Saudi Arabia-Iran joint naval exercise

According to the Tehran Times, the head of the Iranian Army Navy has announced that Saudi Arabia has expressed interest in a joint naval exercise, a move aimed at strengthening regional cooperation.

Rear Admiral Shahram Irani highlighted the Iranian Navy's operations in the Red Sea, noting that Saudi Arabia has proposed a combined exercise in that region. Both nations have extended invitations to each other concerning their presence in the ports.

Irani added that both sides' initiatives include plans for a bilateral exercise and potential involvement from other nations. 

“Coordination efforts are currently in progress, and delegations from both countries will engage in necessary discussions regarding the execution of the exercise,” the commander emphasized.

This collaboration between Saudi Arabia and Iran could potentially pave the way for further dialogue and de-escalation of tensions in the region, benefiting both countries and the broader international community.

Military observers from both parties will be attentively assessing the results of this exercise and the possible effects it could have on the geopolitical dynamics of West Asia.

This proposed joint naval exercise in the Red Sea would mark the third instance of military cooperation between Iran and Saudi Arabia in the region.

In 2018, the two nations, alongside Oman and Pakistan, participated in a joint naval exercise in the Indian Ocean under the banner of the "Coalition of Friendship”.

This week, Iran concluded a joint naval drill in its southern waters, with Saudi Arabia among the participating nations.
 

 

Mari Petroleum Company Results Review

Mari Petroleum Company (MARI) held its corporate briefing to discuss FY24 result and future outlook of the company. The key takeaways are:

MARI achieved highest-ever hydrocarbon sales of 39 MMBOE up 18%YoY in FY24.

MARI’s 2C resources increased from 106 MMBOE in FY23 to 112 MMBOE in FY24. Similarly, 2P reserves increased from 577 MMBOE in FY23 to 704 MMBOE in FY24. Ghazij, Shawal, and HRL were the key contributors to the reserves/ resource additions.

MARI’s Reserves to Production (R/P) life is 17 years.

MARI spudded/ delivered a total of 12 wells in FY24, comprising of four exploratory wells (Maiwand X-1, Bolan West-1, Spinwam-1, and Shawal-1); five appraisal wells (4 Ghazij wells (Ghazij-2, 3, 4, & 5) and one Shewa-2; two development wells (Mari-124 and MD-20); and one water disposal well, WDW-3.

The company has also planned drilling for this year, and the CAPEX will be similar to last year.

Phase 1 of the HRL Pressure Enhancement Facilities/ Debottlenecking Project is near completion, with 17 loops completed and 3 loops in progress. Work on the compression stations is also in progress.

Regarding Enhancement Pressure Facilities (EPF) management highlighted that work on SNGPL pipeline has been completed. Pipeline Hydro testing of the remaining section is under process. The commencement of production will depend on the security situation and local dynamics. The expected production will be 70 MMSCFD.

Management highlighted that Mari D&P lease has been renewed for five years until November 2029 with an additional recurring 15% payment of wellhead value.

Mari Mining Company (a wholly owned subsidiary of MARI) was incorporated in July 2023. Currently, MARI holds three mining licenses in Chagai district of Balochistan (MPCL 1, MMC 2).

MARI has also incorporated Mari Technologies Limited, a wholly owned subsidiary company, focusing on Data Centre, Cloud Computing, Artificial Intelligence and other Petroleum and Mining related Technologies.

The management informed that they will sell the bonus shares at market price, and any difference from the price of PKR448.7/ share will be adjusted from the extra 10% shares of the shareholders held by the company.

The key focus of the company would be: 1) the safe startup of Shewa Early Production Facilities, 2) preparation and execution of Ghazij and Shewa FDPs, 3) completion of offshore evaluation and readiness for the bid round, 4) work streams on carbon capture and green hydrogen, 5) diversification in mining and technologies, and 6) building on technical excellence and enhancing employee experience.

 

China cuts key mortgage rate

According to South China Morning Post, China announced on Monday it had slashed a key reference rate for mortgage loans by a quarter of a percentage point, as the country stepped up efforts to stabilize the property market.

The benchmark five-year loan prime rate (LPR) was lowered to 3.6% from 3.85%, while the one-year lending rate was also cut to 3.1% from 3.35%.

For Chinese households with mortgage loans of 1 million yuan (US$140,000), the monthly instalment payment would be reduced by around 141.5 yuan (US$19.9) after the cut to the five-year LPR.

The move was expected as central bank governor Pan Gongsheng had said at a financial forum on Friday that lending rates would decrease by between 20 to 25 basis points.

The rates were last cut in July.

“The rate cut is broadly in line with market expectations,” said Zhang Zhiwei, president and chief economist at Pinpoint Asset Management.

“It is an encouraging sign that the monetary policy is moving in the right direction to fight deflation.”

The move came as Beijing has taken an all-out effort to drive up the struggling property market.

Speaking at a press conference on Thursday, the housing ministry said it would double the credit to white list property projects to 4 trillion yuan by the end of the year and renovate 1 million units in urban villages.

“The monetary policy has clearly shifted to a more supportive stance since the press conference on September 24. The real interest rate in China is too high,” Zhang added.

Analysts expected more rate cuts in the coming quarters, after Pan indicated on Friday plans to further cut the reserve requirement ratio – the amount of cash that commercial banks must hold as reserve – for banks.

“But this is unlikely to boost loan demand much,” said Huang Zichun, an economist at Capital Economics, who noted weak credit demand as the main constraint.

“And without a rebound in inflation, which we don’t foresee, real lending rates will remain restrictive unless policy rates are cut by a lot more.

“The heavy lifting will need to come from fiscal policy.”

 

Prabowo sworn in as Indonesian president

Prabowo Subianto was inaugurated on Sunday as Indonesia’s eighth president, succeeding Joko Widodo, who served for a decade. In his inaugural address, he pledged to be the "leader of all Indonesians."

The inauguration ceremony took place in Jakarta and was attended by various foreign dignitaries.

Having served as defense minister in Jokowi's Cabinet, Prabowo was elected in February after winning a landslide victory.

Following the ceremony, the 73-year-old president proceeded to the presidential palace, where he received a warm welcome from the outgoing president.

In an emotional speech, Prabowo emphasized his commitment to unity among Indonesians, regardless of political affiliations, and vowed to advocate for the protection and welfare of the nation’s most vulnerable groups.

He highlighted national unity and food security as the primary focuses of his administration and promised that Indonesia’s natural resources would be managed for the benefit of all citizens.

He also committed to continuing the policies of his predecessor, including the industrialization of mining commodities and the ban on exporting raw minerals and ores.

"We will carry out this oath to the best of our ability and with accountability, prioritizing all the people, including those who did not vote for us," Prabowo stated.

His running mate, 37-year-old Gibran Rakabuming Raka, the son of Jokowi, was also sworn in as vice president.

Drone strikes Netanyahu’s residence

According to media reports, a drone launched from Lebanon struck the residence of Israeli Prime Minister Benjamin Netanyahu in Caesarea on Saturday.

The Netanyahu's office confirmed in a statement that the drone was aimed at Netanyahu's private home, but noted that the premier and his family were not present at the time of the attack.

Earlier, the Israeli army reported that three drones were fired from Lebanon, with two successfully intercepted and the third crashing into a building in Caesarea. Fortunately, there were no reported casualties from the incident.

This drone attack occurs amid ongoing cross-border hostilities between Israeli forces and Hezbollah, which have intensified since the Gaza conflict began last October.

Israel has escalated its offensive in Lebanon, resulting in significant casualties, including the deaths of Hezbollah leader Hassan Nasrallah and several other commanders.

The extensive airstrikes, followed by a ground invasion, have claimed over 1,500 lives and displaced approximately 1.2 million people.

PSX witnesses 16.5%WoW decline in average daily trading volume

Pakistan Stock Exchange (PSX) remained volatile during the week, with the benchmark index losing 233 points or 0.3WoW to close at 85,250 points on Friday, October 18, 2024.

Commercial Banks and Power sectors were the primary drags on the index, as concerns over additional ADR-based taxation to weigh on banks’ expected profitability for the last quarter, while continued government scrutiny on IPPs added pressure to the Power sector.

Fertilizer sector also remained laggard due to lower than expected payouts by EFERT.

On the political front, the successful conclusion of the SCO summit was a positive development. However, heightened political noise towards the weekend kept market sentiments subdued.

Textiles and food exports remained elevated.

Foreign exchange reserves held by the State Bank of Pakistan (SBP) crossed the US$11 billion mark for the first time in last two and half years, as of October 11, 2024.

In the T-Bills auction held on Wednesday, GoP raised PKR716 billion as against a target of PKR400 billion, with 3 and 6 month yields falling to 15.3% and 14.3%, respectively.

In its recent fortnightly review, GoP hiked diesel prices by PKR5/litre, while keeping petrol prices unchanged.

Market participation plunged by 16.5%WoW, with average daily traded volume dropping to 432 million shares from 518 million shares in the earlier week.

On the currency front, the PKR remained largely stable against the greenback, closing the week at PKR277.6 to a greenback.

Other major news flows during the week included: 1) GoP pays off PKR1.2 trillion domestic debt in first quarter of the current financial year, 2) Roshan Digital Accounts surpass US$8.749 billion in remittances, 3) LSM output rises by 4.68MoM in August, and 4) Urea off takes decline by 35YoY in September.

Tobacco, Close-end Mutual Funds, and Engineering were amongst the top performing sectors. Woollen, Property, and Transport were amongst the worst performers.

Major selling was led by Banks, with a total outflow of US$16.6 million, primarily due to NBP offloading its entire stake in AGL to FFC. Foreigner followed with net sell of US$11.1 million.

Companies absorbed most of the selling with a net buy of US$25.8 million.

Top performing scrips of the week were: ATRL, PAKT, HGFA, FCEPL, and JDWS, while laggards included: NPL, JVDC, BNWM, KAPCO, and PIOC.

Market is expected to remain positive going forward, supported by declining interest rates, anticipated to continue channeling investment flows into equities.

Additionally, with the ongoing earnings season, corporate results would stay in focus.

Despite the recent upward trend, the market remains attractively valued, currently trading at a P/E of 3.7x with a dividend yield of 11.9%.

AKD Securities proposes focusing on sectors that are likely to benefit from monetary easing and structural reforms, particularly high dividend yield stocks, likely to re-rate as yields converge with fixed income returns. Top picks include, OGDC, PPL, MCB, UBL, MEBL, FFC, PSO, LUCK, MLCF, FCCL and INDU.

 

Join Sanders to stop weapons sale to Israel

In the United States, Senator Bernie Sanders has introduced a congressional resolution to stop US$20 billion in weapons sales to Israel to stop the United States patronizing genocide in Gaza by Israel.

 According to sanders, “Much of this carnage in Gaza has been carried out with US-provided military equipment.”

He added, “Providing more offensive weapons to continue this disastrous war would violate US and international law.”

As long as bombs and other weapons are being supplied to Israel, the US administration is supporting the genocide in Gaza and the killing of over 42,000 Palestinian civilians.

Not only the members of Congress must join with Sanders people from around the world must demand halt to weapons sales to Israel and end to the genocide.

The measure led by Sanders could help in halting sales of missile systems, tank rounds, and other weapons, including munitions, causing the worst destruction in Gaza.