Thursday, 17 February 2022

Pakistan textile exports rise to US$11 billion

According to the data released by Pakistan Bureau of Statistics, Pakistan textile exports has witnessed a record exports of US$11 billion in first seven months of the current financial year (FY22), up by 25%YoY. In PKR terms, the exports yielded Rs1.861 trillion, up 30%YoY due to 4% depreciation of the local currency.

For 7MFY22, the key export driver was increase in value-added exports where knitwear segment contributed the most as it increased by 33%YoY to US$2.9 billion, followed by Readymade garments, up 22%YoY to US$2.2 billion and Bedwear up 19%YoY to US$1.9 billion exports.

However, on MoM basis, Pakistan textile exports were down 4% to US$1.5 billion in January 2022, due to lower value-added exports segments mainly in Knitwear, down 12%MoM and Ready-made garments, down 4% MoM.

As compared to last year, Pakistan’s textile exports were up by 17%YoY in January 2022 led by significant recovery witnessed in value-added segments, largely in knitwear, up 19%YoY, Ready-made up 17%YoY and Bedwear, up 21%YoY.

The volumetric growth and improved pricing were the key drivers resulting in higher exports.   

Going forward, analysts expect textile exports to remain robust in the remaining months of FY22 fiscal and may touch US$19 billion.

Ease of lockdown in European economies is likely to drive increased orders and help overall textile exports.

The Federal Cabinet on February 15 approved the Textile and Apparel Policy 2020-25, after Ministry of Commerce (MoC) submitted the revised draft of textile policy to Economic Coordination Committee (ECC) incorporating few amendments.

The key reason behind the late approval was the dispute between MoC and Energy Ministry on the issue of Energy Tariffs, specifically RLNG and Electricity.

As to the sources, the updated draft stated that Energy Tariffs (RLNG and Electricity) will be provided to textiles and apparel industry at regionally competitive rates during the policy years. For this, tariff will be reviewed and announced in federal budget by Finance Division.

§  As per Pakistan Institute of Development Economics (PIDE), the average regional electricity tariff rate stood at 7.4 cents/kWh in Mar-21, which we believe has likely increased since than. Pakistan’s current electricity tariff is around 9 cents/Kwh. 

§  In case of RLNG, the average regional RLNG rate stood at ~US$4/MMBTU as per PIDE vs. Pakistan’s tariff rate at US$6.5/MMBTU. We believe the above stated textile policy will have a neutral impact on the sector. Given, Pakistan is already offering subsidized energy & RLNG tariffs to textile players and Pakistan being part of an IMF program, a further reduction from the current levels is highly unlikely. 

§  RLNG tariff is expected to remain intact at US$6.5/MMBTU level although regional average is comparatively low. To note, RLNG is currently being provided at US$9/MMBTU to textile sector till March-22 due to supply issues.

§  Subsidized energy rates, increasing export numbers, and currency weakness bodes well for the sector. We have an ‘Overweight’ stance on Textile Sector with Interloop Limited (ILP) and Nishat Mills Limited (NML) as our top picks.

 

 

Wednesday, 16 February 2022

CNN plunging deeper into crisis

According to media reports, the crisis marring CNN deepened Tuesday with the departure of key executive Allison Gollust and a New York Times report shedding new light on internal turmoil at the network. 

Gollust served as Chief Marketing Officer of CNN. She is in a relationship with Jeff Zucker, who was ousted as the President of the network on February 02, 2022.  

Zucker’s failure to disclose the relationship was the official reason given for his departure, though there has been plenty of speculation about other factors that might have been at play. 

Gollust’s departure, like Zucker’s, looks like an involuntary resignation. In a statement, she described it as “deeply disappointing” that she “would be treated this way” as she leaves. 

Meanwhile, the New York Times story provided more detail on an allegation of sexual assault against former CNN anchor Chris Cuomo. The allegation — which Cuomo vehemently denies — dates back to his pre-CNN days at ABC News.  

But the Times report included a claim from his accuser's lawyer that Cuomo, while at CNN, may have sought to dissuade the woman from coming forward by airing a segment on the company where she worked as the "Me Too" movement gathered steam. If true, that would be a clear and grave breach of journalistic ethics. 

The new twists ensure that the saga roiling the network founded in 1980 by Ted Turner will keep on running. 

Two weeks ago, when Zucker resigned, both he and Gollust issued statements acknowledging they should have disclosed their relationship and did not. 

At that time, Gollust appeared set to stay with the network. Zucker and Gollust have worked together for decades, having first met when Zucker was the young executive producer of NBC’s “Today” and Gollust was an NBC publicist.  

The status of their relationship has been a subject of gossip in New York media circles for years. Former “Today” anchor Katie Couric described the dynamics between the two in eyebrow-arching terms in the memoir she published last fall. 

Zucker and Gollust have asserted that they were close friends and colleagues until the pandemic, when their relationship became a romantic one. Both are divorced and there is no suggestion of coercion or abuse of power. 

In a memo announcing Gollust’s departure on Tuesday, WarnerMedia CEO Jason Kilar said that an investigation “performed by a third-party law firm and led by a former federal judge” had begun last September and concluded this past weekend. 

Kilar added that the probe had “found violations of Company policies, including CNN’s News Standards and Practices, by Jeff Zucker, Allison Gollust, and Chris Cuomo.” 

But the careful phrasing says nothing about whether the job-ending violation for Gollust was her failure to disclose her relationship with Zucker. If it was, why did she seem in the clear to stay in her position just two weeks ago? If it wasn’t, what new infraction has come to light? 

Gollust, for her part, says that the claims from WarnerMedia are “an attempt to retaliate against me and change the media narrative in the wake of their disastrous handling of the last two weeks.” 

The thread that has caused the higher reaches of CNN to unravel begins with the relationship between Chris Cuomo and his elder brother, former New York Governor Andrew Cuomo. 

During the early stages of the COVID-19 pandemic, Chris Cuomo conducted several interviews on his CNN prime-time show with the then-governor. The interviews were ethically questionable but strongly backed by Zucker.  

Familial banter between the brothers about topics including which one was favored by their mother made for compelling television even while critics voiced queasiness. 

The situation became more serious when the New York governor was accused by multiple women of inappropriate behavior. In time, it emerged that Chris Cuomo had played a role in helping his brother push back against those allegations. 

Zucker defended the CNN anchor when the first details emerged of those efforts. But the problem deepened in November 2021, when new documentation released by New York Attorney General Letitia James showed that Chris Cuomo had sought to get advance warning of damaging stories about his brother and appeared to be seeking ways to cast doubt on at least one of his accusers. 

Zucker ultimately fired Cuomo, with whom he had been personally close as well as professionally allied. 

For a start, Gollust had worked for Andrew Cuomo, albeit for a brief period almost a decade ago. Perhaps more pertinently, there are now suggestions that Zucker crossed journalistic lines in his dealings with Andrew Cuomo. 

Tuesday’s Times report noted that, after Chris Cuomo was fired, people on his team “soon began whispering to reporters that Zucker had coached Governor Cuomo on how to use his televised briefings [on the pandemic] to go after” then-President Trump. 

The Times included a denial from a Zucker spokeswoman that the ousted CNN president had ever given Andrew Cuomo “advice.” 

If that denial were to be disproved, it would cause serious outrage — and would buttress the argument of those who believe the media in general, and CNN in particular, are too cozy with Democratic politicians. 

Beyond the specifics of what exactly happened with Cuomo, Zucker and Gollust, there are bigger questions facing CNN.  Zucker is widely credited — or blamed, depending on your point of view — for driving CNN in a more opinionated direction, especially during the Trump presidency. 

To his supporters, Zucker understood that the 45th president — whose career he had previously revitalized while at NBC by making him the star of “The Apprentice” — required a paradigm shift in journalistic coverage. The network’s ratings soared as anchors, including Chris Cuomo and others, aimed daily barbs at Trump. 

To his detractors, Zucker pushed a view of politics-as-reality-show to unhealthy extremes. Zucker’s influence undercut CNN’s credibility and accelerated a general coarsening of journalistic and political culture, according to this critique. 

CNN and the rest of WarnerMedia is in the process of being spun off by its corporate owner, AT&T. Assuming that deal goes through, those properties will then merge with Discovery Inc. 

But longtime media mogul and Discovery board member John Malone caused a stir back in November last year when he told CNBC, “I would like to see CNN evolve back to the kind of journalism that it started with — and actually have journalists, which would be unique and refreshing.” 

CNN is also readying a streaming service, CNN plus, for launch. Zucker was central to that project, but he had also recruited some broadcasters who represent a break with the opinionated anti-Trump approach — notably Chris Wallace, formerly of Fox News, and Kasie Hunt, formerly of NBC News. 

With Zucker gone, and so much else in flux, any shift in the network’s tone will be closely parsed. The old maxim holds that it is never good for journalists — or media organizations — to become the news. But whether it matters to the audience is another matter. 

Other networks and big-name shows have endured scandal in recent years — and endured just fine. 

The late Roger Ailes, the driving force behind the rise of Fox News, faced multiple accusations of sexual harassment, leading to his ouster from the network in 2016. Despite this, Fox News remains the ratings leader among all cable networks. 

Matt Lauer, the longtime co-anchor of “Today,” was fired in 2017, with NBC citing a report of “inappropriate sexual behavior.” Other allegations against Lauer followed.  

Lauer has acknowledged causing other people “pain” for which he feels “sorrow and regret” but has denied ever coercing anyone into sex. There has been no long-standing damage to “Today,” which remains in a close battle with ABC’s “Good Morning America” for primacy among morning shows. 

There is no real reason to think CNN will suffer any worse fate.  That said, the network’s ratings were way off the highs of the Trump years even before the current furor kicked off. 

Multiple media reports have indicated that some of CNN’s biggest names are dismayed by Zucker’s departure. There have also been insinuations from the journalistic ranks that Zucker was really pushed out not for a terminal ethical lapse, but because of a battle for corporate power between him and Kilar. There are no signs yet of any big names actually departing the organization. But the prolonged controversy is surely bad for morale, among rank-and-file staff and on-screen stars alike. 

Iran January 2022 oil output rises 21%MoM

Iran’s crude oil production in January 2022 reached 2.503 million barrels per day (bpd), registering a 21% increase as compared to the figure for December 2021, according to OPEC’s latest monthly report. Iran had produced 2.482 million bpd of crude oil in December 2021.

The Iran’s average crude output for the fourth quarter of 2021 stood at 2.480 million bpd indicating a 40,000-bpd increase as compared to the figure for the first quarter of the year, the report indicated.

OPEC put the average Iranian crude output for 2021 at 2.405 million bpd, while the average output in 2020 was 1.988 million bpd.

These statistics show that although with the re-imposition of the US sanctions, Iran's oil production decreased; gradually the country has been able to compensate for part of the output decline.

The country’s heavy crude oil price also increased US$10.91 in January, to register a 14.6% rise as compared to the earlier month.

Iran sold its heavy crude oil at US$85.59 per barrel during the month, under review as compared to December price of US$74.68 per barrel. Based on the OPEC data, the country’s average heavy crude price was US$54.38 in 2021.

In addition to the devastating impacts of the coronavirus pandemic on the global oil industry which resulted in the drastic fall in oil production and prices, the Iranian oil industry was under pressure from the US efforts to isolate the country by re-imposing sanctions in 2021.

Iran has been ramping up its oil production over the past few months following the recovery of the global markets from the negative impacts of the coronavirus pandemic and the developments in Vienna talks.

Back in February 2021, Fitch Solutions Incorporation, a subsidiary of Fitch Ratings, which is one of the three biggest credit rating agencies of United States, saw the Islamic Republic’s crude oil exports double in 2022 compared to 2020.

“The prospects for the Iranian oil sector have brightened significantly following Joe Biden's victory in the US presidential election on November 3, 2020. President Biden has indicated that he will seek to re-enter the US into the Iranian nuclear deal, paving the way for a roll-back of secondary sanctions and recovery of around 2.0 million bpd in oil production,” the report said.

 

Tuesday, 15 February 2022

Japan to supply LNG to Europe amid Ukraine crisis

US asks Japan to offer emergency assistance amid tense faceoff with Russia 

Japan will provide part of its liquefied natural gas imports to Europe from March as simmering tensions between Russia and the West over Ukraine undermine energy security in the region, said Industry Minister Koichi Hagiuda.

Hagiuda told reporters after separately meeting European Union (EU) Ambassador to Japan Patricia Flor and US Ambassador to Japan Rahm Emanuel that the Japanese government took account of requests from the United States and the European Union in making the decision, as well as a gas shortage in Europe.

LNG supply in Japan is currently tight, but we decided to meet the requests as long as a stable supply to Japan is ensured, said Hagiuda.

Industry Ministry officials suggested total shipment to the region in March will likely be several hundred thousand tons.

The government is asking Japanese companies involved in the LNG business for their cooperation even beyond March, Hagiuda said.

Japan, a major LNG importer, will secure enough supply for domestic needs before assisting European countries facing the threat of disruptions to their gas supply from Russia in the event of an incursion by Moscow into Ukraine, according to government sources.

With about 40% of Europe's imports of LNG coming from Russia, the United States has asked Japan to extend energy assistance to ensure stable energy supplies in the region during the winter.

The United States has warned of sanctions if Russia, which has massed troops near the Ukrainian border, invades. There is growing concern that Moscow could significantly restrict LNG exports to Europe in retaliation for Western sanctions.

To reassure allies of the North Atlantic Treaty Organization (NATO), the United States is sending additional troops to Europe, while Russia has accused the United States and NATO of ignoring security concerns related to Ukraine, a former Soviet republic.

At an energy council meeting in Washington earlier this week, the United States and the EU affirmed their commitment to address risks related to the bloc's energy supply.

EU Foreign Policy Chief Josep Borrell told the meeting that Russia does not hesitate to use its energy supplies to Europe as a weapon for geopolitical gain as energy prices surge worldwide.

US Secretary of State Antony Blinken, noting Russia's state-owned companies are holding back natural gas exports, said Washington is in discussions with governments and major producers around the world to shore up energy supply throughout Europe, including Ukraine.

US President Joe Biden also warned, after holding talks with German Chancellor Olaf Scholz, that the yet-to-be-activated Nord Stream 2, a gas pipeline project connecting Germany and Russia via the Baltic Sea, will be halted if Russian troops cross into Ukraine.

Japan's LNG move forms part of such international efforts.

But in Japan, the growth in LNG demand for heating tends to outpace that of supply in the month of February, according to an energy industry official.

While Japan has a greater stockpile of LNG this winter than last, some in the energy sector believe it would be challenging to provide surplus LNG during February due to the possibility of a surge in demand.

The United States has urged Japan to consider imposing economic sanctions on Moscow if Russian troops invade Ukraine, according to diplomatic sources.

 

 


Monday, 14 February 2022

What if Israel strikes Iran?

As negotiations between the world powers and Iran in Vienna enter their “final stage,” many in the Middle East and also in Washington and European capitals – hold their breath to question, is return to a nuclear deal with Iran possible?

The arch rival of Iran, Israel is closely following developments in Vienna. Accepting the fact that some agreement with Iran is almost certainly on the way, Prime Minister Naftali Bennett recently said, “The agreement and what appears to be its conditions will damage the ability to take on Iran’s nuclear program.”

It appears that Israel is getting ready to attack Iran, in case the talks in Vienna fail to produce an agreement and Iran is free to pursue its nuclear program, in addition to its regional activities.

Many Israelis believe that a deal with Iran won’t be able to stop the country from developing a nuclear weapon. Therefore. Israel must get ready to strike Iran. Bennett stated, “Israel will continue to ensure its full freedom of operation in any place and at any time, with no limitations.” The incoming IAF commander Maj.-Gen. Tomer Bar said that the Israel Air Force is ready to attack Iran tomorrow.”

If Israel does indeed attack Iran, as Israeli officials have increasingly implied might happen, what impact would it have on the Middle East? How would the region be any different after such a development?

These questions may be hypothetical now, but they could very well turn out to be reality tomorrow.

To find answers to these question, Wikistrat, a crowdsourced consultancy, ran a weeklong simulation from January 24 to 31, 2022, while the talks in Vienna were still taking place.

To explore how an Israeli strike would impact the region’s stability, the simulation focused on the five actors that were considered the most significant in the Gulf region, Iran, Saudi Arabia, the United States, China and Russia. The simulation included 31 experts from 13 countries and focused on three scenarios: 1) a successful Israeli strike on Iran, 2) a failed strike, and 3) a partially successful strike.

Discussions in the simulation produced a few key insights, which observers of developments in the region may want to keep in mind as they try to make sense of the Middle East in the next few years.

First, the experts argued that in the years after an Israeli military strike ‑ regardless of its results ‑ the Middle East will enter the nuclear proliferation phase, which will include not only Israel but also Iran and possibly Saudi Arabia. An Israeli strike will embolden the Iran regime’s desire to have a nuclear weapon, viewing it – much like North Korea – as a guarantee against future attacks.

For its part, fearing an Iranian nuclear retaliation against it, Saudi Arabia will also seek to develop its own nuclear program. This is based on the participants’ assessment that a failed Israeli strike would drive the Saudi leadership to move forward as quickly as possible with its own nuclear program. A successful strike could serve as a catalyst to the Saudi nuclear program, encouraging Saudi decision-makers to leverage the attack and to catch up with the Iranian nuclear program.

A successful strike could lead to a Saudi-Israeli normalization. Some of the experts argued that a successful Israeli strike might cause Mohammed bin Salman, as king, to normalize relations with Israel, in the expectation that the entrenched anti-Iranian sentiment in Saudi Arabia would outweigh any backlash against normalization.

However, a failed strike could have a negative effect on Israel’s regional position, as Israel was perceived until then as a strong partner to the Gulf states on security affairs and a critical partner for confronting Iran. The experts assessed that if Israel failed to deliver on confronting Iran by failing to destroy its nuclear facilities, Saudi Arabia would be less inclined to engage with it.

While a nuclear deal between the US, other world powers and Iran seems almost certain at this point, the stakes for an unchecked nuclear Iran are higher than ever.

If Israel feels compelled to act alone to stop a nuclear Iran, a completely different geopolitical reality could emerge in the Middle East.



 

Delay in recognizing Taliban government could initiate anarchy in Afghanistan

The animosity of United States with Taliban is evident from the fact that despite taking an exit from Afghanistan as back as on August 15, 2021, the super power has not recognized the Taliban government.

To further add to Taliban insults the US has also not unfrozen foreign exchange reserves of Afghanistan. It looks too funny that the super powers are trying to arrange aid for Afghanistan, on the pretext of hunger etc. However, Afghans are barred from using their own foreign exchange reserves.

There is a consensus among the analysts that since the Taliban's takeover of Kabul, the United States has fundamentally altered its approach towards Afghanistan.

The United States is defeating its stated goals of countering terrorism, maintaining regional stability and protecting rights of Afghans, particularly females.

The United States has been beating the drums that the violent conflicts among the armed groups have proliferated.

The fragile economy of Afghanistan is deteriorating fast and the Afghan people are facing an extraordinarily grave humanitarian crisis. The Taliban's interim government is widely viewed as insular and exclusive.

The western media is constantly running stories that Taliban have curtailed rights of girls and women. It is also alleged that Taliban at times have turned a blind eye to abductions, beatings and, in some cases, the torture and killing of journalists, human rights activists and former civilian and military officials. 

Tom West was appointed the US Special Representative for Afghanistan in October 2021, and assigned task of advancing US objectives in Afghanistan following the withdrawal of US and NATO forces and the Taliban takeover.

As part of his efforts, he engages in dialogue representatives of Taliban, regional leaders, the international community and Afghan political and civil society members to find ways to assist the Afghan people while protecting US national security interests.

I am shocked to know that a US Think Tank intends to invite the US Special Representative for consultations with the Taliban, other Afghans and the international community to find ways of supporting the Afghan people during this period of significant transition for the country.

According to the critics of Afghanistan policy of the United States, it is feared that whatever armaments the super power has abandoned in Afghanistan may be ultimately repossessed and used by ISIS and/or anti-Taliban groups.

Saturday, 12 February 2022

United States interested in working closely with Bangladesh

The newly-appointed Ambassador of United States to Bangladesh, Peter D. Haas has said he looks forward to working with Dhaka to further advance the relationship between the two countries. 

He was speaking at an interaction session with the officers of the Bangladesh Embassy in Washington DC. Haas is expected to arrive in Dhaka in early March to assume charges.

The new envoy was received by the Bangladesh Ambassador to the United States, M. Shahidul Islam and other officials of the Mission.

During the discussion, the ambassadors of the two countries expressed their resolve to work closely to further strengthen the friendly relations between Bangladesh and the United States.

They also laid emphasis on greater engagements of the two sides and undertaking mutually beneficial program and actions to celebrate the 50th anniversary of diplomatic ties between Bangladesh and the United States.

Bangladesh’s location holds significant strategic value for Beijing. China relies on the Strait of Malacca, a narrow waterway between Malaysia, Singapore, and the Indonesian island of Sumatra, to import energy and goods from the Middle East and Africa via the Indian Ocean.

The Strait of Malacca could become a high-risk passageway in the event of a potential conflict either in the South China Sea or the India-China border. Consequently, China has taken a number of initiatives to build alternative routes aimed at reducing dependence on the Strait of Malacca. Seeking port facilities in the Indian Ocean and Bay of Bengal region along with overland connections to them is one of the efforts in this direction.

It may be recalled that Chinese Ambassador to Bangladesh Li Jiming recently expressed concerns that China-Bangladesh relations will suffer if Dhaka joins the Quad, an informal grouping that aims to counterbalance Beijing.

Though China shares no border with Bangladesh, the distance between the two countries is only about 100 kilometers. Beijing hopes to bridge this distance through infrastructure that would link the two countries closer.

The Bangladesh-China-India-Myanmar Economic Corridor is one of the six proposed economic corridors of China’s Belt and Road Initiative (BRI). Bangladesh enjoys a strategic location in Beijing’s strategic advances in the Indian Ocean.