Elections Confusion, Rice Export, Textile Woes & Earnings, Snowfall, Energy Imports & Price Hikes, Chinese Spending & Real Estate.

TOPLINE

• The Supreme Court heard a plea seeking to annual the Feb 8 general elections due to alleged violations of rigging. Rawalpindi Commissioner Chattha resigned over rigging, admitting guilt. PTI-led countrywide protests which heightened tensions as the PDM continued with government formation talks.
• Pakistan's rice exports doubled reaching $2.1 billion in the first 7 months of FY2024 and will help rice earnings cross the $3 Billion mark for the first time.
• Pakistan's textile exports fell 2.99% to $9.738 billion in the first 7 months of the FY. Overall exports for July-January 2023-24 reached $17.778 billion, up 7.87%. APTMA expressed concern over the government's energy price hike, particularly in captive gas prices and the proposed domestic gas/RLNG blend.
• After a month-long break, Chitral Upper and Lower districts in Khyber-Pakhtunkhwa experienced snowfall, indicative of changing weather patterns due to climate change which will continue until the 21st of the month.
• Petroleum group imports saw a 12.06% decline in the first 7 months of the FY, totaling $9.332 billion. The government is considering raising gas prices for 6 remaining fertilizer plants with a 175% increase or Rs 1,017 per MMBtu. The government also approved a 67% increase in gas tariffs. The hike in gas and petroleum prices is anticipated to raise the inflation rate to about 25% in the fiscal year 2023-24.
• Chinese travel and spending during the Lunar New Year holiday exceeded levels from before the pandemic, adding signs that consumption is improving. China Revived Socialist Ideas to Fix its Real-Estate Crisis as Jinping aims to put the state in charge of the property market.

COMMODITIES - CROPS, LIVESTOCK & HORTICULTURE

• Pakistan's Rice Exports Soar, Aiming for Historic $3 Billion Milestone: Pakistan's rice exports reached $2.1 billion in the first 7 months of fiscal year 2024, doubling compared to the same period in the previous fiscal year. This surge is expected to help annual rice earnings cross the historic three-billion-dollar mark for the first time, contributing significantly to the record goods export earnings of $17.8 billion in the same period. [BR]
• Hyderabad Faces Soaring Vegetable Prices Amid Protests: Vegetable prices have surged in Hyderabad, leading to profiteering and disputes between vendors and buyers. Despite a notice, broiler chicken prices remain unchanged with various vegetables now priced at Rs 150 per kg, up from Rs 100. [ET]
• Cotton Prices Surge, Industry Faces Closure Concerns: Cotton prices have surged, crossing Rs 23,000 per maund, with Phutti at Rs 10,500/40-kg. Concerns about potential industry closures, particularly in textiles, are rising due to increased international cotton prices and higher costs of electricity, petrol, and gas. [BR]
• APTMA Concerned Over Energy Price Hike: Textile Exports Decline 2.99% - APTMA expresses deep concern over the government's energy price hike, particularly in captive gas prices and the proposed domestic gas/RLNG blend. They urge reconsideration, citing potential impacts on power generation costs and regional competitiveness. Pakistan's textile exports fell 2.99% to $9.738 billion in the first seven months of the fiscal year. Overall exports for July-January 2023-24 reached $17.778 billion, up 7.87%. January 2024 exports totaled $2.792 billion, down 1.06% from December 2023 but up 24.81% from January 2023. The global textiles and apparel trade favor man-made fibers (MMF) at 63%, while Pakistan's sector relies heavily on cotton-based exports (67%), with only 12% from MMF-based exports, missing out on the growing MMF market. [ET] [BR] [ET] [ET]
• Court Dismisses Al-Ghazi Petition: PAMA Opposes Tax Hike: Govt Eyes EV Credit - The Sindh High Court dismissed Al-Ghazi Tractors Limited's petition challenging sales tax refund requirements. PAMA opposed the government's plan to increase sales tax on locally made passenger vehicles in a letter to Finance Minister Shamshad Akhtar. The government is considering a credit guarantee scheme for Electric Vehicles (EVs) via the State Bank of Pakistan (SBP), tying the interest rate to KIBOR, to address low market penetration due to financing barriers, discussed in a recent inter-ministerial meeting chaired by the Secretary Industries and Production. [BR] [BR] [BR]
• Growers Seek Agri Policy: Prof. Dr. Bikram Gill Urges Tech Innovation - Growers call for a long-term agricultural policy for food security amid private sector wheat imports sanctioned by the government without subsidies to address a shortage of over 2.5 million tons, posing challenges for selling produce at minimum support prices. Prof. Dr. Bikram S Gill advises young breeders at the University of Agriculture Faisalabad to use emerging technologies for high-yielding, climate-resilient crops, leveraging nearly 50 years of research focused on conserving and utilizing wild grains to breed modern, nutritious, disease-resistant wheat varieties. [BR] [BR]
• Tea Import: Rs 15.4 billion was the import value of tea in January 2024 2023, up 46.22% compared to Rs 10.5 billion in January 2023. [ET]
• Sugar Import: Rs 115 million was the import value of sugar in January 2024 2023, up 50.98% compared to Rs 76 million in January 2023. [ET]

AGRI-INPUTS, WEATHER, WATER & POWER

• North Experiences Snowfall After Month, More Expected: After a month-long break, Chitral Upper and Lower districts in Khyber-Pakhtunkhwa experienced snowfall, indicative of changing weather patterns due to climate change. Other mountainous areas like Kalam in Swat and Hazara Division also saw heavy snowfall. The Met Office predicts the snowfall to continue until the 21st of the month. While higher-altitude regions are covered in snow, lower-lying areas like Chitral proper and Darosh had minimal rainfall. [ET] [Dawn]
• Pakistan's Petroleum Imports Decline 12% in Fiscal Year 2023-24: Petroleum group imports in Pakistan saw a 12.06% decline in the first seven months of the current fiscal year, totaling $9.332 billion compared to $10.611 billion in the same period last year, according to the Pakistan Bureau of Statistics. In January 2024, petroleum imports increased slightly by 0.03% year-on-year, reaching $1.327 billion, but recorded a 14.52% decline compared to December 2023. [BR]
• Caretaker Government Eyes Amendments to IRSA Act, 1992: The caretaker government is reportedly considering a new attempt to promulgate an ordinance to amend the Indus River System Authority (Irsa) Act, 1992. The proposed changes aim to limit the irrigation-related operational decision-making powers of the inter-provincial water regulator and enhance the financial autonomy of its non-member chairman to impose charges, fees, or cess for hiring experts and consultants. [Dawn]
• Government Mulls Gas Price Hike for Fertilizer Plants: The government is considering raising gas prices for 6 remaining fertilizer plants to prevent potential windfall profits, with a proposed 175% increase or Rs 1,017 per mmbtu. According to government sources, this may go to the Economic Coordination Committee (ECC) next week, along with a plan to prioritize gas allocation to the industrial sector. [ET]
• Government Approves 67% Gas Tariff Hike: The government has approved a 67% increase in gas tariffs, effective from Feb 1, leading to dismay among consumers who received higher bills for January. Many consumers express frustration, criticizing the rulers and considering alternative options. There are calls for the government to reconsider decisions to repeatedly raise gas and electricity prices. [Dawn]
• SSGC Targets Gas Theft, Collaborates with Regulators: SSGC aims to register around 500,000 unauthorized gas users by the next fiscal year, with approximately 150,000 identified already and 29,000 integrated into the unauthorized gas claim mechanism. Collaborative efforts with regulatory bodies like OGRA and SBCA have enabled SSGC to pursue gas theft claims from unauthorized users in Karachi, marking a significant step in combating illegal gas usage. [BR]
• Cabinet Excludes Ogra, Rejects Proposed Diesel Duty Extension: The federal cabinet excluded OGRA from the Ministerial Committee addressing anomalies in the revised Refinery Policy. During a CCoE meeting, the Finance Division objected to extending the 7.5% deemed duty incentive on High-Speed Diesel, fearing it would raise consumer prices despite increased refinery capacity, leading to the proposal's rejection. [BR]
• Hub Power Acquires 9.5% More in Sindh Engro Coal: Hub Power Company Limited is buying an additional 9.5% stake in Sindh Engro Coal Mining Company Limited from Habib Bank Limited, making it the second-largest shareholder with a total holding of 17.5%. Analysts expect a positive impact on profitability, estimating an annualized increase of Rs 750 million. The acquisition will require approximately Rs 7,125 million in cash. [BR]

AGRI UPDATES & PAKISTAN POLICY

• Elections Confusion: The Supreme Court has summoned the petitioner who filed a plea seeking the Feb 8 general elections to be declared null and void due to alleged violations of democratic norms and electoral integrity. Rawalpindi Division Commissioner Liaqat Ali Chattha resigned over electoral rigging, admitting guilt and injustice to residents. In the division, PML-N won 11 out of 13 National Assembly seats and 15 out of 27 provincial seats, with independents winning 11. Despite PPP-P's support, PML-N hesitates to form the central government. [Dawn] [Dawn] [The News] [ET]
• FAFEN Calls for Independent Audit Amid Election Rigging Allegations: Following allegations of massive rigging and discrepancies between forms 45 and 47 in the recent general elections, the Free and Fair Election Network (FAFEN) has called for an independent audit. Fafen proposed a three-stage methodology, urging the Election Commission of Pakistan (ECP) to scrutinize challenged constituencies legally, utilizing data analytics and forensics. Simultaneously, the Punjab government has decided to register a case against former Rawalpindi commissioner Liaquat Ali Chattha, who made allegations about election rigging. [Dawn] [Dawn]
• PTI Alleges Massive Election Fraud in 2024, Cites Evidence: Over the weekend, massive protests across Pakistan highlighted tensions and strengthened the PTI mandate. Salman Akram Raja was briefly arrested and attempts to arrest other PTI Leaders were made. Pakistan Tehreek-e-Insaf (PTI) labeled the 2024 general elections as a massive vote fraud and a significant attack on democracy, claiming that the party was winning over 177 seats in the national assembly but was allegedly deprived of 85 seats through midnight robbery of the public mandate. PTI leaders and supported candidates presented evidence of rigging at a function organized by the party to address both national and international media. [ET] [Islamabad Post] [Dawn]
• PDM Talks Ongoing for Govt Formation - PPP Chairman Bilawal Bhutto-Zardari rejected a power-sharing formula for the prime minister's office, designating Asif Ali Zardari as the PPP's presidential candidate. Ishaq Dar of PML-N acknowledged the disclosed time-sharing formula but suggested the possibility of other formulas in government formation talks. Meanwhile, PML-N supremo Nawaz Sharif, post-Feb 8 polls, remains low-profile but actively involved in behind-the-scenes efforts for government formation. [Dawn] [Dawn]
• Sukuk Auction: Pakistan Targets Rs 150 Billion on Feb 20 - The Pakistani government aims to raise Rs 150 billion through a Sukuk auction at the Pakistan Stock Exchange on February 20, offering one-, three-, and five-year fixed and floating rate bonds. Meezan Bank, along with other banks, is leading the transaction as a joint financial and Shariah adviser for the Sukuk issuance. [The News]
• Gas & Petroleum Price Hike Expected to Push Inflation to 25%: The recent hike in gas and petroleum prices is anticipated to raise the inflation rate to about 25% in the fiscal year 2023-24, reducing the likelihood of a marginal interest rate cut in mid-March. This projection excludes potential political upheaval post-election, and any prolonged crisis or delays in securing a new IMF loan post-April could further increase inflation. [ET]

INTERNATIONAL – OVERVIEW & MARKET OUTLOOK

• UAE Achieves Record Non-Oil Trade: $952.93 Billion in 2023 - In 2023, the United Arab Emirates reached a record non-oil trade of 3.5 trillion dirhams ($952.93 billion), marking a 12.6% increase from 2022. The achievement is attributed to the country's efforts to reduce reliance on oil, with initiatives like CEPAs since 2021 fostering diversification through bilateral trade and investment deals. [BR]
• Chinese New Year: Chinese travel and spending during the Lunar New Year holiday exceeded levels from before the pandemic, adding to signs that consumption is improving. Some 474 million tourist trips were made around the country during the festival, which began Feb. 10 and concluded Saturday up 19% from the comparable period in 2019, while tourism spending for the holiday climbed nearly 8% from that year. Chinese stocks look poised for a strong open when onshore traders return from the Lunar New Year break. China Revives Socialist Ideas to Fix its Real-Estate Crisis Xi Jinping aims to put the state back in charge of the crumbling property market, part of a push to rein in the private sector. [BBG] [BBG] [WSJ] [Dawn]
• Israeli Genocide: Israel to launch Rafah attack unless hostages home in March by the Muslim holy month of Ramadan, which begins around March 10. War cabinet member Gantz says Hamas has a choice over Rafah. Red Sea attack-fueled ocean freight inflation is starting to ease on key global trade routes. Ocean freight rates from Asia to the U.S. have begun to decline, providing some relief for U.S. shippers, but cargo shipping costs are still massively up since December 14 when the Red Sea crisis began. Far East to U.S. East Coast freight rates have increased by more than 146%; Far East to West Coast freight rates have increased more than 186%. [BBG] [CNBC]
• OpenAI Nears $80 Billion Valuation in Latest Investment Deal: OpenAI has reportedly finalized a deal with investors, potentially valuing the California-based startup at $80 billion or more, marking a significant increase in its value in less than 10 months. While not officially confirmed by OpenAI, the reported agreement involves the sale of existing shares to investors led by Thrive Capital, showcasing the company's rapid growth as a global leader in generative artificial intelligence. [BR]
• Ukrainian Troops Withdraw from Avdiivka, Marking Strategic Shift: Ukrainian troops have withdrawn from the frontline city of Avdiivka to prevent encirclement, according to the new military chief, Oleksandr Syrsky, marking a significant symbolic victory for Russia after Kyiv's unsuccessful summer counter-offensive. Russia has sought to capture Avdiivka for months, and this development is its most significant territorial gain since seizing Bakhmut last May, occurring just before the second anniversary of the invasion's start. [ET] [France 24]
• Pakistan Emphasizes Indus Water Treaty at UN: Amid complex political challenges in Pakistan, three significant global issues unfolded at the United Nations, with a particular focus on the water crisis. In a Security Council meeting, Pakistan emphasized the vital importance of upholding the Indus Water Treaty. [Dawn]

PAKISTAN - REMAINDERS

• New Economic Zones Planned in Kurram & South Waziristan. [ET]
• Karachi Faces Prolonged Gas Outages, Disrupting Daily Life: Karachi Residents, report gas outages lasting 16 to 20 hours a day, impacting meal preparation and daily routines. The sporadic gas load shedding disrupts both daytime and nighttime supply, requiring patience and effort from residents. [ET]
• IT Sector Targets $3 Billion Exports by 2023-24: The sector's exports already reached $1.45 billion in the first half, showing a 32% growth in November and December. [ET]
• Opinion: A PLate Half-Empty - “The World Food Programme highlights a concerning reality: an average Pakistani household allocates a significant portion, almost half (50.8 percent) of its monthly income, to food expenses. Addressing food insecurity requires a nuanced, multidimensional strategy that goes beyond increasing agricultural productivity” - Abid Qaiyum Suleri [Dawn]
• Opinion: Why Karachi Has Got That Sinking Feeling - “Inadequate infrastructure exacerbates the effects of high rainfall in Karachi. The severe floods that Karachi has seen in recent years during the monsoon season have brought attention to the urgent need for infrastructure improvements to lessen the consequences of heavy rains. Every year, many urban development projects are introduced to counter the flooding in the city, and millions of rupees are invested in investigating the connection between rain and Karachi's infrastructure to help suggest some possible fixes.” - By Yusra Salim [ET]