Pakistan Stock Exchange benchmark index posts 3.55%WoW increase

During the week ended on November 24, 2023 the benchmark index of Pakistan Stock Exchange skyrocketed to touch an all time high of 59,086 points on Friday, reflecting a significant increase of 3.55%WoW.

Positive developments encircled the current account deficit narrowing to US$74 million in October, a decline of 91%YoY, keeping in line with shortage of dollars in the market needed to open L/Cs.

During 4MFY24, FDI rose by 7% to US$ 525 million which further contributed to the bullish market. Moreover, the IT export remittances for July-October increased by 4.4%YoY to US$893 million and total borrowing fell by US$0.41 million to US$3.85 billion.

International oil prices (Brent Crude) fell significantly to US$78.93/barrel on Wednesday amidst delayed OPEC Plus meeting, but recovered to US$81.42/barrel on Friday.

Market participation witnessed a decline, with an average daily traded volume of 657 million shares, marking 8.9%WoW decrease from the earlier week's average of 721.3 million shares.

On the currency front, the rupee appreciated by 0.39%WoW against the greenback, closing at PKR285.37/US$ on Friday.

Other notable news for the week included: 1) foreign exchange reserves by Pakistan’s central bank dropped by US$217 million to US$7.2 billion, 2) power generation cost fell by 19% in first four months of the current financial year, 3) Dr. Shamshad Akhtar said Pakistan’s GDP likely to grow by 2% to 2.5% during the ongoing financial year, 4) power ministry recovered PKR55 billion from delinquent consumers, 5) during 4MFY24 developmental projects worth PKR300.9 billion were approved under PSDP and 6) Nepra approved PKR1.52 per unit surcharge on KE consumers.

Woollen, Leasing Companies, and Glass & Ceramics were amongst the top performers, while Synthetic & Rayon, Tobacco, and Refinery were amongst the laggards.

Major net selling was recorded by Banks with a net sell of US$5.03 million. Individuals absorbed the selling with a net buy of US$3.52 million.

Top performing scrips included: PGLC, BNWM, GHGL, ABOT, and PSMC, while top laggards were: UNITY, EFUG, CNERGY, PIOC, and OGDC.

Analysts forecast positive outlook of the market owing to favorable economic developments like easing inflation and expected positive economic recovery in the current fiscal year. While the market is flourishing, analysts strongly advise the market participants to avoid potential pitfalls and instead concentrate on companies with robust fundamentals.

Furthermore, considering companies with healthy dividend yields can be a prudent strategy for navigating inflation safely.

 

 

Bolton terms hostage swap a very bad deal

Former US Ambassador to the UN John Bolton has slammed the Hamas hostage and cease-fire agreement reached as a very bad deal for Israel.

“The deal itself, at least as I understand the terms as they’ve been announced, is a very bad deal for Israel,” Bolton said. “It’s another swap of hostages — innocent victims — for criminals that are in Israeli jails at a ratio of 3:1 in favor of the Hamas terrorists.”

Bolton made the comments Wednesday on the Cats & Cosby radio show with host John Catsimatidis.

The deal was announced late Tuesday after hours of difficult negotiations within the Israeli cabinet. It frees about 50 of the approximately 240 hostages held by Hamas over the course of four days, beginning no sooner than Friday. An undisclosed number of Palestinian prisoners will also be released.

Fighting in the ongoing war between the two sides will cease during the exchanges, a halt which will be extended by one day for every 10 hostages released.

The agreement was the culmination of weeks of negotiations between the United States, Qatar, Israel and Hamas, and is expected to result in a window for increased humanitarian aid for the enclave.

Bolton said Israel folded, accepting the deal due to pressure from the Biden administration, which he claims is no longer backing Israel as strongly as it has previously.

“I don’t see how this, on net, benefits Israel strategically,” he said. “I’m sure the Israeli Defense forces get some benefit from a pause…but fundamentally, time is on Hamas’ side here.”

“I do understand humanitarian concerns, but there are 220 hostages and 9 million other Israeli citizens who are threatened, not just by Hamas but by Hezbollah and fundamentally by Iran,” he continued.

Israeli Prime Minister Benjamin Netanyahu has faced extreme domestic pressure to focus efforts on rescuing the hostages taken by Hamas militants at the beginning of the conflict early last month.

Over 1,200 Israelis died at the start of the war, in the attack which resulted in the hostage-taking. Israel’s air and ground campaign since has killed over 12,000 Palestinians, including over 4,600 children, according to the Gaza Health Ministry.

 

Growing Chinese influence in Asia

The new economic framework of United States was intended to counter China’s influence in the Indo-Pacific region. But the increasingly inward-looking Washington is no longer a champion of free trade, says S Rajaratnam School of International Studies’ Kevin Chen.

Three of the four Indo-Pacific Economic Framework (IPEF) pillars may have been completed, but the inability of United States to see through the trade deal aimed at countering China’s economic influence is a strategic failure.

Hopes of an agreement were dashed last week at the Asia-Pacific Economic Cooperation (APEC) forum, even before former US president Donald Trump threatened to knock out the initiative if he were to return to power.

The IPEF was supposed to fill the policy gap left by the Trump administration’s withdrawal from the Trans-Pacific Partnership (TPP) in 2017.

It was styled as a novel economic agreement that provides a template for future economic engagement after years of rudderless drifting in the Indo-Pacific.

“You can count on the United States,” said Joe Biden at APEC. At its most basic level, the IPEF aimed to reassure America’s partners that it is still interested in a meaningful economic relationship with them. However, it has ostensibly fallen short of even that.

Southeast Asian observers should recognize that for domestic political reasons, Washington is no longer a champion of free trade. While they should continue engaging with the US on security issues, they should also be mindful that their region’s economic agenda is increasingly diverging from that of Washington’s.

The IPEF was challenging to negotiate from the outset, its demands and constraints a product of US domestic politics.

The lack of access to the US market removed a key incentive from the American negotiating toolkit. It was an effort to avoid a sensitive political issue: American public opinion has become generally less supportive of free trade due to the perception that cheap foreign goods are displacing American products, especially in key swing states and unions.

Believing that deep trade liberalization failed to protect American jobs and capacity, Biden’s administration bucked decades of free trade promotion to aggressively subsidise favoured industries in its competition with China. US$39 billion in manufacturing incentives was allocated under the CHIPS Act alongside US$370 billion in investments for clean energy under the Inflation Reduction Act to grow the US industrial base.

Meanwhile, labour and environmental standards were always a hard sell to partners such as Vietnam and Indonesia. These US demands tapped on these growing sentiments against free trade.

A common rallying call was that trade deals need to ensure strong labour and anti-dumping standards so American workers can compete on a level playing field – not just with Chinese workers, but with supply chains linked to China as well.

Yet, the IPEF was still vulnerable to the domestic forces it sought to appease. As a White House initiative, the IPEF was unlikely to garner financial support from a split Congress and could also be cancelled with a simple executive order by a future president.

Negotiators likely understood that the odds were stacked against them. The timeframe to complete IPEF negotiations was also relatively short at two years, compared to seven years for the TPP.

 

Gaza disaster exposes double standards

Saudi Arabia emphasized on Wednesday that the Gaza disaster has exposed the double standards and selective application of international laws and UN resolutions by the global community.

In his speech, on behalf of Saudi Crown Prince and Prime Minister Mohammed bin Salman, at the virtual summit of the leaders of the G20 countries, Finance Minister Mohammed Al-Jadaan said the Israeli military escalation and violence are raging in the besieged Gaza in flagrant violation of international laws and it had resulted in one of the history’s worst humanitarian catastrophes.

“The Gaza conflict would inevitably lead to consequences that go beyond this crisis and jeopardize the credibility of the current international system, which will have a negative impact on the world’s future ability to maintain international peace and security,” he said.

Al-Jadaan stressed Saudi Arabia’s categorical rejection of targeting civilians, infrastructure, residential and medical facilities, and displacing Palestinians from Gaza. He reiterated the Kingdom’s demand to spare bloodshed and stop Israeli military operations immediately.

He underlined the need for urgent and safe access of relief and medical supplies to the residents of the Gaza Strip, and create conditions to restore stability and achieve a peaceful solution that guarantees the Palestinian people’s access to their legitimate rights and the establishment of their independent state within the 1967 borders, with East Jerusalem as its capital.

The virtual meeting comes as a continuation of G20 summit of leaders, held in New Delhi, India in September, and it aimed to discuss the outcomes of its final statement and a number of topics, including the role of multilateral development banks, climate action and green finance, technical transformation, digital infrastructure, and the role of women in development.

 

Oil price tumbles nearly 4% as OPEC Plus meeting delayed

Crude oil prices fell nearly 4% on Wednesday as OPEC Plus producers delayed a meeting on output planned for Sunday, raising questions about the future course of crude production cuts. Brent crude futures declined 3.7%, to US$79.40 a barrel by 1313 GMT and WTI crude futures were down 3.82%, to US$74.80.

OPEC Plus delayed its ministerial meeting scheduled for November 30, OPEC said in a statement, without giving a reason for the postponement.

Earlier on Wednesday, Bloomberg News reported that the OPEC Plus meeting could be delayed for an unspecified period of time after Saudi Arabia expressed its dissatisfaction with other members about their output numbers.

Analysts had predicted before the delay that OPEC Plus was likely to extend or even deepen oil supply cuts into next year.

Both Brent and WTI oil benchmarks have fallen for four straight weeks.

 

Two ships divert course away from Red Sea

Two commercial ships that diverted their course in the Red Sea and Gulf of Aden were connected to the same maritime group whose vessel was seized by Yemen's Houthis, according to shipping data and British maritime security company Ambrey.

Israel on Sunday said the Houthis had seized a British-owned, Japanese-operated cargo ship in the southern Red Sea, describing the incident as an Iranian act of terrorism with consequences for international maritime security.

The Houthis, an ally of Tehran, confirmed that they had seized a ship in that area but termed it Israeli.

Japan's top government spokesperson on Monday confirmed the capture of the Nippon Yusen-operated ship Galaxy Leader, adding that Japan was appealing to the Houthis while seeking the help of Saudi, Omani and Iranian authorities to work toward the swift release of the vessel and its crew.

Two other ships also listed as commercially managed by Ray Car Carriers, Glovis Star and Hermes Leader, diverted their sailing routes, Ambrey said on Monday.

"The vessel continued to sail back to where it had come from, providing a new AIS destination as Hambantota, Sri Lanka," Ambrey said. "The vessel incurred a minimum four-day business disruption and sailed an additional 1,876 nautical miles."

The Glovis Star drifted for a number of hours in the Red Sea before continuing its journey, AIS ship tracking data showed on Monday.

Isle of Man registered Galaxy Maritime, which is the registered owner of the Galaxy Leader, said in a statement on Monday that the vessel was illegally boarded by military personnel via a helicopter on November 19.

When asked about the other two vessels diverting, a company spokesperson said it was not commenting further on political issues.

Houthi leadership last week said their forces would make further attacks on Israel and they could target Israeli ships in the Red Sea and the Bab al-Mandeb Strait.

US maritime administration MARAD in an advisory said the Galaxy Leader had been hijacked approximately 50 miles west of the Houthi-controlled port of Hodeidah, adding that ships should exercise caution when transiting this area.

"We saw yesterday a new record - for the first time we saw an official announcement of pirates taking over a ship on the high seas, which I think is a major threat to international law and order," Israeli President Isaac Herzog said in comments on Monday, referring to the Galaxy Leader.

 

Iran aims boosting trade with Pakistan

The Islamic Republic of Iran is aiming to expand its economic and trade relations with Pakistan through establishing joint free zones and trade centers with the country, IRIB reported.

According to Ahmad Jamali, the deputy secretary of Iran’s Free Zones High council, Tehran has reached an agreement with Islamabad to establish a joint free zone on the border between the two countries.

“We have identified 200 investment opportunities in potential joint free zones with Pakistan which can be used to boost export to the country,” Jamali said in a meeting held on Monday by the Trade Promotion Organization (TPO) for exploring Iran-Pakistan business opportunities.

Noting that Chabahar free zone in Sistan-Baluchestan Province is a good platform to develop exports from Iran to Pakistan, the official added, “Identifying investment opportunities in free zones can lead to the prosperity of businesses and trade of the two countries’ economic operators.”

Jamali further noted that Iran has considered significant incentives for the exporters to Pakistan and the government fully supports business operators active in the mentioned country.

Mentioning an upcoming exhibition of Iran-Pakistan trade opportunities, which is scheduled to be held in mid-January 2024, Jamali said holding such exhibitions would also be another great way to expand economic relations between the two countries.

Also speaking in the same meeting, Director of TPO’s South Asia Department Hadi Talebian-Moghadam announced a plan for establishing trade centers in Pakistan in the coming months, saying: “We are planning to increase the volume of trade between Iran and Pakistan, because the two countries need each other's goods and products.”

Stating that currently the highest level of trade between Iran and Pakistan is nearly US$2.5 billion, he added. “In the two countries’ strategic cooperation roadmap, we seek to increase the level of exports and exchanges between the two countries to five billion dollars bartering and free trade.”

The value of Iran’s non-oil export to Pakistan increased by 62% during the first seven months of the current Iranian calendar year, as compared to the same period in the past year, the spokesman of the International Relations and Trade Development Committee of Iran's House of Industry, Mining and Trade announced.

Ruhollah Latifi said that Iran exported non-oil commodities worth US$1.14 billion to its neighbor Pakistan in the seven-month period of this year.

He also announced that Iran imported commodities valued at US$352.64 million from Pakistan during the first seven months of this year, with 39% drop YoY.

The official has previously announced that Iran’s non-oil export to Pakistan increased by 18% in the previous Iranian calendar year.

Pakistan was Iran’s fifth largest export market in the previous calendar year, importing non-oil products worth US$1.488 billion from Iran, Latifi said in May.

He added that Iran imported non-oil goods worth $842 million from Pakistan last year, up 170% from the previous year.

The intertwining of economic, security, and transit relations between Iran and Pakistan has made the relations of the two countries beyond the neighborhood and turned them into strategic partners with common interests at the regional level.

Having more than 900 kilometers of joint border can lead to closer cooperation between the two countries in areas such as transit corridors and bilateral trade.

Iran and Pakistan signed a Memorandum of Understanding (MoU) in mid-January to facilitate bilateral trade between the two countries.

The MoU was signed by the former Head of Iran’s Trade Promotion Organization (TPO) Alireza Peyman-Pak and Head of the Trade Development Authority of Pakistan (TDAP) Muhammad Zubair Motiwala.

Based on the MoU, which was signed on the sidelines of Iran’s Exclusive Exhibition in Karachi, the parties pledged to exchange business information, support each other’s private sectors, and provide the conditions and context for the presence of their trade delegations in the other country.

Speaking at the signing ceremony, Peyman-Pak said that signing this MoU was indicative of the two sides’ determination for removing the obstacles in the way of bilateral trade and prepare the ground for the businesspersons of both sides to bolster cooperation.

He considered the holding of exclusive exhibitions, exchanging trade delegations and investment in joint production units as positive steps for knowing the capacities and needs of the two countries and expressed hope that such events would continue.