Knitwear Export, Electricity Hike, Caretaker Govt & Elections, Govt Borrowing, US-Iran Tensions.

TOPLINE

• Rs 112.3 billion was the export value of knitwear in June 23, up 15.7% compared to Rs 97.1 billion in June 22.
• Electricity consumers in Pakistan might face a possible hike of Rs 3.50-6 per unit in their bills as DISCOs have requested an increase in the last quarter of the year.
• The ruling coalition of PDM has tentatively chosen a caretaker prime minister but kept the identity under wraps to avoid controversy. There is also a strong possibility of a delay in holding the next general elections.
• The federal government plans to borrow Rs 11.09 trillion from domestic banks in the next three months (August-October) of FY24 through auctions of various security papers.
• Over 3,000 US military personnel have arrived in the Red Sea on two warships as part of an intensified response to Iran's tanker seizures, as tensions flare up in the busy Gulf waters.

COMMODITIES - CROPS, LIVESTOCK & HORTICULTURE

• Avocado Cultivation: The successful domestication of avocado in Pakistan holds the potential to significantly boost the agricultural sector and benefit growers due to its high value. Despite being a relatively new crop in the country, avocado is gaining popularity among consumers for its nutrition, organic nature, and resistance to pests and diseases. With approved cultivars yielding between 40 and 60 kilograms per plant and a current market value of Rs 1,400 to Rs 1,500 per kilogramme, avocado farming offers substantial income opportunities, tracing its introduction back to an Italian-funded initiative called "Fruit Vegetable and Olives" in the 1980s. [The News]
• Cotton Yield Boost Initiative: Agriculture Republic, an agricultural think tank, has urged Punjab's government to invest in farmers and quality seeds to boost cotton crop yields. Co-founder Aamer Hayat Bhandara welcomed the Chief Minister's efforts to collaborate with Uzbekistan in cotton cultivation but emphasized involving farmers and think tanks like Agriculture Republic for better outcomes. [BR]
• Wheat Price Warning: The Senate Committee on National Food Security & Research was informed about the impending rise in wheat flour prices due to provincial governments falling short of wheat purchase targets, potentially leading to shortages and price hikes. Pakistan, once a major wheat exporter, now faces flour shortages and has become a net importer, despite investigations and government efforts to address the issue. [ProPakistani]
• Knitwear Export: Rs 112.3 billion was the export value of knitwear in June 2023, up 15.7% compared to Rs 97.1 billion in June 2022, according to the Pakistan Bureau of Statistics. [ET]

AGRI-INPUTS, WEATHER, WATER & POWER

• Pakistan Electricity Tariff Hike Pending: Electricity consumers in Pakistan might face a possible hike of Rs 3.50-6 per unit in their bills as the country's power distribution companies (DISCOs) have requested this increase for the last quarter of the fiscal year 2022-23. NEPRA is scheduled to review these requests on August 23, potentially leading to an additional financial burden of around Rs 144.688 billion on consumers from July 1, 2023. The manner in which this increase will be implemented, whether over three or six months, is yet to be determined by the government. [The News]
• Electricity Price Hike Approved: The government approved higher electricity prices for Karachi consumers and revised the national electricity transmission policy for projects involving Gulf countries, following SIFC directives. An Rs80 billion foreign remittances incentive package and a Rs30 billion subsidy for the poorest Utility Stores Corporation customers were also endorsed. Additionally, a uniform tariff application to K-Electric consumers was approved. [ET]
• Karachi Port Terminal Outsourcing Deal Update: The CCoIGCT rejected a low-rate offer from Abu Dhabi Ports (ADP) for outsourcing the Bulk and General Cargo Terminal at Karachi Port's East Wharf. The negotiating team found the offer insufficient for a 15-year agreement with Karachi Port Trust (KPT). The committee directed the team to improve the terms within two days to avoid potential cancellation and urged the team to re-engage with AD Ports for better terms. [Dawn]? [BR]
• Opinion: Staying afloat amidst floods - “This piece is being written in a country where nearly 26% of the land is situated below sea level and almost 60% of the territory is flood-prone. However, when it rains here, the populace does not have much to fear, unlike in Pakistan where heavy downpours put people on an edge. And unprecedented they are as in their wake they leave: mass deaths, erased homes and shattered livelihoods. And then an unsettling silence prevails.” - By Tania Imran [ET]

AGRI UPDATES & PAKISTAN POLICY

• Prime Minister Chairs Investment Committee: The Apex Committee of the Special Investment Facilitation Council (SIFC) held its third meeting, chaired by Prime Minister Shehbaz Sharif and attended by high-level officials. The committee endorsed ongoing efforts to attract investments across sectors such as agriculture, livestock, mining, minerals, IT, and energy. [BR]
• Caretaker PM Decision Looms Amid Dissolution: The ruling coalition has tentatively chosen a caretaker prime minister but kept the identity under wraps to avoid controversy. Post-dissolution, the prime minister and opposition leader can consult for three days or involve the Election Commission of Pakistan. Interior Minister Rana Sanaullah and Defence Minister Khawaja Asif have both stated that there is a possibility of a delay in holding the next general elections. [Dawn] [Dawn]
• Parliament Passes Trade Bills 2023: In a joint parliamentary session, "The Trade Dispute Resolution Bill, 2023" and "The Trade Organizations (Amendment) Bill, 2023" were passed. The former establishes a commission to swiftly resolve trade disputes, including in E-Commerce, while the latter mandates synchronized elections and extends tenure for chambers of commerce and industry. Both bills gained majority approval with minor amendments, emphasizing law enforcement agencies' cooperation. [BR]
• Government's Rs 11.09 Trillion Borrowing Plan: The federal government plans to borrow Rs 11.09 trillion from domestic banks in the next three months (August-October) of FY24 through auctions of various security papers. Most of the borrowing will be through short-term government papers, with around Rs 8.25 trillion aimed to be raised through MTBs auctions during this period, covering maturing debt of Rs 8.905 trillion. [BR]
• SECP Enforces Limits on Nano-Lending: The SECP has implemented exposure limits on digital lenders and borrowers in Pakistan's nano-lending sector to prevent predatory practices and ensure financial stability. Borrowers can take a maximum of Rs 25,000 from one app and Rs 75,000 from multiple apps. Loan periods are limited to 90 days, promoting responsible lending and safeguarding borrowers. [The News]

INTERNATIONAL – OVERVIEW & MARKET OUTLOOK

• Ocean Plastic Pollution: A recent study reveals that ocean plastic pollution might be less than previously thought, with larger plastic pieces over 25 millimeters making up more than 95% of floating plastic. The study suggests the total plastic mass in the ocean is lower than estimated, contradicting assumptions about microplastic prevalence. While microplastics' mass is relatively small, the presence of larger pieces could aid cleanup efforts. [ET] [Barron’s] [Forbes] [France 24] [The National]
• US Bolsters Presence Near Iran Amid Tensions: Over 3,000 US military personnel have arrived in the Red Sea on two warships as part of an intensified response to Iran's tanker seizures, according to the US Navy. This move contributes to the growing US military presence in key Gulf waterways crucial for global oil trade. Iran accused the US of exacerbating regional instability in response. [BR] [Dawn] [ET] [TRT World] [Al Jazeera] [TH]
• China Deflation Threat: When China abandoned pandemic restrictions after three years of stringent controls, some economists predicted rapid price gains. Instead, the country is experiencing a rare period of falling prices, in clear contrast to places like the US and other major economies which have been hit with rocketing inflation. Unlike the temporary decline in late 2020 and early 2021, the drop in consumer prices this time around is more cause for concern. People not spending could force businesses to cut prices, eating into revenue and profits and prompting them to curb investment and jobs. [Bloomberg]
• Deadly East Coast Storm: A powerful storm system hit the East Coast on Monday, causing widespread wind and thunderstorms. Two deaths were reported – a 28-year-old man in Alabama struck by lightning and a 15-year-old in South Carolina hit by a falling tree during the storm. Over 1 million utility customers lost power from Pennsylvania to Georgia due to the storm. [Dawn] [CNN] [NBC] [ABC] [NPR] [NYT] [Anadolu Agency]
• Oil Prices Dip Amid Demand Concerns: Oil prices dropped over $1 per barrel on Monday, amid concerns of waning demand as the summer driving season in the United States comes to a close, following a prolonged period of price increases. Both Brent crude and US West Texas Intermediate crude experienced a recovery from their early lows, with Brent trading at $85.70 (down $1.05) and US WTI crude trading at $81.79 (down $1.02). Meanwhile, Malaysian palm oil futures also decreased, reaching a nearly six-week low due to expectations of increased supply in the world's second-largest producer and sluggish demand. The benchmark palm oil contract for October delivery on the Bursa Malaysia Derivatives Exchange fell 88 ringgit, or 2.28%, to 3,771 ringgit ($827.52) per metric ton, marking its lowest closing since June 28. [BR] [BR]

PAKISTAN - REMAINDERS

• Track Damage, Missing Fishplates Blamed: The derailment of the Hazara Express near Nawabshah, which caused 30 deaths and numerous injuries, was attributed to missing fishplates and a damaged track, according to a preliminary report by a Pakistan Railways inquiry team. Skidding of the train's locomotive was also identified as a factor. The report indicated negligence as the train engine left without proper examination, and the engineering and mechanical branches of PR were deemed responsible for the accident. While sabotage isn't fully ruled out, technical issues are the primary focus. [Dawn] [BR]
• Opinion: Drowning thirsty - “Among the many paradoxes that this land of the pure has been grappling with, one stands out as particularly strange: Pakistan, despite being blessed with the mighty Indus river and some of the world’s largest glaciers, is ranked as the second-most water-stressed country globally. In the year 2022, one-third of the nation was submerged under floodwaters, yet the majority of urban centers, including Karachi, continued to suffer from chronic water shortages. This bewildering situation has created a cycle in which citizens alternately protest against the government for water scarcity or cry out for help with dewatering after urban floods caused by rainfall.” - By Masood Lohar [Dawn]
• Pakistan’s civil-military establishment comes down hard on Imran Khan - “It was only a matter of time before the civil-military establishment, in its determination to keep former Prime Minister Imran Khan from returning to power through popular election, acted to remove him from the political stage. In the aftermath of Khan's arrest, unanswered questions remain over the timing of the upcoming national elections, the leadership of the caretaker government, and whether recent events have in any way reset civil-military relations.” - By Marvin G. Weinbaum [MEI]