Gold Rates Rise, Pak-China Sesame, Pharma Profits Soar, NEPRA KE Hike, IMF Approval, China EU Dairy Tensions.

TOPLINE

• Local gold rates reached new highs despite economic challenges, with the price hitting Rs 261,000/tola and Rs 223,765/10 grams.
• A 23-member delegation of Pakistani sesame exporters visited Beijing and Handan, China, strengthening trade ties in the sesame industry. The trip included the Pakistan-China B2B Sesame Conference, where an SCI Group analyst discussed sesame demand, supply trends, and price fluctuations with representatives from 19 major Chinese companies.
• The pharmaceutical industry saw record quarterly sales of Rs 237 billion in Q4FY24, up 25% year-on-year, and total sales of Rs 916 billion for FY24, a 22% increase. This rise is due to a 20% price increase following deregulation and a February price hike.
• Nepra approved a Rs 5.7622 per unit tariff increase for KE for May and June 2024 to recover Rs 10 billion, rejecting some of KE's costs. In July 2024, power generation was steady at 14.4 billion units, and the Central Power Purchasing Agency requested a negative 31 paisa FCA adjustment.
• Finance Minister Aurangzeb stated that the IMF Executive Board is expected to approve a new program for Pakistan in September 2024, with negotiations progressing positively. It has been delayed from August due to pending debt rollovers, with only $1 billion confirmed so far from the UAE.
• China launched an anti-subsidy investigation into EU dairy imports on Wednesday, escalating tensions with the bloc. This move followed the EU's revised tariff plan for Chinese electric vehicles, which reduced the proposed duty from 37.6% to 36.3% but did not eliminate it, prompting strong objections from Beijing.

AGRI-UPDATES - COMMODITIES, POLICY & DEVELOPMENTS

• Pakistani Sesame Exporters Strengthen China Ties: A 23-member delegation of Pakistani sesame exporters visited Beijing and Handan, China, strengthening trade ties in the sesame industry. The trip included the Pakistan-China B2B Sesame Conference, where an SCI Group analyst discussed sesame demand, supply trends, and price fluctuations with representatives from 19 major Chinese companies. [The News]
• Pakistan Faces Export, FDI Risks: Pakistan risks losing exports and FDI due to potential climate change non-compliance. OICCI President Rehan Shaikh highlighted the opportunity to attract $500 billion in green financing by marketing climate-friendly projects. [ET]
• Cotton Prices Across Pakistan: In Sindh, cotton is priced between Rs 17,700-Rs 17,800/maund and Phutti between Rs 6,500-Rs 7,400/40 kg. In Punjab, cotton ranges from Rs 18,000-Rs 18,500/maund, while in Balochistan, cotton is priced between Rs 17,400-Rs 17,700/maund, with corresponding Phutti prices in both regions. [BR]
• NRSP Bank & FFC Partner for Agri-Financing: NRSP Microfinance Bank and Fauji Fertilizer Company Limited (FFC) have formed a strategic partnership to enhance agricultural financing in Pakistan. The MOU, signed on August 20, 2024, aims to improve credit access for farmers with tailored financial solutions, combining NRSP Bank's microfinance expertise with FFC's agricultural leadership. [BR]
• ECC Seeks Report on Sector Concessions: The Economic Coordination Committee (ECC) has requested a detailed report on the concessions granted to sectors declared as industry and those applicable to them. This directive followed a discussion on a proposal to classify "warehousing as an industry" by the Ministry of Industries and Production. [BR]
• Gold Prices Hit Record Highs: Local gold rates reached new highs despite economic challenges, with the price hitting Rs 261,000/tola and Rs 223,765/10 grams. The All Sindh Saraf and Jewellers Association issued higher domestic rates despite stable global gold prices and unchanged rupee-dollar parity. [Dawn]
• Pharma Industry Sees Record Sales: The pharmaceutical industry saw record quarterly sales of Rs 237 billion in Q4FY24, up 25% year-on-year, and total sales of Rs 916 billion for FY24, a 22% increase. This rise is due to a 20% price increase following deregulation and a February price hike, though the deregulation was stayed by the Lahore High Court. [Dawn]
• Germany's €91.1 Million Flood Aid: Minister Ahad Khan Cheema thanked Germany for €91.1 million in support for post-flood reconstruction and highlighted the €4 billion in aid since 1961. The meeting, attended by German Federal Minister Svenja Schulze and senior officials, underscored the long-standing partnership between the two countries. [ET]

ENERGY - WEATHER, WATER & POWER

• Flash Floods Devastate KP: Flash floods from heavy rains over the past 24 hours have devastated Peshawar and other parts of Khyber-Pakhtunkhwa, killing seven people and injuring dozens, according to the PDMA. The floods also caused four deaths in DI Khan and Bannu districts, with the casualties in Peshawar including two women and a child. [ET]
• Sindh Pushes for Renewable Energy: Sindh Chief Minister Murad Ali Shah noted that while Sindh had long advocated for wind and solar energy investments, now the entire country seeks them. He highlighted that Thar coal power plants, generating over 3,000 megawatts of electricity, supply the National Grid but not Sindh. [BR]
• Gas Consumers Shielded from Tariff Hikes: Petroleum Minister Musadik Malik said 66% of gas consumers are shielded from tariff increases due to tiered pricing, and lowering prices indiscriminately would increase circular debt. He also noted that three state-owned petroleum firms have been moved to a sovereign wealth fund. [BR]
• Nepra Approves KE Tariff Hike: FCA Adjustment Requested - Nepra approved a Rs 5.7622 per unit tariff increase for KE for May and June 2024 to recover Rs 10 billion, rejecting some of KE's costs. In July 2024, power generation was steady at 14.4 billion units, and the Central Power Purchasing Agency requested a negative 31 paisa FCA adjustment, the first since December 2022. [BR] [ET]
• Audit Requested for KAPCO Payment: CPPA-G has requested an audit of a Rs 151 billion irregular payment to KAPCO due to an unauthorized extension of their Power Purchase Agreement (PPA) without NEPRA's approval. The PPA, signed in 1996 with a 25-year term, encountered issues from 2008 as Wapda faced electricity shortages and struggled with cash flow, impacting KAPCO's ability to procure fuel for power generation. [BR]
• CSAP Expands K-IV Pipe Supply: Crescent Steel and Allied Products Limited (CSAP) has agreed to supply an additional 65,000 meters of coated pipes for the K-IV project to the China Harbour Engineering Company Limited (CHEC) and Al-Fajr International (AFI) joint venture. The notice, shared with the Pakistan Stock Exchange, confirms the expansion of their existing contract, with Hot Rolled Coils provided by the client. [BR]
• Pakistan to Auction 20 Offshore Blocks: The Pakistan government plans to auction 20 offshore blocks for oil and gas exploration to address rising energy demands, according to Petroleum Minister Musadik Malik. The government is also focusing on onshore tight gas exploration with new incentives to reduce costs and challenges in horizontal drilling. [The News]
• Corporate Result: Rs 2.17 billion was the profit reported by Lotte Chemical for six months ended June 30, 2024, down 24% from a profit of Rs 2.85 billion last year. [ET]

PAKISTAN - ECONOMICS, POLITICS & SECURITY

• IMF Approval for Pakistan Program Expected: Finance Minister Muhammad Aurangzeb stated that the IMF Executive Board is expected to approve a new program for Pakistan in September 2024, with negotiations progressing positively. He shared this update with the Senate Standing Committee on Finance, having previously anticipated an EFF approval by the end of August 2024. It has been delayed from August due to pending debt rollovers, with only $1 billion confirmed so far from the UAE. [Dawn] [BR]
• Imran Khan Demands Faiz Hameed's Trial: Imran Khan, the jailed PTI chairman, has called for a public trial of former ISI Chief Lt General Faiz Hameed, recently arrested over a housing scheme scam. Khan suggested the media should cover the trial if Hameed is believed to be the mastermind behind the May 9 events, making this statement at Adiala Jail after a hearing of the Al-Qadir Trust case. [BR]
• ECC Criticizes FBR on Subsidy Taxation: The ECC has criticized the FBR for taxing government subsidies, which should not be treated as income. This issue came up during a briefing on subsidies for essential items under the Prime Minister’s Relief Package, with Rs 35 billion approved for FY 2023-24 and Rs 60 billion for 2024-25. [BR]
• T-Bill Yields Drop on Rate Cut Hopes: On Wednesday, Treasury Bill yields fell significantly due to expectations of future interest rate cuts by the State Bank of Pakistan, with the government raising Rs 397 billion—well above the Rs 150 billion target. Yields on 3-month, 6-month, and 12-month T-bills reached their lowest levels since early 2023. [The News]
• Roshan Digital Account Inflows Update: Since its launch, Pakistan's Roshan Digital Account (RDA) has attracted $8.416 billion in inflows, with $1.624 billion repatriated and $5.334 billion used locally. By July, the net repatriable liability was $1.458 billion. The RDA was introduced by former Prime Minister Imran Khan on September 10, 2020, to address COVID-19's economic impact. [Dawn] [ET]
• Privatization Commission Appoints Financial Advisors: The Privatization Commission Board approved the appointment of financial advisors for PIA, Discos, and the Roosevelt Hotel in New York during its 222nd meeting. Chaired by Federal Minister Abdul Aleem Khan, the board also selected six firms as pre-qualified financial advisors for the privatization program. [BR]

INTERNATIONAL - MARKET, POLITICS, SECURITY & DEVELOPMENT

• Israeli Genocide: Israeli airstrikes in Gaza have killed at least 50 Palestinians in the past 24 hours. This escalation follows US Secretary of State Antony Blinken's recent visit, which ended without securing a truce. The Israeli military targeted around 30 sites, including tunnels and launch sites, and reported the killing of armed fighters along with the seizure of various weapons. [BR] [Dawn] [ET]
• Ukraine Launches Large Drone Strike on Moscow: Ukraine launched at least 11 drones at Moscow on Wednesday, marking one of the largest drone strikes on the Russian capital since the war began in February 2022. Russian air defenses intercepted the drones. This escalation follows Ukraine's recent border incursion into Russia's Kursk region on August 6. [BR] [Dawn]
• China Launches EU Dairy Investigation: China launched an anti-subsidy investigation into EU dairy imports on Wednesday, escalating tensions with the bloc. This move followed the EU's revised tariff plan for Chinese electric vehicles, which reduced the proposed duty from 37.6% to 36.3% but did not eliminate it, prompting strong objections from Beijing. [BR] [BBG]
• 35 Pakistani Pilgrims Killed in Iran Bus Crash: At least 35 Pakistani pilgrims were killed when their bus crashed and caught fire in central Iran while traveling to Iraq for a Shia ritual. The accident occurred near the Dehshir-Taft checkpoint in Yazd province; 23 others were injured, with seven in critical condition. The deceased included 11 women and 17 men. [BR] [Dawn]
• Oil Prices Fall Amid U.S. Job Data: Oil prices dropped on Wednesday after a significant downward revision in the U.S. job growth data for the year leading up to March, impacting investor sentiment. Brent crude futures fell by $1.04 (1.35%) to $76.16 per barrel, while U.S. West Texas Intermediate crude futures declined by $1.15 (1.15%) to $72.02 per barrel. [BR]

OPINION(S) & REMAINDERS

• Supreme Court Rejects Military's Claim: The Supreme Court has dismissed the military's claim to ownership of the Margalla National Park land. In January 2022, Islamabad High Court Chief Justice Athar Minallah had also ruled that the Pakistan Army's claim over 8,068 acres within the park violated the 1979 and 1960 ordinances and the Master Plan. [ET]
• PM Orders Anti-Smuggling Crackdown: Prime Minister Shehbaz Sharif ordered the confiscation of vehicles used in smuggling and stressed the need to curb smuggling to protect the economy. He urged the FBR and the Ministry of Interior to enhance cooperation and create job opportunities in border areas. He directed the Balochistan government to curb the smuggling of diesel and petrol, which is causing significant national revenue losses. During a meeting on anti-smuggling, he set a one-month deadline for Balochistan's chief secretary and inspector general of police to implement measures. [Dawn] [BR]
• Punjab Blocks PTI Events: The Punjab government has used Section 144 to block Pakistan Tehreek-i-Insaf (PTI) from holding political events since May 9 last year. With PTI supporters planning to move to Islamabad for a public meeting today, the government remains concerned that such gatherings could be vulnerable to terrorism and security threats. [Dawn]
• Submarine Cable Fault Causes Internet Slowdown: The government cited a faulty submarine cable as the cause of the internet slowdown, dismissing firewall allegations. This came amid scrutiny from lawmakers and tough questions faced by PTA Chairman Hafeezur Rehman during a National Assembly committee session. [Dawn]
• Opinion: What’s Happening with the Internet in Pakistan? - “In recent months, users have experienced sluggish speeds, difficulty downloading media on WhatsApp, and intermittent connectivity issues. Instead of addressing the root cause behind widespread outcry and economic concerns, government obfuscation on “firewall” rumours continues — the latest excuse for persisting crawling speeds being too much VPN use or “faulty submarine cables”.” - By Ramsha Jahangir [Dawn]
• Opinion: Iranian Call for Oil Boycott of Israel & Pakistan's Nod - “Pakistan has thrown its support behind Iran's call to impose an oil boycott on Israel at the OIC. This move marks a significant step in the diplomatic relations between these countries and reflects a broader geopolitical strategy. Iran has been vocal in its opposition to Israeli policies, particularly concerning its actions in Palestinian territories. As part of its campaign, Iran has called on other nations to cease purchasing oil from Israel. The idea behind this boycott call is to exert economic pressure on Israel, hoping it will lead to changes in its policies and actions.” - By Durdana Najam [ET]