pakistan-US defense ties, rekindling US interest in the country after a previous inclination to disengage. A notable case in point is the renewal of the Communications and Information Security Memorandum of Agreement (CISMOA), a crucial element of US-Pakistan defense cooperation, through which the US has extended its offer to assist Pakistan in counterterrorism efforts.

To further solidify ties, Munir visited Washington in mid-December for discussions with senior US military and Biden administration officials, seeking to strengthen US-Pakistan military cooperation and foster investment in Pakistan by urging the US government to explore opportunities through the newly established Special Investment Facility Council.

As for China, despite reports of Beijing’s reluctance to add more projects to the China-Pakistan Economic Corridor (CPEC) due to performance issues on Pakistan's part, Munir's renewed commitment to ensuring the security of Chinese interests has injected new life into previously stagnant CPEC projects.

Pakistan's economic revival

One of Munir’s major foreign policy objectives is to address Pakistan's economic challenges through cooperation with friendly nations. His vision for Pakistan’s economic growth and prosperity emerged when he took on a diplomatic role in securing funding from the United Arab Emirates and Saudi Arabia to fulfill IMF preconditions for a crucial bailout package. While this prevented Pakistan from facing a debt default, it also brought significant embarrassment due to the harsh conditions attached to the IMF bailout in an already crisis-ridden country.

Indicating a shift away from geopolitics and toward geo-economics, Munir has committed to leading Pakistan toward self-reliance by leveraging its resource advantages.

His vision includes a policy aimed at ending dependency and promoting self-sufficiency. To expedite these initiatives, a new “single-window” investment facilitation body, the SIFC, was established under his leadership in June of this year. Its primary objective is to attract foreign investments across various sectors, such as mining, agriculture, information technology, and energy, from affluent Gulf countries, China, and the United States.

Munir has urged foreign investors to explore Pakistan's untapped natural resources, estimated to be worth US$6 trillion, including deposits of copper, gold, sulfur, lead, and zinc, among others. He has also encouraged local investors to participate in these endeavors.

In discussions with Pakistan's business community, Munir outlined his plans for economic recovery. Emphasizing his commitment to geo-economics, he underscored his efforts to convince Gulf monarchs to consider investing up to US$100 billion in Pakistan.

Munir's broader approach to economic diplomacy underscores his vision, favoring development partnerships over development assistance. This shift also signifies a change in Pakistan's traditional military approach of providing military bases to now offering economic bases.

Key takeaways

Munir’s geostrategic vision for Pakistan, though it may sound idealistic, has already scored several successes. To revive the domestic economy, he has launched a comprehensive crackdown on corruption, smuggling, energy theft, illegal practices, and unauthorized immigration.

Munir has earned praise for his commitment to revitalizing Pakistan's economy, presenting himself as the guarantor of stability in the country and the primary point of contact for the international community. This underscores his aim of transforming Pakistan into an important market that can bring together various global economic interests.

On the security front, Munir has escalated military operations against terrorist outfits like Tehreek-e-Taliban Pakistan, declining to engage in talks for peace.

Furthermore, he has strengthened the military’s defense engagements by forging military cooperation agreements with countries across the Central, West, East, and South Asian regions.

Pakistan recently hosted the “Eternal Brotherhood-II” multinational counterterrorism exercise, reflecting Munir's two-pronged strategy.

Firstly, he aims to capitalize on Pakistan's pivotal role in combating terrorism originating from Afghanistan, addressing concerns among both neighboring nations and global powers such as the US, China, and Russia. Secondly, he seeks to counterbalance India's influence by strengthening regional military alliances.

At the same time, Munir's foreign policy aspirations entail significant risk and could have serious consequences for Pakistan.

To begin with, it remains uncertain whether his expanded role in governance will effectively enhance the military's softer image and bolster Pakistan's global reputation, especially given that many of its major challenges are still attributed to the actions of the military establishment.

Additionally, establishing Pakistan as a stabilizing regional security actor seems to be a daunting task, particularly in the context of heightened tensions with its immediate neighbor, Afghanistan.

Achieving a neutral middle power status presents its own set of difficulties, and this objective may prove elusive until Pakistan gains a certain level of economic independence.

To date, Pakistan's efforts to attract significant new investments from the Gulf states have run into difficulties, given the latter’s predominant focus on the ongoing Gaza crisis.

There is limited evidence to suggest that Gulf nations will come to Pakistan's aid in the near future. As a result, the SIFC has struggled to finalize long-awaited billion-dollar foreign transactions. With limited foreign support available, Pakistan continues to heavily depend on financial assistance from organizations like the IMF and investments from China.

It seems that the most critical foreign policy challenge confronting Munir is the integration of soft power with hard power.

This requires finding a delicate balance between security and economic considerations, necessitating a departure from traditional military strategies to embrace alternative methods of advancing national interests. Given the unique strategic culture of the military, which may lack an understanding of the nuances of civilian affairs and the intricacies of soft power, expectations for progress from Munir may be limited.

With two more years ahead, the success of Munir's foreign policy hinges on addressing several crucial questions. How does he plan to balance fostering economic growth with Pakistan's current economic dependence? Could Munir's geo-economic strategy unintentionally lead Pakistan into another debt trap?

To prevent Pakistan from becoming overly reliant on the exploitation of natural resources and transforming into a rentier state, what proactive measures does he intend to take?

Additionally, as Pakistan navigates strained relations with neighboring India and Afghanistan, how will Gen. Munir achieve Pakistan’s long-term security goals? Moreover, how does he plan to navigate its position amid the rivalry between the United States and China without taking sides? Importantly, what specific steps will he take to bridge the gap between civilian leadership and the military establishment, ensuring a cohesive and effective foreign policy strategy?

 Courtesy: Middle East Institute

 

Media in United States in the grip of intelligence agents

Some of my blog readers did not like a term coined by me “Dishonest Western Media”. Today I got an opportunity to read an article in "Information Clearing House", I am happy to share it verbatim.

After years in the shadows overseeing espionage, kill programs, warrantless wiretapping, entrapment, psyops and other covert operations, national security establishment retirees are are turning to a new line of work where they can carry out their imperial duties.

That is, propagandizing the public on cable news. Reborn as cable news pundits, these people are cashing in. So many years working in the dark, only to emerge in the studio lights of the same networks that rail all day everyday against state TV from countries that America hates.

It may look crazy how many former spooks have been hired at corporate news outlets like CNN and MSNBC as “analysts”. After spending their careers serving the national security state, they get to shape the news under the guise of expertise. It’s like state TV

Following is but a partial list of prominent former spooks turned mainstream media pundits and analysts, to say nothing of the even greater numbers of retired generals the network continuously rely on. 

Former CIA Director John Brennan who is now an NBC News senior national security and intelligence analyst

Fran Townsend, former homeland security advisor to George W. Bush. She's now a CBS News senior national security analyst. 

But CNN takes the cake — it's the biggest spook show of all

Jim Clapper, former Director of National Intelligence, now a CNN national security analyst

Retired General Michael Hayden, former director of the CIA and the NSA, now a CNN national security analyst

Asha Rangappa, former FBI special agent, now CNN legal analyst

James Gagliano, a retired FBI supervisory special agent, now a CNN law enforcement analyst

Tony Bliken, former deputy secretary of state and former deputy national security advisor, and now CNN global affairs analyst

Mike Rogers, former chair of the House Intelligence Committee, now CNN national security commentator

Samantha Vinograd senior advisor to the national security advisor under President Obama, now CNN national security analyst

Steven Hall, retired CIA chief of Russia operations, now a CNN national security analyst

Philip Mudd, former CIA counter-terrorism official, now CNN counter-terrorism analyst