Elections, Mineral Export Ban, Fuel Exports Halted, Gas Tariff Approved, Services Exports Decline, China Equities Rebound.

TOPLINE

• The ECP will release unofficial results for all 859 constituencies on February 9. Over 648,000 security personnel have been deployed nationwide with 137,000 from the army.? Minister Gohar Ejaz suggested the possibility of suspending internet services on election day in areas with security issues.
• The FPCCI vehemently opposed the recently approved ban on the export of raw minerals and marble, citing contradictions with the vision of the Special Investment Facilitation Council (SIFC), particularly its emphasis on mines and minerals as a focal point.
• The refining sector stopped fuel oil exports in January due to high domestic demand from furnace oil-based power plants, following 3 months of continuous exports. This decision came after the country exported 434,000 tonnes, amid a shift to liquefied natural gas (LNG).
• OGRA approved a 35.13% increase in SNGPL's gas tariff and an 8.57% raise for SSGC for the fiscal year 2023-24, effective from January 1 to June 30. This is the second hike this fiscal year, aiming to cover a Rs 98 billion shortfall for both companies.
• In December 2023, services exports declined by 6.93% to $726.94 million, marking the second consecutive monthly contraction. However, in rupee terms, exports grew by 17.31% to Rs 205.94 billion.
• Anticipation of more forceful measures from China’s government to stem an equity rout boosted US-listed Chinese stocks. The CSI 300 benchmark closed 3.5% higher on its best day since late 2022. Some $7 trillion in value has been wiped off Hong Kong and China equities since 2021.

COMMODITIES - CROPS, LIVESTOCK & HORTICULTURE

• FPCCI Opposes Export Ban: The Federation of Pakistan Chambers of Commerce and Industry (FPCCI) vehemently opposed the recently approved ban on the export of raw minerals and marble, citing contradictions with the vision of the Special Investment Facilitation Council (SIFC), particularly its emphasis on mines and minerals as a focal point, as stated by FPCCI President Atif Ikram Sheikh during a press conference. [The News]
• Karachi Cotton Association Raises Spot Rate: In a recent update, the Spot Rate Committee of the Karachi Cotton Association (KCA) raised the spot rate by Rs 500 per maund to Rs 20,500. This decision reflects a strong local cotton market despite relatively low trading volume. Cotton prices in Sindh fluctuate between Rs 19,000-21,500/maund, while in Punjab, they range from Rs 19,000-21,000/maund. [BR]
• Postponement of Gilgit Baltistan Protests - The postponement of protests in Gilgit Baltistan is welcomed, showcasing successful negotiation. With two demands met, talks will continue for the rest, offering relief to affected parties. This highlights GB's strategic importance for CPEC a. [The Nation]
• Gold Prices Inch Up Locally: On Tuesday, gold prices edged up slightly while silver remained unchanged in the local market. Gold rose by Rs 300 to reach Rs 215,100 per tola and Rs 257 to Rs 184,413 per 10 grams. Globally, bullion trading closed at $2048 per ounce, with a $20 premium added for domestic gold sales in the local market. [BR]

AGRI-INPUTS, WEATHER, WATER & POWER

• Refining Sector Halts Fuel Oil Exports: The refining sector stopped fuel oil exports in January due to high domestic demand from furnace oil-based power plants, following three months of continuous exports. This decision came after the country exported a significant amount of fuel oil in the second quarter of the fiscal year, totaling 434,000 tonnes, amid a shift to liquefied natural gas (LNG) for power generation. [The News]
• CDWP Approves Indus River Telemetry: The Central Development Working Party (CDWP) approved a Rs 23.8 billion project for telemetry systems along the Indus River but deferred two other projects worth over Rs 63 billion due to technical issues. [Dawn]
• Ogra Approves Gas Tariff Hike: Ogra approved a 35.13% increase in SNGPL's gas tariff and an 8.57% raise for SSGC for the fiscal year 2023-24, effective from January 1 to June 30. This is the second hike this fiscal year, aiming to cover a Rs 98 billion shortfall for both companies, with the government projecting to collect Rs 980 billion against revenue requirements of Rs 700 billion. [BR] [Dawn] [ET]
• Government Renews Sui Mining Lease: The federal government has decided to renew the Sui Mining Lease (Sui ML) between Balochistan and Pakistan Petroleum Limited (PPL) for 10 years starting from June 1, 2015, to May 31, 2025, with a total payment of Rs 60 billion. [BR]
• CCoE Approved Refineries Policy Amendments: The Cabinet Committee on Energy (CCoE) approved amendments to the Refineries Policy 2023 to address implementation issues faced by existing refineries, allowing them to undertake major upgrade projects. Key concerns included customs duty clarity, tax exemptions, output flexibility, legal matters, and sales tax adjustments on equipment. [BR] [Dawn] [ET]
• Commerce Ministry Seeks Urea Cost Recovery: The Commerce Ministry seeks Finance Ministry assistance to recover 50% of imported urea costs from Sindh and Balochistan, as both provinces haven't paid their shares. The Trading Corporation of Pakistan estimated Federal Government subsidies for 200,000 MT and 195,000 MT of imported urea to be Rs 12.547 billion and Rs 14.454 billion, respectively, by December 31, 2023. [BR]
• CDWP Clears Automated Irrigation Project: The CDWP cleared a Rs 23.835 billion project for the Automated Indus Basin Irrigation System, recommending it to ECNEC for final approval. Chaired by Deputy Chairman Dr. Muhammad Jehanzeb Khan, the CDWP discussed key projects in energy, transport, communication, and water resources. [BR]
• Seasonal Fog Sparks Health Crisis in Central Punjab: In central Punjab, the cold and foggy weather has sparked a seasonal fog fever epidemic, exacerbated by high inflation and ineffective prevention measures, increasing the risk of infected meat in markets. Despite the annual occurrence of cattle falling ill, there's still a lack of serious prevention strategies, leaving farmers and livestock vulnerable to significant financial losses. [ET]

AGRI UPDATES & PAKISTAN POLICY

• ECP to Release Unofficial Results: The Election Commission of Pakistan (ECP) will release unofficial results for all 859 constituencies of the National and Provincial Assemblies on February 9, as reported by the Returning Officers. The ECP spokesperson stated that preparations for the general elections on February 8 have been finalized, including the printing of 260 million ballot papers for all constituencies across the country. [BR]
• Security Personnel Deployed for Elections: Over 648,000 security personnel have been deployed nationwide for the February 8 elections, ensuring voter safety and transparency, announced caretaker Interior Minister Dr. Gohar Ejaz. Of these, 137,000 are from the army and paramilitary forces, while 511,000 are police personnel. [BR]
• Election Manifestos Disappoint Voters: As the general elections approach, PTI, PPP, and PML-N have presented ambitious manifestos lacking detailed strategies, particularly on democratic reforms, the economic crisis, and internal security, leaving voters undecided. A photo of Imran Khan energized PTI supporters. [BR]
• Interior Minister Weighs Internet Suspension on Election Day: Caretaker Interior Minister Gohar Ejaz suggested the possibility of suspending internet services on election day in areas with security issues, while Amnesty International called for uninterrupted internet access during polling. Ejaz clarified that any suspension would only occur if requested by a district or province due to security concerns. [Dawn] [ET]
• Government Falls Short on Security Papers Sale: The federal government raised only Rs 64 billion, falling short of the Rs 480 billion target through the sale of short-term security papers. The State Bank of Pakistan conducted the auction, receiving bids totaling Rs 1.153 trillion, with commercial banks actively participating in anticipation of potential declines in the key policy rate. [BR]
• Government Raises Rs 64 Billion in T-Bill Auction: The government raised Rs 64 billion through treasury bill auctions, below the Rs 480 billion target, with cut-off yields reduced by up to 15 basis points. The three-month T-bills saw a decline to 20.44%, while six-month rates remained unchanged, and 12-month rates dropped to 20.08%. Total bids received amounted to Rs 1.153 trillion. [Dawn]
• S&P: Pakistan's Credit Rating Tied to Elections - Pakistan's credit rating prospects rely on election outcomes and reform efforts, notes S&P Global Ratings. Despite economic improvements, persistent downgrades are attributed to political and economic instability, with fairness concerns about elections adding to uncertainty. Pakistan currently holds a CCC+ rating, indicating vulnerability to default, one step below the B category. [BR] [Dawn] [ET]
• Services Exports Decline, Rupee Gains: In December 2023, services exports declined by 6.93% to $726.94 million, marking the second consecutive monthly contraction. However, in rupee terms, exports grew by 17.31% to Rs205.94 billion. For the July-December period of FY24, services exports totaled $3.76 billion, a 2.70% decrease, but in rupee terms, there was a significant 25.17% improvement to Rs1.08 trillion. FY23 witnessed a 2.78% growth in services exports to $7.30 billion. [Dawn]

INTERNATIONAL – OVERVIEW & MARKET OUTLOOK

• Houthis Target Vessels in Red Sea, Gaza Hospital Evacuation: Yemen's Houthis claimed to have launched missiles at two vessels in the Red Sea, damaging one. The group targeted commercial ships, citing solidarity with Palestinians. The Star Nasia, a Greek-owned vessel, was damaged, with no injuries reported among its crew. Additionally, around 8,000 displaced people were evacuated from a besieged hospital in Gaza's Khan Yunis, according to the Red Cross. [BR] [Dawn] [ET]
• China Rebound: Anticipation of more forceful measures from China’s government to stem an equity rout boosted US-listed Chinese stocks, with the Nasdaq Golden Dragon China Index climbing more than 5%. The CSI 300 benchmark closed 3.5% higher in its best day since late 2022 after Bloomberg reported that regulators led by the China Securities Regulatory Commission plan to update President Xi Jinping on market conditions and the latest policy initiatives. Some $7 trillion in value has been wiped off Hong Kong and China equities since their peaks in 2021. [BBG]
• Qatar Energy, Petronet LNG Sign Major Deal: Qatar Energy and India’s Petronet LNG signed their largest deal for LNG supplies, with Qatar set to supply 7.5 million metric tons annually from 2028 to 2048. Qatar aims to bolster its role in Asia and Europe amid competition from the US, planning to expand liquefaction capacity from 77 million to 126 million tons per year by 2027. [BR]
• Water Scarcity to Affect Billions - Water scarcity could impact 3 billion more people by mid-century due to increased pollution, with river sources becoming unsafe. The UN warns that half the world's population already faces severe water scarcity annually, with rising demand and global warming exacerbating the issue. Recent research underscores that nitrogen pollution significantly worsens water scarcity. [BR]
• Oil Prices Rise Amid Supply Concerns: Oil prices rose on Tuesday due to expectations of tighter supply in February and ongoing US diplomatic efforts to resolve the Gaza War and ease tensions in a significant crude-producing region. Brent crude futures increased by 1.12% to $78.86 a barrel, while US West Texas Intermediate crude futures climbed by 1.21% to $73.68. The benchmark palm oil contract for April delivery on the Bursa Malaysia Derivatives Exchange closed up 1.03% at 3,841 ringgit ($806.42). [BR] [BR]

PAKISTAN - REMAINDERS

• Cabinet Approves PIA Restructuring: The caretaker federal cabinet approved the restructuring of Pakistan International Airlines (PIA) and the privatization of the First Women Bank Limited on recommendations from the Privatization Division. PIA's prolonged financial losses led to the decision, with the appointment of a Financial Advisor previously endorsed for its restructuring. [BR] [ET]
• Customs Authorities Propose Baggage Rule Amendments: Karachi's customs authorities have recommended FBR amend baggage rules to curb misuse and proposed new rules to aid overseas Pakistanis. The Federal Tax Ombudsman has also directed FBR to amend baggage rules to prevent smuggling of high-value luxury goods with customs officials' connivance. [BR]
• Commerce Ministry Plains RD Adjustments: The Commerce Ministry plans to impose or increase Regulatory Duty (RD) on 3 items to protect local industries, following the National Tariff Policy 2019-24. [BR]
• Opinion: How Elections can Shape the Future - “In the larger interest of the nation, it is necessary that a maximum number of people, men and women, who are eligible voters, exercise their right to vote. This is despite the despondency that prevails due to their realization that gross interference by state institutions makes a farce of elections. There is too much at stake, as the country continues to drift and lags behind in all major elements of national power — be it the economy, politics and strategic coherence.” - By Talat Masood [ET]