Saudi Arabia discusses defense cooperation

Saudi Assistant Minister of Defense Eng. Talal Al-Otaibi discussed various aspects of defense cooperation with senior officials of Russia, China, Pakistan and Iran. The discussions were held on the sidelines of the 11th Moscow Conference on International Security.

Eng. Al-Otaibi, headed the delegation of the Saudi Ministry of Defense that participated in the conference. More than 800 delegates from 76 countries and six international organizations took part in the conference.

They included 26 defense ministers and 16 deputy defense ministers and chiefs of general staff in addition to senior defense and security policy makers from various countries.

Delegations from 12 more countries, led by department chiefs, as well as ambassadors and military attaches accredited to Russia also attended.

The conference aimed to discuss modern military challenges and threats, and to enhance the benefit and keep abreast of all that is proposed by decision-makers and experts interested in the fields of politics, defense and security in the world.

On the sidelines of the conference, Assistant Defense Minister Al-Otaibi met with Russian Deputy Defense Minister Alexander Fomin. During the meeting, they discussed ways to enhance defense cooperation between the two friendly countries.

A number of issues of common concern also figured in the talks.

During the meetings, they reviewed the bilateral relations between the Kingdom and friendly countries in the defense fields, and ways to develop and enhance them.

Al-Otaibi also met with Minister of Defense Li Shangfu, head of the Chinese delegation; Secretary General and Deputy Minister of Defense Hammood Uz Zaman Khan, head of the Pakistani delegation; and Deputy Chief of the General Staff Brig. Gen. Aziz Nasirzadeh, the head of the Iranian delegation.

 

Pakistan Stock Exchange returning to business as usual

The week ended on August 18, 2023 witnessed investors’ sentiments swaying in either direction owing to major developments on the political front. The caretaker set up was finally announced with Anwaarul Haq Kakar taking charge as Prime Minister and announcement of portfolios of 24-member cabinet. However, general elections seem to be delayed owing to higher population numbers requiring fresh constituency delimitations.

The first gift of the interim government was hike in fuel prices, said to be in line with global oil price hikes and IMF SBA requiring fiscal discipline. Further, hikes in power tariffs added to an already high inflationary environment, coupled with high interest rates have been hurting industrial output particularly the textile sector, which has been hit with added gas curtailments.

The latest LSMI numbers stand at 114.83 for FY23, indicating a drop of 10.26%YoY. Further, PKR remained under pressure against the US$ with the biggest issue being the spread between interbank and open market rate, at PKR295.78/US$, down 2.46%WoW).

The benchmark index opened the week at 48,424 points, and closing at 48,218 points, down 205 points or 0.43%WoW.

Average daily traded volume was recorded at 175 million shares, as compared to 255 million shares a week ago, down by 31.50%WoW.

The other key news driving the market during the week included: 1) RDA inflows exceeded US$6.5 billion, with accounts crossing 600,000 in number; 2) K-Electric recovering PKR24.5 billion from consumers, through PKR1.52/unit surcharge imposed; 3) Federal Government debt spiked by 21.38%YoY to PKR60.8 trillion in the last month of last financial year; 4) Debt servicing reached PKR5.8 trillion; 5) Pakistan’s total debt, liabilities surged to PKR77 trillion at the end of last financial year; 5) Foreign exchange reserves held by the central bank were up by US$12 million to US$8 billion; 6) SNGPL based AGL and Fatima Fert (Sheikhupura plant) gas supply extended to March 2024 to address urea production shortfalls and 7)PRL dismissed news regarding inability to manage Russian crude oil processing.

Buying was witnessed in Automobile Parts & Accessories, emerging as the top performer recording gains, whilst Woolen saw major selling. Major selling was recorded by Banks/DFI with a net sell of US$3.89 million. Insurance companies absorbed most of the selling with a net buy of US$4.05 million.

Top performing scrips during the week were: SYS, PABC, THALL, JDWS, and AIRLINK, while laggards included LOTCHEM, FCEPL, CNERGY, ENGRO, and BOP.

Volume leaders were: YOUW; OGDC; DGKC; PPP; KHYT.

Analysts anticipate the market to remain on positive trajectory owing to a safe passage towards the caretaker setup. However, due to the IMF’s strict conditions with regards to fiscal discipline and a move towards the general elections, market performance may remain volatile with some cushion coming from bilateral/ multilateral inflow commitments and elevated reserves’ level compared to prior periods.

They continue to reiterate following a cautious approach to stock picking and continue to advocate dollar-denominated revenue stream scrips (Technology and E&P sector) to hedge against currency risk or high dividend yielding scrips.

Pakistan: Interim setup likely to remain in place a little longer

Over the months I have been saying that current account deficit and budget deficit are the outcome of “Confidence Deficit”. However, the team headed by Shehbaz Sharif, spent most of the time talking about non-issues.

Please allow me to say that Pakistanis were ready to bear the brunt, but unwillingness of the ruling junta to cut contain its extravaganzas, created rebellious attitude. Now, top of the agenda items should be bridging the confidence deficit, curtailing extravaganzas, facilitating the local manufacturers and exporters.

The economic managers must stop saying “these are the conditions of IMF” and come up with a home grown plan. Restoring the competitiveness of the local manufactures can not only help in boosting exports but containing inflation and generating new employment and taxes.

It is encouraging that the Caretaker Prime Minister, Anwaarul Haq Kakar, has assembled a small cabinet comprising of 24-members, which sworn in on Thursday. This can also be termed the implementation of a technocratic framework. One has all the reasons to believe that the setup has been put in place to serve the country beyond 90 days due to the potential delay in holding scheduled elections.

This extended period presents a unique opportunity to the caretaker government to spearhead essential economic reforms. Unburdened by political considerations, they can make tough but necessary decisions to jumpstart the economy. Notably, the caretaker setup comprises of accomplished professionals, particularly in key ministries such as Finance, Foreign Affairs, and Power. This strategic placement underscores their significance in the forthcoming period.

The Prime Minister's unwavering commitment to address pressing economic concerns is evident in his swift actions. His decision to transfer DISCOs (Distribution Companies) to provincial authorities, his efforts to attract investments through the SIFC, and the prompt convening of the inaugural cabinet meeting on Friday, all reflect the priority he places on resolving these issues.

 

 

Resumption of Saudi Iran ties pivotal for regional security

Foreign Minister Prince Faisal bin Farhan has affirmed Saudi Arabia's desire to strengthen bilateral relations with the Islamic Republic of Iran and his country's keenness to discuss ways to activate agreements between the two countries.

Addressing a joint press conference with his Iranian counterpart Hossein Amir-Abdollahian in Riyadh on Thursday, Prince Faisal said the resumption of diplomatic relations between Saudi Arabia and Iran marked a pivotal moment for regional security.

Amir-Abdollahian’s visit to Riyadh follows the reestablishment of diplomatic relations between Riyadh and Tehran, brokered by China in March, after seven years of no formal ties.

"Within the framework of the implementation of the agreement, the missions of both countries have resumed their work, and so have the ambassadors-designate," Prince Faisal said.

Prince Faisal said that the Kingdom is keen to activate security and economic agreements that were inked with Iran. He also conveyed Saudi Arabia’s gratitude to Iran for its support of the Kingdom’s bid to host World Expo 2030.

For his part, Amir-Abdollahian described the discussions in Riyadh fruitful. He said that the Islamic Republic values the role Saudi Arabia plays in the region, adding that the two countries can work together to resolve lingering regional issues.

Amir-Abdollahian said that relations with Saudi Arabia were moving in the right direction and stressed that his country was determined to strengthen relations with the Kingdom.

He added that Iranian President Ebrahim Raisi will visit Saudi Arabia soon.

Prince Faisal had made a landmark visit to Tehran in June, where he met with Amir-Abdollahian and President Ebrahim Raisi.

Under the deal signed in March, Riyadh and Tehran agreed to reopen embassies and consulates in each other’s territories and implement security and economic cooperation agreements that were signed over 20 years ago.

Saudi Arabia severed ties with Iran in 2016 following an attack on its embassy in Tehran and consulate in Mashhad. 

Dr Shamshad Akhtar Prudent Choice as Caretaker Finance Minister

In the current economic landscape, it is evident that the role of the Caretaker Finance Minister is strategically important in the team of the Caretaker Prime Minister. While following the prudent decision making process, the appointment of Dr Shamshad Akhtar as the Caretaker Finance Minister is commendable.

Dr Akhtar's track record showcases her adroitness in handling intricate economic scenarios, demonstrated notably during the 2008 global financial crisis when she served as Governor State Bank of Pakistan (SBP) Governor, and again in 2018 during her tenure as the Caretaker Finance Minister.

As the Under-Secretary General of the Economic and Social Commission of the Asia and Pacific (UNESCAP) and the United Nations Secretary General’s Senior Special Advisor on Economics and Finance, Dr Akhtar oversaw the implementation of the sustainable development agenda including economic, social, and environmental and finance work of the UN Department of the Economic and Social Affairs.

During her term at UN, she was UN Secretary General’s Sherpa for Development and the Finance and Central Bank tracks. Among others, she was closely involved in the development and implementation of the 2030 Sustainable Development Agenda (SDG), the Addis Ababa Financing frameworks and work on the Paris Climate Accord and ensured closer alignment of G20 development agenda with the 2030 SDG agenda.

Dr Akhtar served as the Vice President, Middle East and North Africa at the World Bank, the Director General of Asian Development Bank (ADB) and served as the Special Senior Advisor to the President of ADB.

Dr Akhtar is recipient of Asia’s Best Central Bank Governor from Emerging Markets and the Banker’s Trust awards. In 2008, The Wall Street Journal Asia recognized her as one of Asia’s top ten professional women. Recently in 2020, she has been awarded the HUM Women’s Leadership Global Award.

Dr Akhtar in now serving as the Chairperson of few Boards in Pakistan: Chairperson of the Pakistan of Stock Exchange, Chairperson on the Board of Sui Sothern Gas Transmission and Distribution company, Chairperson of the Karandaaz – an innovative nonprofit company—grant funded by DFID/Bill Melinda to promote financial and digital inclusion, Chairperson, Pakistan Institute of Corporate Governance and as Independent Director, Engro Fertilizer Company and Advisor on Pakistan Environment Trust Fund.

Dr Akhtar is Member of the Advisory Council of the Sustainable Finance Centre at the SOAS at London University, Member of UN Global Women Leaders Group, served on G20 Task Force member of the Think Tank on Infrastructure during the Presidency of Japan, Saudi and Italian Government.

She served as an Advisor of SG Food Security and Financing for Development Group, one of the 12 Global Advisors to the Ministry of Foreign Affairs on China on Belt and Road, Council of Advisor and Policy Sherpa for the Boao Forum for Asia and Advisor to the Shanghai Forum.

She has conducted analytical work as Chair of the Pakistan Reform Insurance Committee, Capital Markets reforms and the Special Economic Zones etc. She serve as speaker on diverse set of international and national panel.

 

What is on top of agenda at BRICS upcoming meeting in South Africa?

BRICS leaders are scheduled to meet in South Africa next week to discuss how to turn a loose club of nations accounting for a quarter of the global economy into a geopolitical force that can challenge the West's dominance in world affairs.

Russian President Vladimir Putin, who faces an international arrest warrant over alleged war crimes in Ukraine, will not join leaders from Brazil, India, China and South Africa amid rifts over whether to expand the bloc to include dozens of ‘Global South’ nations queuing up to join.

South Africa will host Chinese President Xi Jinping, Brazil's Luiz Inacio Lula da Silva and Indian Prime Minister Narendra Modi for the BRICS summit from August 22 to 24.

Spread over the globe and with economies that operate in vastly different ways, the main thing uniting the BRICS is skepticism about a world order they see as serving the interests of the United States and its rich-country allies who promote international norms they enforce but don't always respect.

Few details have emerged about what they plan to discuss, but expansion is expected to be high on the agenda, as some 40 nations have shown interest in joining, either formally or informally, according to South Africa. They include Saudi Arabia, Argentina and Egypt.

China, seeking to expand its geopolitical influence as its tussles with the United States, wants to enlarge BRICS quickly, while Brazil is resisting expansion, fearing the already unwieldy club could see its stature diluted by it.

In a written response to questions by Reuters, China's foreign ministry said, “It supports progress in expanding membership, and welcomes more like-minded partners to join the 'BRICS family' at an early date."

Russia needs friends to counter its diplomatic isolation over Ukraine, and so is keen to bring in new members, as is its most important African ally, South Africa.

In a nod to the bloc's African hosts, the theme of its 15th summit is "BRICS and Africa", emphasizing how the bloc can build ties with a continent increasingly becoming a theatre for competition between world powers.

South Africa's foreign minister Naledi Pandor in a statement last week said BRICS nations wanted to show global leadership in addressing the needs ... of the majority of the world, namely ... development and inclusion of the Global South in multilateral systems, in a veiled swipe at Western dominance.

BRICS nations are keen to project themselves as alternative development partners to the West. China's foreign ministry said BRICS sought to reform global governance systems (to) increase the representation ... of developing countries and emerging markets.

The bloc's New Development Bank (NDB) wants to de-dollarize finance and offer an alternative to the much-criticized Breton Woods institutions.

But it has approved only US$33 billion of loans in nearly a decade -- about a third of the amount the World Bank committed to disbursing just last year -- and has recently been hobbled by sanctions on member Russia.

South African officials say talk of a BRICS currency, mooted by Brazil earlier this year as an alternative to dollar-dependence, is off the table.

With 40% of global population, the BRICS carbon-intensive nations also make up about the same share of greenhouse gas emissions. Officials in Brazil, China and South Africa said climate change may come up but indicated it wouldn't be a priority.

BRICS countries blame rich nations for causing most global warming and want them to take on more of the burden of decarburizing the world's energy supply. China was accused of blocking climate discussions at the G20, which it denied.

 

First commercial ship leaves Ukraine port since February 2022

According to Seatrade Maritime News, Joseph Schulte is the first commercial ship to leave Odessa port of Ukraine’s Black Sea ports on Wednesday, since the beginning of the war in February 2022.

The 9,400 teu Joseph Schulte, owned by German company Bernard Schulte and had been operated by MSC, which has been docked in the war-torn port of Odessa since the conflict in Ukraine began left for Turkey, ostensibly under ballast.

In July the Russians refused to renew the agreement that allowed bulk vessels to operate the grain corridor, exporting foodstuff to maintain populations in the Middle East and Africa.

In bringing that agreement to an end Russia effectively renewed its blockade of Ukraine’s Black Sea ports for commercial as well as military shipping. The departure of the Hong Kong flagged Joseph Schulte from Odessa will test Russia’s resolve to maintain that blockade.

On 13 August a Russian Navy vessel, fired warning shots across the bow of the Palau-flagged Sukru Okan, with troops boarding and searching the bulk carrier.

Nevertheless, Daniil Melnychenko, an analyst at transport consultancy Informall, based in Odessa, told Seatrade Maritime News, “The expectations are that Türkiye flagged ships that were stuck here in Ukraine since the beginning of the war will also leave the big Odessa regional ports.”

According to Melnychenko many of the bulk carriers that have been docked in southern Ukraine are Turkish flagged vessels, so the departure of the container ship has heightened expectations that others will follow.

VesselsValue reports suggest that the Joseph Schulte vessel, which MSC has confirmed is no longer in its fleet, will first call at the Luk Sintez Oil Terminal to load bunkers. It will then sail to the Turkish port of Ambarli on the north shore of the Marmara Sea, on the European side of Istanbul, to offload the few containers on board and for inspection.

Melnychenko added that the vessel will likely be crewed by a mixture of Turkish and older Ukrainian men, over 60-years-old.