Pakistan Stock Exchange Nosedive Starts

Lately, the benchmark index of Pakistan Stock Exchange has witnessed a massive fall. While many of the leading brokerage houses are talking about quick recovery, some of the cynics like me are getting jittery. There is a growing consensus that the benchmark index may plunge below 60,000 by end September 2024.

I am amazed to note that none of the brokerage house is talking about this likely fall, seems they have been told explicitly by the high-ups in the government to remain silent. The government, particularly the finance minister is using the rising index as an indicator of the robust performance of the economy of the country.

I am sure many of the readers may not like my expression, “In no way the benchmark index of the Exchange is the true indicators of the robustness of the economy of Pakistan”.

My premise is based on the following: 1) the index is based on 100 out of total listed around 550 companies, 2) bulk of the index points pertain to around 30 blue of the blue chip companies, 3) substantial holding is by institutions and foreigners, and 4) bulk of the daily trading volume is generated by “Day Traders”.

Coming back to likely substantial fall in index, the readers are advised to keep following points in mind and watch market movement closely: 1) income of commercial banks will decline due to the reduction in interest rate and shrinking appetite of the private sector borrowers as well as consumer financing, particularly car financing, 2) E&P companies are likely to witness fall in earnings because of declining crude oil prices and mounting circular debt of the energy sector, 3) the ongoing IPP saga may also result in selling of these shares as well as reduction in income, and 4) profitability of fertilizer companies is being marred by persistent hike in gas tariff.

Going two steps forward, I believe bearish spell in the United States, may lead to a situation we have witnessed in 2008. At that time the fall was led by subprime loans and this time it will be led by technology companies.

 

 

Is there any similarity between toppling of Hasina and Imran regimes?

According to my friend Muda Guppa, on Monday Sheikh Hasina prime minister of Bangladesh relinquished power that reminded a planned non-confidence move against ex-prime minister of Pakistan, Imran Khan. 

The only difference was that a member National Assembly, Shehbaz Sharif, became prime minister for the remaining term, whereas in Bangladesh chief of army became head of the government for the interim period till new elections are held.

Muda insisted that in change of regime in Bangladesh and Pakistan, United States played a key role, and the architect of change in regimes in both the countries was Donald Lu, US assistant secretary of state.

In the recent past I have been taking about three types of countries which United States hates.  During her three regimes Hasina made Bangladesh from strong to stronger, evident from GDP growth rate and foreign exchange reserves held by the country.

However, Bangladesh was lured to approach IMF for a bailout package.

Muda insisted that United States was not happy with Hasina due to her tilt towards China, which has been mediating between countries having long history of animosity. United States believed the restoration of diplomatic relations between Saudi Arabia and Iran would weaken its influence in the Middle East and North Africa (MENA).

It is on record that Saudi Arabia and United Arab Emirates (UAE) refused to join a naval task forces led by United States and some of the European countries to take action against Houthis of Yemen.

In the saga, India played the role of most trusted friend of Hasina, it took her out of Bangladesh and provided a safe haven.

Muda believes that the whole controversy started when students demanded to end the quota system for the children of those who had fought against Pakistan Army.

Therefore, India has to arrange for a safe exit of Hasina. She and her father Sheikh Mujibur Rahman played a key role in turning East Pakistan into Bangladesh.

 

Bangladesh: Hasina resigns, army takes over

According to Sudi Gazette, the prime minister of Bangladesh, Sheikh Hasina, resigned on Monday after weeks of deadly anti-government demonstrations gripped the South Asian nation.

The announcement from Bangladesh’s army chief, Gen. Waker-uz-Zaman, came after protesters stormed the official residence of the prime minister in the capital, Dhaka.

Images showed flames billowing from vehicles near Hasina’s house, with police unable to contain throngs of people charging towards the neighborhood.

Earlier in the day, the military and police had attacked demonstrators rallying in the area, according to a journalist working for CNN in Dhaka.

At least 91 people were killed and hundreds injured on Sunday in clashes between police and protesters demanding the scrapping of quotas for government jobs and the resignation of the prime minister. Opponents say the civil service job quotas are discriminatory.

The death toll on Sunday, which included 13 police officers, was the highest for a single day from any protests in the country’s recent history.

The figure surpassed the 67 deaths reported on July 19, when students took to the streets against the quotas, Reuters reported.

At least 32 children were killed during protests last month, UNICEF said on Friday.

The widespread unrest prompted the government to impose an indefinite nationwide curfew over the weekend. Meanwhile, human rights groups accused authorities of using excessive force against protesters, a charge the government denies.

The military will form an interim government in the wake of Hasina’s resignation, according to the army chief, who called on students “to maintain peace and help us.”

“Whatever demands you have, we will fulfill and bring back peace to the nation, please help us in this, stay away from violence,” Zaman said on Monday. He added that “the military will not fire at anyone, the police will not fire at anyone, I have given orders.”

Police opened fire on protesters in Dhaka earlier in the day, according to a journalist working for CNN, even as security forces have been under scrutiny for unleashing a wave of brutality on demonstrators.

At least four people sustained injuries as protesters were gathering at Dhaka Medical College on Monday, according to the journalist. One of those people was shot in the head.

Protesters told CNN that ⁠the military was blocking Dhaka Medical College Bakshibazar Gate. Police also used tear gas on protesters there, according to a demonstrator on the ground.

Students and protesters at Dhaka University Campus and the Shaheed Minar, a national monument in the capital, were beaten by police as they assembled at these locations.

Protesters there said that the police had attempted to break up the crowd by “brutally beating” them with bamboo sticks and using tear gas.

“Direct open firing took place in Shahbag area 15 minutes ago. We don’t have an estimate of how many were injured. It is still ongoing. Near Motijhil Shantinagar, tear gas has been fired on common people,” one demonstrator told CNN.

In other locations across Dhaka, the military has also fired warning shots in the sky and towards protesters.

Details and videos are scant as Bangladesh is in the midst of a “near-total national internet shutdown after earlier social media and mobile cuts” according to data from Netblocks, a global internet monitor.

Video posted on social media and verified by CNN showed security forces launching live rounds into the air near protesters on the N1 highway in Dhaka.

Protesters in Dhaka told CNN that the university campus was surrounded by armed forces.

The neighborhoods of Nilkhet, Katabon, and Shahbagh are currently blocked. ⁠The military’s armored personnel carriers have taken positions in front of the Intercontinental Hotel, and they are only letting doctors in.

Asif Mahmud, one of the key coordinators of the civil disobedience campaign, called on protesters to gather at 11:00 a.m. local time, adding that they planned to walk to Shahbagh in what they call the Long March to Dhaka.

 

Rockets fired at Israeli settlement

Saudi Gazette reports a rocket barrage was launched from southern Lebanon toward Israel early Sunday. Israeli Channel 14 reported that at least 50 rockets were fired toward the Upper Galilee, triggering sirens across the region.

Hamas and Iran have vowed to retaliate for the assassination of the group’s political bureau chief Ismail Haniyeh in Tehran, while Hezbollah pledged to respond to the killing of its commander, Faud Shukr, in Beirut.

Fears have grown about a full-blown war between Israel and Hezbollah amid a months-long exchange of cross-border fire.

The escalation comes against the backdrop of an Israeli onslaught in Gaza, which has caused nearly 40,000 deaths since October 2023.

According to the Tehran Times, Lebanon's Hezbollah announced on Sunday that it had targeted a new settlement inside occupied Palestine as part of ongoing operations in solidarity with Gaza.

In a statement, the Lebanese resistance movement explained that it had added the settlement of Beit Hillel to its current range of fire and targeted it for the first time with dozens of Katyusha rockets. 

Beit Hillel is a settlement in the north, about five kilometers away from Kiryat Shmona, which is closer to the Lebanese border and has been under constant Hezbollah fire. 

The extent of attacks on Kiryat Shmona saw Israelis flee the settlement to Tel Aviv and elsewhere. They have been replaced by the Israeli occupation forces who have gone into hiding amid ongoing precision strikes by Hezbollah. 

The Lebanese resistance emphasized that targeting Beit Hillel for the first time was a response to Israeli assaults "on the steadfast southern villages and safe homes". 

The statement added that the new operation was carried out especially after the Israeli military waged attacks on the southern Lebanese villages of Kfarkela and Deir Siriane (Marjeyoun District), which injured civilians. 

Hezbollah reaffirmed that targeting a new settlement also comes alongside its support for Gaza and the Palestinian resistance. 

According to the Lebanese news agency NNA, the Lebanese resistance has said its fighters carried out a "direct hit" on Israeli surveillance equipment in the settlement of Ramya, destroying the equipment. 

The ramifications of the Lebanese resistance’s moves against the Israeli occupation regime have been covered by The Financial Times, the British newspaper.

Based on satellite images, the newspaper said, the Israelis have sustained severe damages after ten months of confrontations with Hezbollah. 

The newspaper pointed out that Hezbollah's operations led to the largest evacuation in the northern occupied Israeli territories since the "establishment of Israel" more than 75 years ago, reporting that Hezbollah's fire caused damage to buildings, crops, and commercial activities. 

Reports have also cited data from the Israeli army that showed Hezbollah had deployed only a small fraction of its massive arsenal between October 2023 and mid-July 2024, launching about 6,700 rockets and 340 drones at the north, while confirming that the impact was widespread and significant. 

Hezbollah has carried out some 2,500 military operations targeting occupation sites, settlements, and military posts on the other side of the Lebanese border. 

This covers over 300 days of military support operations from October 8, 2023, to August 3, 2024, according to a new report from Hezbollah's military media. 

Hezbollah has vowed to avenge the assassination of its senior commander Faud Shukr in Beirut's suburb last week. 

In a speech, the Secretary-General of Hezbollah, Seyyed Hassan Nasrallah, vowed to retaliate but has kept Tel Aviv waiting on the nature of the response. 

Analysts say the vague warning by Seyyed Nasrallah has also left the Israelis in a state of fear and panic.

 

 

 

 

Turmoil in Nigeria

According to Reuters, Nigerian President Bola Tinubu called on Sunday for a suspension of protests against a rising cost of living crisis, saying this would create an opportunity for dialogue, his first public comments since frustrated citizens took to the streets last week.

Nigeria one of the largest oil producing countries

On July 11, 2024 we posted a blog “US hates and destroys three types of countries”. One of these was countries rich in energy resources. Today we talk about Nigeria, an African country persistently facing armed conflict by and with Boko Haram in North-Eastern Nigeria is resulting in widespread displacements, food insecurity, and many victims of violence. Nigeria was also the largest crude oil exporter of the African continent and also among top 10 oil exporters of the world. The main destination of Nigerian crude oil are: India, Spain, France, United States, and Netherlands. The fastest growing export markets between 2021 and 2022 were: Indonesia, Netherlands, and France.

 Amnesty International has said at least 13 people were killed in clashes with security forces on the first day of protests on Thursday.

Police denied using excessive force and said seven people had died as of Saturday - four from an explosive device during a march in northeast Borno state, two who were hit by a car and another who was shot by a guard when protesters looted a shop.

In a televised broadcast, Tinubu called for an end to violence in several states since the protests started, saying he was always open for dialogue.

"My dear Nigerians, especially our youth, I have heard you loud and clear. I understand the pain and frustration that drive these protests, and I want to assure you that our government is committed to listening and addressing the concerns of our citizens," he said.

Nigerians have been mobilizing online to organize protests against economic hardship and bad governance and have called for a cut in petrol prices and electricity tariffs, among several demands.

Tinubu, in office since May 2023, defended his economic reforms, which have included a partial end to petrol and electricity subsidies and devaluation of the naira, as necessary to reverse years of economic mismanagement.

Government revenues had more than doubled to 9.1 trillion naira (US$5.65 billion) in the first half of this year while 68% of revenue now went to debt servicing, down from 97% before he took office in May last year.

The government was also ramping up spending on infrastructure projects, started a loan scheme for university students and was building thousands of housing units across Nigeria's 36 states, the president said.

"But we must not let violence and destruction tear our nation apart," said Tinubu.

 

 

 

Bangladesh: Remittance Boycott Call

According to Nikkei Asia, weeks of deadly protests in Bangladesh have triggered a bold new strategy from critics, who are urging the country’s vast diaspora to halt the flow of foreign remittances. This move aims to pressure the government of Prime Minister Sheikh Hasina, which is grappling with an economic crisis and a contentious political climate.

A Financial Lifeline in Jeopardy

Organizers are calling on nearly 10 million Bangladeshis living abroad to freeze the approximately US$2 billion sent home monthly. This financial lifeline is crucial for the South Asian nation, which turned to the International Monetary Fund (IMF) for a bailout last year.

Faiz Ahmad Taiyeb, a Bangladeshi engineer working for a telecom company in Europe, is a prominent voice in this movement. He believes that reducing remittances could financially undermine Hasina’s government. “By reducing remittances, we can cut off the financial lifeline to Hasina’s autocratic government,” Taiyeb asserted.

Expatriate Support

The call for a remittance boycott has gained traction among influential Bangladeshi expatriates, including Elias Hussain, a US-based former TV journalist with over 2 million YouTube followers. Hussain’s endorsement amplifies the movement’s reach and impact.

Heavy-Handed Response

The backdrop to this economic strategy is a series of violent protests that have claimed more than 200 lives since they erupted last month.

The protests were initially sparked by demands from students and other demonstrators to abolish public-sector job quotas amid rising youth unemployment. The government’s response has been severe, with thousands arrested and a curfew imposed.

Prime Minister Hasina’s administration, re-elected to a fourth term in controversial elections boycotted by the opposition, has also announced a ban on the main Islamic party, Jamaat-e-Islami, and its student wing, blaming them for the violence.

Economic Strain

The unrest has drawn international condemnation and agravated Bangladesh’s economic woes. The country’s foreign exchange reserves have plummeted to about US$18 billion from nearly US$49 billion two years ago. Remittances, a significant source of foreign currency, totalled nearly US$24 billion in the last fiscal year.

Shafquat Rabbee, an adjunct instructor of business analytics at the University of Dallas, highlighted the critical role of remittances, comparing them to oil sales receipts for a Middle Eastern country. “Any reduction could run shockwaves through the country’s macro economy,” he warned.

Boycott Movement

Leaders of the boycott movement, such as Tokyo-based apparel merchandiser Saddam Hossain, are urging Bangladeshis in Japan and South Korea to suspend remittances temporarily despite the financial strain. “I am doing this for my homeland,” Hossain said. “By killing students, this autocratic government of Hasina has forfeited all legitimacy.”

Government Counterarguments

The Hasina administration has strongly criticized the remittance freeze. Salim Mahmud, secretary of information and research for the ruling Awami League, labelled the boycott as “unpatriotic” and unrealistic in the long term. “People back home rely on this money,” he stated, adding that the boycott could encourage illegal remittance channels.

Economic Fallout

The protests and subsequent government actions have already caused significant economic damage, with business leaders estimating losses at US$10 billion.

The European Union has postponed negotiations with Bangladesh on a new cooperation deal, citing concerns over the government’s response to the unrest.

The impact of the remittance boycott remains uncertain. Bangladesh Bank reported a sharp decline in remittances between July 19 and July 24, attributed to a five-day internet blackout during the protests. However, economist Jyoti Rahman cautioned that it is too early to attribute these figures to the boycott.

Potential Consequences

If the remittance boycott gains traction, it could have severe consequences for Bangladesh’s economy.

US-based academic Rabbee warned that cutting remittances by half could push the country into insolvency and crash the local currency.

Zaved Akhtar, president of the Foreign Investors Chamber of Commerce and Industry, echoed these concerns, noting that the full economic repercussions are still unfolding.

The remittance boycott could also backfire, potentially driving a wedge between the low-income population and the student-led protest movement. Dhaka-based economist Rubaiyath Sarwar emphasised the complexity of the situation, suggesting that the government might use the boycott to create friction among different social groups.

 

Haniyeh killed by short range projectile

Hamas political chief Ismail Haniyeh was killed with a "short-range projectile" fired from outside his guesthouse in Tehran, according to Iran's Revolutionary Guard Corps (IRGC), reports Saudi Gazette.

The paramilitary organization said the projectile weighed about 7kg (16lbs) and caused a "strong blast," killing Haniyeh and his bodyguard last Wednesday. Haniyeh was in Tehran to attend inauguration of President Massoud Pezeshkian.

The IRGC accused Israel, with US support, of designing and implementing the operation. Israel has not commented on Haniyeh's death.

Western media reports suggest that explosives were planted in the guesthouse by Israeli operatives, conflicting with the IRGC's account. The incident has embarrassed Iran and the IRGC, especially given the intense security on the day of the attack.

Dozens of IRGC officers have been arrested or dismissed since Haniyeh's death, according to the New York Times.

The IRGC's intelligence agency has taken over the investigation, interrogating staff members at Haniyeh's guesthouse and seizing their electronics.

In response to the security breach, the security details of Iranian politicians have been overhauled.

The IRGC's statement followed a report by Britain's Daily Telegraph that Haniyeh was killed by bombs planted in his room by agents of Israel's Mossad intelligence agency.

The New York Times also reported that Haniyeh was killed by explosives, potentially planted up to two months earlier. Hamas officials noted that Haniyeh had stayed at the guesthouse before and had made numerous visits to Iran since becoming the head of the political bureau in 2017.

If true, these reports would indicate a significant failure for the IRGC, highlighting Mossad's ability to operate within Iran.

Both Iran and Hamas have vowed to retaliate for Haniyeh's death. The IRGC promised "severe punishment" for Israel at an appropriate time, while Hezbollah has also vowed reprisals after one of their commanders was killed in an Israeli strike.

The situation has escalated regional tensions, with Prime Minister Benjamin Netanyahu warning Israelis of challenging days ahead and preparing for any scenario.

The US has deployed additional warships and fighter jets to the Middle East to help defend Israel from potential attacks by Iran.

British Foreign Secretary David Lammy warned of a rapidly deteriorating situation on the ground.

Israeli officials, including the heads of Mossad and Shin Bet, are in Cairo for ceasefire talks with Egyptian intelligence chief Abbas Kamel.

US President Joe Biden acknowledged that Haniyeh's death had damaged the ceasefire negotiations. The conflict, which began in October 2023, has resulted in significant casualties.