PAR News - Mon, 12 Feb 2024

PAR News Bulletin - Mon, 12 Feb 2024

PAR News - Mon, 12 Feb 2024
PAR News - Mon, 12 Feb 2024
PAR News
February 12, 2024
News

TOPLINE

  • PTI plans to ally or merge with another party to form a government. The PMLN/PPP have agreed to form a coalition as independent candidates switch over to the PDM alliance. Pakistan's sovereign dollar bonds dropped by more than 5 cents as uncertainty continues around the elections.
  • The ECP halted the announcement of final results for 10 NA and 16 PA constituencies, ordering re-polling at 53 polling stations in 3 constituencies. Numerous petitions challenging election results were filed by PTI candidates.
  • The poultry industry in Pakistan has declined by 40% due to challenges like price manipulation by feed mills and mismanaged breeding practices. Egg prices have dropped sharply by Rs 100 to Rs 320-330 per dozen in the past week, down from Rs 420-430 per dozen during the winter season.
  • Exports to 9 regional countries, led by increased shipments to China, grew by 17.71% to $2.233 billion in the first half of the current fiscal year, compared to $1.897 billion in the same period last year. Export to Afghanistan rose by 3.63% during the first 6 months as well despite border closures.
  • The PMD forecasts continued cold wave conditions in the upper and western parts of the country due to a shallow westerly wave, with rain expected in southwestern Balochistan and light rain possible in Kashmir.
  • Fourth-quarter 2023 S&P 500 earnings growth is now forecasted at 9.0%, nearly double the January 1 forecast of 4.7%. Oil prices were up about 6% for the week as the IMO is addressing the Red Sea crisis, where Houthi rebels have disrupted global goods transport intended for Israel.

COMMODITIES - CROPS, LIVESTOCK & HORTICULTURE

  • Cotton Prices Surge: Cotton prices rose due to higher New York prices, impacting domestic markets. Support for farmers is needed for textile exports. The Global Cotton Yarn Expo in Shanghai will feature 500 exporters. In Sindh and Punjab, cotton rates range from Rs 19,000-21,500/maund. Phutti rates range from Rs 7,500-9,500/40 kg, only in Punjab. The KCA Spot Rate Committee increased the spot rate to Rs 20,500/maund. [BR]
  • Sindh Foundation to Train 3,000 Women Cotton Workers: The Sindh Community Foundation signed an agreement to train 3,000 women cotton workers in Matiari and Sanghar districts, aiming to narrow female literacy gaps and improve rural literacy rates in Sindh. The Foundation's Executive Director stressed the importance of literacy in empowering women workers for fair wages and better working conditions. [BR]
  • CIMMYT Introduces Heat-Tolerant Maize Hybrids: The International Maize and Wheat Improvement Centre (CIMMYT) has introduced 20 high-yielding heat-tolerant maize hybrids in Pakistan and four other South Asian nations. These hybrids, developed over a decade in collaboration with public-sector maize research institutes and private seed companies, were also distributed to Bangladesh, Bhutan, India, and Nepal. [Dawn]
  • High Prices Persist for Essential Food Items: Survey - Prices of essential food items like live chicken, cow meat, and mutton beef remained high in the retail market, according to a survey by Business Recorder. Live chicken was priced at Rs 450/kg, cow meat at Rs 800-900/kg (with bone) and Rs 1000/kg (without bone), and mutton beef at Rs 1800-2000/kg and Rs 2200/kg, exceeding official rates. [BR]
  • Pakistan's Poultry Industry Slumps 40% Amid Challenges: The poultry industry in Pakistan has declined by 40% due to challenges like price manipulation by feed mills and mismanaged breeding practices. Factors contributing to this include poor biosecurity, risky feed transactions, and fluctuating chicken meat prices, ranging from Rs 550 to Rs 250 per kilogram. Egg prices have dropped sharply by Rs 100 to Rs 320-330 per dozen in the past week, down from Rs 420-430 per dozen during the winter season. This decline is attributed to sliding demand caused by a change in weather conditions. [ET] [PT] [Dawn]
  • FMCG Supply Chain eFBR Registration: The FMCG supply chain must register on the eFBR portal by February 1, 2024, to issue electronic sales tax invoices, according to the FBR. A technical document has been issued to help importers, dealers, and distributors of FMCG understand digital invoicing methods. [BR]
  • Robust Export Growth to Regional Markets: Exports to 9 regional countries, led by increased shipments to China, grew by 17.71% to $2.233 billion in the first half of the current fiscal year, compared to $1.897 billion in the same period last year. Notably, exports to China alone increased by 39.91% to $1.481 billion during July-December FY24. [Dawn]
  • Pakistan's Exports to Afghanistan Up 3.63%: Pakistan's exports of goods and services to Afghanistan rose by 3.63% during the first six months of the current fiscal year (2023-24) compared to the same period last year, as reported by the State Bank of Pakistan (SBP). Export figures stood at $260.716 million from July to December (2023-24), compared to $251.580 million during the same period in the previous fiscal year (2022-23),. [ET]
  • Gold Import: Rs 221 million was the import value of gold in Dec 2023, down 70% compared to Rs 732 million in Dec 2022. [ET]
  • Milk & Cream Import: Rs 2.6 billion was the import value of milk, cream and milk food for infants in Dec 2023, down 32% year-on-year. [ET]
  • Silk & Synthetic Textile Export: Rs 8.83 billion was the export value of art, silk and synthetic textile in Dec 2023, up 31.4% compared to Rs 6.72 billion in Dec 2022, according to the PBS. [ET]
  • Meat Export: Rs 12.5 billion was the export value of meat and meat preparations in Dec 2023, up 77.5% compared to Rs 7.02 billion in Dec 2022, according to the Pakistan Bureau of Statistics. [ET]

AGRI-INPUTS, WEATHER, WATER & POWER

  • Cold Wave Continues Across Pakistan: Meteorological Department - The Pakistan Meteorological Department forecasts continued cold wave conditions in the upper and western parts of the country due to a shallow westerly wave, with rain expected in southwestern Balochistan and light rain possible in Kashmir. Minimum temperatures recorded in the past 24 hours include Leh at -13°C, Skardu at -09°C, and Kalam at -08°C. [ET] [The Nation]
  • Pakistan Mulls Urea Price Hike, Farmers Bear Import Burden: The ECC approved a basket price mechanism for selling imported urea and considered allowing fertilizer manufacturers to hike urea prices by up to Rs 358 per bag, shifting the import burden to farmers. Leading companies proposed price hikes ranging from Rs 159 to Rs 358 per bag, posing significant implications for agriculture. [BR] [ET]
  • KE & Hub Power MoU for Thar Coal Off-take: K-Electric and Hub Power Company Ltd have signed an MoU to explore off-take opportunities for affordable electricity post-conversion of the Hub plant to Thar coal, aligning with KE's strategy for indigenous power sources. The Hub power station, a 1,292MW facility operating on residual fuel oil since 1997, is evaluating Thar coal-based power generation projects. [Dawn] [BR] [The News]
  • Transfer of OGDCL Shares Under Review: The CCoP has requested the Law Ministry's opinion on transferring OGDCL shares from the Privatization Commission to either the Petroleum Division or the Sovereign Wealth Fund, as discussed in a meeting chaired by caretaker Minister for Privatization Fawad Hasan Fawad. This follows a proposal from former Petroleum Secretary Jawad Pal, who is now Secretary of the Privatisation Division. [BR]
  • HSD Demand Declines: Demand for high-speed diesel (HSD) dropped in February as consumers anticipated a significant price hike amid a global rally in fuel prices. The expected increase in HSD prices, driven by rising global prices, led to reduced consumption in the local market, with an increase of over Rs 7/liter in the next price review. [The News]
  • Pakistan Railways Finalizes Loan Terms with Beijing: The terms and conditions of the loan for Pakistan Railways' Main Line-1 project from Beijing will be finalized by the upcoming government in collaboration with Chinese authorities, according to Pakistan Railways' CEO. All aspects of the project have been completed, except for the finalization of financing terms, with no current issues reported. [Dawn]
  • President Alvi Halts IRSA Ordinance, Cites Lack of Consultation: President Arif Alvi halted a caretaker government ordinance aimed at limiting Indus River System Authority (IRSA) powers without consulting the Council of Common Interests (CCI). The president rejected the amendments to the 1991 Irsa Act, citing the need for proper consideration involving all federating units' interests. [Dawn]

AGRI UPDATES & PAKISTAN POLICY

  • IMF Review Delay Raises Economic Concerns: The IMF review mission to Pakistan is delayed until the formation of federal and provincial governments, expected by the end of this month or early next month. This delay is critical for finalizing a medium-term bailout package to avoid defaulting on external loan repayments. Concerns about potential political stalemate causing delays in reforms and foreign funding have led to a selloff in Pakistan's international bonds, heightening fears of economic challenges. [The News] [The News]
  • PMLN & PPP Form Coalition for Government: The PMLN and PPP have agreed to form a coalition government in the Centre and Punjab, following a meeting between PMLN leader Shehbaz Sharif, PPP Chairman Bilawal Bhutto, and former president Asif Ali Zardari. [The News]
  • PTI Eyes Alliance for Reserved Seats: Realizing the importance of reserved seats for forming a government, Pakistan Tehreek-i-Insaf (PTI) plans to ally or merge with another party to gain this advantage. PTI leader Barrister Gohar Ali Khan confirmed this decision but ruled out alliances with PML-N or PPP. [Dawn]
  • ECP Halts Final Results, Orders Re-Polling in Some Constituencies: The Election Commission of Pakistan (ECP) has halted the announcement of final results for 10 National Assembly and 16 provincial assembly constituencies, ordering re-polling at 53 polling stations in three constituencies. Numerous petitions challenging election results were filed, with petitions scheduled for review in various high courts on Monday. [ET] [ET]
  • Violence Erupts in Miranshah: Two Killed, Fifteen Injured in Protest: Two National Democratic Movement workers were killed and 15 others, including party chairman Mohsin Dawar, were injured during a protest in Miranshah Cantonment. Police allegedly opened fire on the demonstration outside the RO's office, which was regarding delayed election results in the NA-40 constituency, where Mr. Dawar was a candidate. [Dawn]
  • Election Dispute Sends Pakistan Bonds Down: Pakistan's sovereign dollar bonds dropped by more than 5 cents as Imran Khan and Nawaz Sharif both claimed victory in closely contested election results. The September 2025 maturity bond saw the largest decline, trading at 82.4 cents on the dollar by 0751 GMT. [BR]
  • Moody's Urges Long-term Financing Plan for Pakistan: Moody's highlights the need for Pakistan's new government to establish a long-term financing plan to address substantial external debt obligations. [BR]
  • Economic Mismanagement, Increased Debt Burden: Mismanagement by the Pakistan Democratic Movement coalition government, with expenditures exceeding budgeted amounts by over Rs 2.2 trillion and a 25% increase in debt burden per citizen. [ET]

INTERNATIONAL – OVERVIEW & MARKET OUTLOOK

  • Red Sea Shipping Crisis: The International Maritime Organization (IMO) is actively addressing the Red Sea crisis, where Houthi rebels supported by Iran have disrupted global goods transport with attacks since November. The rebels, in solidarity with Gaza, targeted ships heading to Israel. Despite US and UK strikes, attacks persist, with the recent targeting of the US ship "Star Nasia" and UK vessel "Morning Tide" on Tuesday. Israel is amassing troops to attack over 1 Million refugees in Rafah. [BR] [BR] [Dawn] [ET] [FP] [The Hindu] [TOI]
  • S&P 500 Q4 2023 Earnings Growth Forecast Doubles: Fourth-quarter 2023 S&P 500 earnings growth is now forecasted at 9.0%, nearly double the January 1 forecast of 4.7%, with about two-thirds of companies reporting results, according to LSEG data on Friday. Approximately 81% of reports are surpassing analysts' expectations, compared to an average of 76% in the previous four reporting periods. [ET] [USN] [Reuters] [CNBC] [Factset] [Yahoo]
  • US Real Estate, Banking Struggle Amid Pandemic, Tensions: The US real estate sector and banking system are still reeling from the aftermath of the COVID-19 pandemic and the Russia-Ukraine war. Vacant office buildings and inflation spikes have led to financial losses and raised concerns about repayment of bank financing, exacerbating the crisis in the world's largest economy. [ET] [GAO] [Chicago Fed] [St Louis Fed] [Thomson Reuters]
  • EU Reaches Agreement on Budgetary Rule Reform: The European Parliament and member states reached an agreement to reform EU budgetary rules, aiming to boost investment while maintaining spending control. The updated rules modernize the Stability and Growth Pact, which limits countries' debt to 60 percent of GDP and public deficits to three percent. [BR] [Lemonade] [TRT] [Europa] [Europa]
  • Europe Agriculture Protests: Polish politicians demanded the EU agriculture commissioner's resignation as farmers in Poland launched a month-long strike, protesting EU policies. Similar protests are occurring in France, Belgium, Portugal, Greece, Spain, and Germany against climate measures. [ET] [BBG] [Politico] [Reuters] [EURACTIV]
  • Trump Suggests Encouraging Russia to Target NATO Members: Donald Trump suggested he would "encourage" Russia to attack NATO members not meeting financial obligations, criticizing the alliance he's long been skeptical about. Amid discussions for aid to Ukraine, Trump reiterated his stance against the US defending all 30 NATO member nations. [BR] [The Guardian] [Reuters] [NBC] [PBS] [AP]
  • Philippine Landslide: The death toll from a Philippine landslide near a gold mine has risen to 54, with 19 more bodies recovered on Sunday as 63 are still missing. [Dawn] [ET] [AP] [Al Jazeera] [NBC] [Reuters] [ABC]
  • IMF Warns of Economic Impact from Middle East Conflicts: The IMF noted that Middle East economies are below growth projections due to oil production cuts and the Israel-Gaza conflict, despite the global economy's resilience. Managing Director Kristalina Georgieva warned of potential broader impacts on regional economies due to the ongoing conflict in Gaza. [BR] [VOA] [USN] [IMF] [Economic Times]
  • Oil Prices Surge 6% Amid Middle East Tensions & Refining Outages: Oil prices were up about 6% for the week, driven by ongoing tensions in the Middle East and refining outages affecting refined products markets. Brent crude futures rose to $81.98 a barrel, while US West Texas Intermediate crude futures climbed to $76.63 a barrel. [Dawn] [ET] [BBG] [TE] [Oil Price] [Oil Price]

PAKISTAN - REMAINDERS

  • Elections Breakdown: In Pakistan's recent general election, 60 million voters participated. The Ministry of Information Technology and Telecom faces criticism for its online presence amid frequent internet outages. Environmental concerns arise over paper usage, with activists claiming 2,170 tons used for ballots. Additionally, $2.7 billion in exports failed to return to Pakistan in FY23, surpassing official figures. [BR] [Dawn] [ET]
  • Next Govt Urged: Prioritize ME Relations, Address Governance Indicators: The upcoming government should prioritize relations with key Middle Eastern nations (Saudi Arabia, UAE, Iran) due to economic, geographic, and cultural connections. Meanwhile, debates continue over result acceptance and the government's tenure. Incoming leadership must also address 10 key indicators for effective governance. [Dawn] [ET]
  • Lahore Climate Rally Urges Chinese Renewable Investments: Climate campaigners in Lahore urged China at a rally to invest in renewable energy instead of coal projects, coinciding with the Chinese Lunar New Year. [BR]
  • Pakistan to Become AI Hub: Dr. Wu Jun of CPInS Lab stated that Pakistan, with increased cooperation with China, could become an AI hub in South Asia. The lab, established at NUST in 2022 supports this vision. [BR]
  • SECP Imposes Penalty on Digital Lenders: The SECP's adjudication division has imposed a penalty of Rs 13.265 million on digital lending companies for violating laws from July to December 2023. [BR]
  • Opinion: Go For Green, Not Greenwashed Education - “Couple of years ago, when I used to work as a teacher in an elitist private school in Islamabad, our principal announced that we would start a school garden to encourage environmental awareness. It sounded good, so I signed up, hoping to get involved in some hands-on gardening activities, while discussing environmental issues with my students. Our education system can foster a cultural shift by teaching our youth to be environmentally responsible” - By Klaudia Khan [ET]
PAR News - Mon, 12 Feb 2024

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