PSX Index closes the week at the historic high

Pakistan Stock Exchange (PSX) remained volatile throughout the week ended on November 29, 2024. This led to the KSE-100 index registering its highest ever intra-day gains of 4,695 points on Wednesday, and closing at a record high of 101,357 points on Friday, marking an increase of 3.6%WoW.

The volatility stemmed from acceleration in political instability amid opposition party reaching to protest in the country’s Capital, creating uncertainty amongst the investor, leading to a major fall in benchmark index, marking a decrease of 3,506 points on Tuesday. However, market regained its momentum on Wednesday after the protestors started to back off from Islamabad and the momentum was further fueled by a circular from the State Bank of Pakistan (SBP), removing the MDR requirements on deposits held by Commercial banks of financial institutions and public sector enterprises. This led to the KSE-100 index registering its highest ever intra-day gains of 4,695 points on Wednesday, and closing at a record high of 101,357 points on Friday, marking an increase of 3.6%WoW.

Major contributing sectors to this rally were commercial banks, contributing 1,675 points, followed by Technology & Communication with 349 points, and Oil & Gas Exploration, which added 283 points during the week. However, with another circular from the SBP revising its guidelines for profit sharing on saving deposits for Islamic Banking Institutions (IBIs), which resulted in MEBL eroding 439 points during the week.

Secondary market yields on the 6-month bill decreased to 12.12%, dropping to the lowest levels seen in over 2.5 years.

Foreign exchange reserves held by SBP increased by US$131 million WoW, ending the week at US$11.4 billion as of November 22, 2024.

Average daily trading volume remained higher, up by 39.8%WoW, rising to 1.4 billion shares, as compared to 990.7 million shares traded a week ago.

PKR witnessed a meagre depreciation of 0.1% against the greenback during the week to close at 278.05PKR/US$.

Other major news flow during the week included, 1) SBP receives US$500 million from ADB under climate resilience program, 2) IT Ministry released incentive plan for semiconductor industry, 3) Pakistan, Belarus announced to boost ties with 8 MoUs, and 4) the GoP formed a body to oversee Reko Diq deal.

Property, Leather & Tanneries, Oil & Gas Marketing Companies, Technology & Communication and Exchange Traded Funds were amongst the top performing sectors, while Jute, Woollen, Transport, Automobile Assembler & INV.Banks/ INV.Cos/ Securities Cos. were amongst the worst performers.

Major selling was recorded by Foreigners with a net sell of US$15.1 million. Insurance Companies absorbed most of the selling with a net buy of US$10.6 million.

Top performing scrips of the week were: BOP, AKBL, HBL, JVDC, and MEHT, while laggards included: MEBL, FABL, PSEL, SAZEW, and GHGL.

Continuation of monetary easing due to disinflationary environment and improving macroeconomic environment would make investment in equities more appealing, currently trading at P/E of 4.9x and DY of 10.2%.

Aforementioned factors, along with declining external financing requirement under the IMF program, would keep foreigners’ interest alive.

AKD Securities recommends sectors that benefit from monetary easing and structural reforms. However, modest economic recovery may limit the upside for cyclicals.

The top picks of the brokerage house include, OGDC, PPL, MCB, FFC, PSO, LUCK, MLCF, FCCL and INDU.

 

 

Iran: Transit trade through Chabahar Port

Officials from Iran, India, Afghanistan, and Uzbekistan met in Mumbai to explore strategies for enhancing commercial transactions and facilitating the transportation and transit of goods through Iran’s Chabahar Port.

Hossein Shahdadi, Deputy Director of Port and Economic Affairs of Chabahar, represented Iran at the meeting, which also included senior officials from India’s Ministry of Ports, Shipping, and Waterways, as well as ambassadors and diplomats from Uzbekistan, Afghanistan, and Iran.

Chabahar potential

The discussions centered on leveraging Chabahar’s strategic position as a vital trade and transit hub connecting Central Asia, South Asia, and the Middle East. Participants reviewed the port’s current infrastructure and operational capacity while addressing key obstacles to trade, including bureaucratic challenges, logistical inefficiencies, and infrastructure gaps.

As part of the agenda, the officials also proposed measures to streamline customs processes, enhance multimodal transport connectivity, and expand investment in Chabahar’s development to unlock its full potential as a regional trade gateway.

Chabahar regional role

Chabahar Port, located on Iran’s southeastern coast in the Gulf of Oman, is Iran’s only oceanic port and holds immense strategic significance. It provides a shorter and more secure trade route for landlocked countries such as Afghanistan and Uzbekistan, offering a viable alternative to traditional trade routes through Pakistan.

India, in particular, has invested heavily in Chabahar as part of its broader strategy to bypass Pakistan and enhance trade with Central Asia, Afghanistan, and beyond. The port is seen as a linchpin of India’s International North-South Transport Corridor (INSTC), a multimodal trade route linking India to Russia via Iran and Central Asia.

Chabahar Port and India

India has played a significant role in the development of Chabahar Port, committing substantial financial and technical resources to its construction and expansion. Under a trilateral agreement signed in 2016 between Iran, India, and Afghanistan, India has been granted operational control of a portion of the port. Since then, the country has contributed to improving the port’s infrastructure, including the construction of new terminals, installation of modern equipment, and dredging activities to enhance its cargo-handling capacity.

In recent years, India has shipped essential commodities such as wheat to Afghanistan through Chabahar and has positioned the port as a key enabler of humanitarian assistance and economic collaboration. The development of Chabahar aligns with India’s vision of regional connectivity and underscores its commitment to promoting economic stability in Afghanistan and Central Asia.

Future goals and challenges

The third joint working group meeting also highlighted the challenges faced in realizing Chabahar’s full potential. These include the need for sustained investment in rail and road connectivity, enhancing port efficiency, and addressing geopolitical issues, including US sanctions on Iran, which have hindered the pace of collaboration in some areas.

Despite these hurdles, all four nations reiterated their commitment to furthering cooperation on Chabahar and exploring innovative solutions to promote regional trade and economic integration. The port’s strategic location and growing role in fostering connectivity ensure it will remain central to the economic ambitions of the participating nations.

 

GCC Summit begins in Kuwait today

The 45th Gulf Cooperation Council (GCC) Summit is scheduled to begin in Kuwait on Sunday (today). It aims at bringing together leaders and representatives from member states to discuss pressing regional and international issues to bolster sustainable development, regional security, and stability.

The summit will focus on a range of critical issues, including regional security, economic integration, and responses to mounting regional and international challenges.

Leaders are expected to deliberate on enhancing the GCC joint market, fostering technology cooperation, advancing infrastructural linkages, and addressing political files such as Palestine, Lebanon, Syria, Yemen, and Iraq.

Established in 1981, the GCC includes Saudi Arabia, Kuwait, the UAE, Bahrain, Qatar, and Oman, with an annual goal of strengthening cooperation across economic, political, and security domains.

Experts and officials have highlighted the significance of the summit, particularly during a period of heightened regional and international instability.

The GCC leaders are expected to reiterate their commitment to unity and collaboration, ensuring that the council continues to play a central role in addressing the region’s evolving challenges while fostering stability and prosperity for member states

Syrian counteroffensive against infiltrators

The Syrian Arab Army has launched a major counteroffensive against terrorist groups who waged a surprise assault from the northwestern city of Idlib. Government forces have successfully halted the advance of terrorists led by Hayat Tahrir al-Sham (HTS), aligned with al-Qaeda.

Fighting between the Syrian army and HTS-led terrorists has reportedly expanded from western Aleppo city to southwest of Aleppo, east of Idlib in the vicinity of Saraqib city, and southeast of Idlib.

Terrorists have been launching major attacks on these fronts since Friday morning, intending to breach Aleppo.

A large majority of the terrorists who have been killed are foreigners, according to Syrian army sources.

After reinforcements, Special Forces were dispatched to the region, the army took back control of one village from the terrorists in southeastern Idlib after heavy clashes.

In two other villages, terrorists have been forced to retreat to Idlib city.

The counteroffensive has seen heavy rocket barrages and Russian-Syrian warplanes targeting the positions of the HTS-led Joint Operations Room.

Terror groups are reportedly attempting to open a new front after failing to advance toward a main highway called M5.

Intense battles are also taking place south of Idlib, which is under Syrian army control.

Russian and Syrian airstrikes have stretched from villages that had been taken over by terrorist groups in Western Aleppo and newly established HTS supply lines in Jabal al-Zawiya (Zawiya Mountains), south of Idlib.

Meanwhile, heavy fighting continues on two fronts in Aleppo’s countryside between the Syrian army and terrorist groups who are fiercely trying to make advances.

Syrian warplanes also targeted terrorists near the city of Marea, north of Aleppo.

According to reports, clashes persist in Saraqib, west of the Aleppo-Damascus highway, as militants fail to make any breakthrough.

The Syrian army also repelled militant attacks on a front southwest of Aleppo city, thwarting four attacks from Thursday evening until Friday morning.

Additionally, the army repelled five successive assaults on Andan, northwest of Aleppo, inflicting heavy casualties among the terror groups.

Violent clashes are also ongoing in the town of Mansoura, west of Aleppo, as militants tried unsuccessfully to enter. The town is less than two kilometers from Aleppo.

Reports indicate that large convoys of militants, heavy weapons, and other ammunition entered through a Syrian crossing with Turkey, heading toward combat fronts in western Aleppo and southern Idlib.

Syrian warplanes monitored the convoys entering the town of Marea and conducted airstrikes targeting terrorist positions and some of the newly arrived military vehicles.

In recent days, HTS, alongside factions of the Turkish-backed groups, launched a surprise broad offensive on Syrian army positions in Idlib province and the city of Aleppo. Reports suggest that HTS used new weapons, including Ukrainian drones.

On Wednesday, at least 400 militants linked to HTS were killed while attacking Syrian army positions in Aleppo and Idlib, according to Oleg Yegnasiyuk, deputy chief of the Russian Reconciliation Center in Syria.

Analysts have been quick to point out that the timing of the terror offensive on Aleppo, which has led to the martyrdom of a senior Iranian military advisor in Syria, coincided with the Israeli ceasefire with Lebanon.

On Wednesday, the 60-day truce ended the daily exchange of fire between Hezbollah and the Israeli military since October 08, 2023.

The last battle in Aleppo saw similar terrorist groups defeated in 2017 when the Syrian army, backed by Iranian military advisors and Russia, liberated the ancient city.

It was widely believed to be the turning point in the more than a decade-long Syrian war on terrorism that saw militants, who had once controlled large swathes of Syria, holed up in Idlib.

Northwest of Syria, where there are oil reserves, is also occupied by the United States military and mostly US-backed Kurdish rebels.

Turkey has maintained an illegal occupation in the northern Syrian border near Idlib over the past years as well.

This is while the Israeli regime has, for decades now, occupied the Syrian Golan Heights in another threat to the stability of the Arab country.

 

Syria: Insurgents Enter Aleppo

Insurgents breached Syria’s largest city Friday and clashed with government forces for the first time since 2016, in a surprise attack that sent residents fleeing and added fresh uncertainty to a region reeling from multiple wars.

The advance on Aleppo followed a shock offensive launched by insurgents Wednesday, as thousands of fighters swept through villages and towns in Syria’s northwestern countryside. Residents fled neighborhoods on the city’s edge because of missiles and gunfire, according to witnesses in Aleppo. The Syrian Observatory for Human Rights, which monitors the country’s unresolved civil war, said dozens of fighters from both sides were killed.

The attack injected new violence into a region already experiencing wars in Gaza and Lebanon involving Israel, and other conflicts, including the Syrian civil war that began in 2011.

Aleppo has not been attacked by opposition forces since they were ousted from eastern neighborhoods in 2016 following a grueling military campaign in which Syrian government forces were backed by Russia, Iran and its allied groups.

But this time, there was no sign of a significant pushback from government forces or their allies. Instead, reports emerged of government forces melting away in the face of advances, and insurgents posted messages on social media calling on troops to surrender.

Robert Ford, who was the last US ambassador to Syria, said the attack showed that Syrian government forces are “extremely weak.” In some cases, he said, they appear to have “almost been routed.”

This week’s advances were among the largest in recent years by opposition factions, led by the Hayat Tahrir al-Sham group, or HTS, and represent the most intense fighting in northwestern Syria since 2020, when government forces seized areas previously controlled by the opposition.

 

Implications of US energy dominance

President-elect Donald Trump is set to create a National Energy Council that he says will establish American “energy dominance” around the world as he seeks to boost US oil and gas drilling and move away from President Joe Biden’s focus on climate change.

The energy council — to be led by North Dakota Gov. Doug Burgum, Trump’s choice to head the Interior Department — will be key in Trump’s pledge to “drill, drill, drill” and sell more oil and other energy sources to allies in Europe and around the globe.

The new council will be granted sweeping authority over federal agencies involved in energy permitting, production, generation, distribution, regulation and transportation, with a mandate to cut bureaucratic red tape, enhance private sector investments and focus on innovation instead of “totally unnecessary regulation,” Trump said.

But the president-elect’s energy wishes are likely to run into real-world limits. For one, U. oil production under Biden is already at record levels. The federal government cannot force companies to drill for more oil, and production increases could lower prices and reduce profits.

A call for energy dominance — a term Trump also used in his first term as president — “is an opportunity, not a requirement,’' for the oil industry to move forward on drilling projects under terms that are likely to be more favorable to industry than those offered by Biden, said energy analyst Kevin Book.

Whether Trump achieves energy dominance — however he defines it — “comes down to decisions by private companies, based on how they see supply-demand balances in the global marketplace,’' said Book, managing partner at ClearView Energy Partners, a Washington research firm. Don’t expect an immediate influx of new oil rigs dotting the national landscape, he said.

Trump’s bid to boost oil supplies — and lower U.S. prices — is complicated by his threat this week to impose 25% import tariffs on Canada and Mexico, two of the largest sources of US oil imports. The oil industry warned the tariffs could raise prices and even harm national security.

“Canada and Mexico are our top energy trading partners, and maintaining the free flow of energy products across our borders is critical for North American energy security and US consumers,” said Scott Lauermann, speaking for the American Petroleum Institute, the oil industry’s top lobbying group.

American Fuel & Petrochemical Manufacturers, which represents U.S. refineries, also opposes potential tariffs, saying in a statement that “American refiners depend on crude oil from Canada and Mexico to produce the affordable, reliable fuels consumers count on every day.”

Scott Segal, a former Bush administration official, said the idea of centering energy decisions at the White House follows an example set by Biden, who named a trio of White House advisers to lead on climate policy. Segal, a partner at the law and policy law firm Bracewell, called Burgum “a steady hand on the tiller” with experience in fossil fuels and renewables.

And unlike Biden’s climate advisers — Gina McCarthy, John Podesta and Ali Zaidi — Burgum will probably take his White House post as a Senate-confirmed Cabinet member, Segal said.

Dustin Meyer, senior vice president of policy, economics and regulatory affairs at the American Petroleum Institute, called the new energy council “a good thing” for the US economy and trade. “Conceptually it makes a lot of sense to have as much coordination as possible,” he said.

Still, “market dynamics will always be the key’’ for any potential increase in energy production, Meyer said.

Jonathan Elkind, a senior research scholar at Columbia University’s Center on Global Energy Policy, called energy dominance a “deliberately vague concept,” but said, “It’s hard to see how (Trump) can push more oil into an already saturated market.”

Trump has promised to bring gasoline prices below US$2 a gallon, but experts call that highly unlikely, since crude oil prices would need to drop dramatically to achieve that goal. Gas prices averaged US$3.07 nationally as of Wednesday, down from US$3.25 a year ago.

Elkind and other experts said they hope the new energy council will move beyond oil to focus on renewable energy such as wind, solar and geothermal power, as well as nuclear. None of those energy resources produces greenhouse gas emissions that contribute to climate change.

“Failure to focus on climate change as an existential threat to our planet is a huge concern and translates to a very significant loss of American property and American lives,’' said Elkind, a former assistant energy secretary in the Obama administration. He cited federal statistics showing two dozen weather disasters this year that caused more than US$1 billion in damage each. A total of 418 people were killed.

Trump has played down risks from climate change and pledged to rescind unspent money in the Inflation Reduction Act, Biden’s landmark climate and health care bill. He also said he will stop offshore wind development when he returns to the White House in January.

Even so, his Nov. 15 announcement of the energy council says he will “expand ALL forms of energy production to grow our Economy and create good-paying jobs.”

That includes renewables, said Safak Yucel, associate professor at Georgetown University’s McDonough School of Business.

“The mandate for the energy council is US dominance globally, but what’s more American than American solar and American wind?’' he asked. A report from Ernst & Young last year showed that solar was the cheapest source of new-build electricity in many markets.

Trump, in his statement, said he wants to dramatically increase baseload power to lower electricity costs, avoid brownouts and “WIN the battle for AI superiority.”

In comments to reporters before he was named to the energy post, Burgum cited a similar goal, noting increased demand for electricity from artificial intelligence, commonly known as AI, and fast-growing data centers. “The AI battle affects everything from defense to health care to education to productivity as a country, ″ Burgum said.

While Trump mocks the climate law as the “green new scam,” he is unlikely to repeal it, Yucel and other experts said. One reason: Most of its investments and jobs are in Republican congressional districts. GOP members of Congress have urged House Speaker Mike Johnson to retain the law, which passed with only Democratic votes.

“A lot of Southern states are telling Trump, ‘We actually like renewables,’” Yucel said, noting that Republican-led states have added thousands of jobs in recent years in wind, solar and battery power.

If renewables make economic sense, he added, “they’ll continue.’'

 Courtesy: Associated Press

Donald Trump is riding high

President-elect Donald Trump is enjoying a honeymoon period in the wake of his election victory, largely staying out of the spotlight as positive developments have piled up. Trump has quickly put together a Cabinet for his incoming administration, has seen his legal problems dissolve and has benefited from a bump in polling since winning a second term earlier this month.

An Emerson College poll published Tuesday found Trump’s favorability rating had increased by 6 percentage points since the election, putting him at 54 percent.

The postelection period has not been entirely free of drama for Trump, however, as one of his Cabinet nominees, former Rep. Matt Gaetz, has already withdrawn, and another, Pete Hegseth, is facing allegations of sexual assault that cloud his chances of confirmation.

Here are five reasons Trump is riding high three weeks after Election Day.

Quick Cabinet assembly

Trump has rolled out new picks for his incoming administration almost daily in the past two weeks, wasting little time installing allies at top posts in the White House and nominating staunch loyalists to lead major government agencies.

Following his 2016 victory, Trump did not name his first Cabinet picks until 10 days after the election. This time around, he has named choices for nearly his entire Cabinet, plus several top White House positions, within three weeks of his victory.

Trump allies said the quick pace showed a more cohesive transition than eight years ago, reflected his team’s preparedness for victory this time around and underscored how Trump was ready to rely on those he knew rather than more establishment figures.

“The people that he is surrounding himself with now are all committed to advancing the agenda,” former White House press secretary Sean Spicer said.

The rapid pace of nominations has kept headlines moving from one pick to the next, but some of Trump’s choices are likely to face intense scrutiny as the confirmation process moves along. 

In particular, Hegseth, his choice for Defense secretary, is facing allegations of sexual assault, which he denies. Former Hawaii Rep. Tulsi Gabbard, Trump’s choice for director of national intelligence, has faced criticism for parroting pro-Russian talking points. And Robert F. Kennedy Jr., the man tapped to lead the Department of Health and Human Services, has spread anti-vaccine rhetoric, among other controversial views.

End of legal cases

Trump and his legal team spent more than a year fighting to delay various legal cases against him in the hopes that a victory in the presidential election would effectively end his court battles.

This week proved that effort was a success when special counsel Jack Smith moved to dismiss both his election interference case and classified documents case against Trump, citing Department of Justice policy against prosecuting a sitting president.

The motion for the election interference case was approved by Judge Tanya Chutkan, bringing to a close the prosecutorial effort to hold Trump accountable for seeking to thwart the peaceful transfer of power that culminated with his supporters storming the Capitol.

In Trump’s Florida documents case, where he is facing charges for violating the Espionage Act and obstruction of justice, Smith also moved to dismiss an appeal to a motion tossing the case.

Trump was convicted earlier this year on 34 felony counts over a hush money scheme to keep an alleged affair quiet during the 2016 campaign. But his sentencing has been indefinitely adjourned, and Judge Juan Merchan now faces a choice of freezing the case in place until he leaves the White House or tossing it entirely.

Fewer signs of Democratic resistance

After Trump’s first victory in 2016, Democrats quickly rallied from the top down with vows to oppose and resist his agenda. 

The Women’s March took place one day after Trump was inaugurated, lawmakers planned for how to delay confirmation of Trump’s nominees and critics seized on questions about Russian influence in the 2016 election.

This time around, Democrats appear more focused on sorting out where their own party went wrong during the 2024 campaign than on forming an organized resistance to Trump’s plans. With President Biden on his way out of the White House and Vice President Harris defeated, there is no clear leader of the party.

Instead of vowing to oppose Trump’s Cabinet picks, senators like Sen. John Fetterman have openly talked about supporting nominees such as Sen. Marco Rubio for secretary of State and even Dr. Mehmet Oz, who was nominated to lead the Centers for Medicare and Medicaid Services. Fetterman defeated Oz in 2022 to win his Pennsylvania Senate seat.

Colorado Gov. Jared Polis drew backlash when he expressed excitement over Trump’s choice of Kennedy to lead the Department of Health and Human Services.

Some state-level leaders, particularly those with aspirations for 2028, have appeared keener to position themselves as a bulwark against Trump. California Gov. Gavin Newsom has vowed to push back against certain Trump policies, while Illinois Gov. JB Pritzker has signaled he would fiercely protect his state’s rights.

Middle East peace deal

One major victory for Trump since the election came thanks to the work of the Biden administration, which announced Tuesday a ceasefire agreement between Israel and Hezbollah.

President Biden made the announcement that Israel and Hezbollah agreed to pause their fighting in and around the border with Lebanon as of early Wednesday morning following months of fighting and airstrikes in the region. 

The terms of the deal include a 60-day truce during which Israel will gradually withdraw its forces from southern Lebanon and Hezbollah will withdraw its troops north of the Litani River in Lebanon.

Trump has not publicly commented on the announcement, but the Biden team briefed Trump transition officials twice in recent weeks about the ongoing push for a ceasefire.

The Washington Post reported earlier this month that the government of Israeli Prime Minister Benjamin Netanyahu aimed to reach a ceasefire with Hezbollah as a gift to the incoming Trump administration.

While Trump must still contend with the conflict between Ukraine and Russia and Israel’s war with Hamas, which has decimated Gaza, the truce between Israeli forces and Hezbollah takes one foreign policy concern off the table.

Out of the public eye

Trump has largely been absent from the public eye in the roughly three weeks since he secured a second term.

He appeared in Washington DC, to meet with House Republicans and President Biden at the White House, and he made a trip to Texas to witness a SpaceX rocket launch alongside Elon Musk, the founder of the company.

But he has not held a press conference or delivered remarks on camera, making announcements largely through press releases from his transition team or on Truth Social.

Trump has in the past enjoyed some of his stronger political stretches when he has stayed out of the spotlight and avoided the kind of self-created controversies that come from his own on-camera remarks to the press or at rallies.

The question is how long he can keep it up. Some of his Cabinet picks are sure to come under growing scrutiny in the weeks ahead, his threat of tariffs against allies Mexico and Canada have rankled officials and could upend the economy, and there will be an even greater focus on Trump’s every move once he takes office in January.

Courtesy: The Hill