- In Jan 2024, Pakistan received remittances of $2.4 billion, showing an increase from December. Government debt increased by 7.14% to Rs 65.188 trillion in the H1 of FY’24 due to rising expenditure and slow foreign inflows. Y-o-Y, debt rose by 27.67% in December to Rs 51.058 trillion.
- In the first half of the 2023/24 fiscal year, Pakistan experienced a decline in exports to high-priced US and EU markets. Chinese imports of Pakistani goods rose 66% from July to December in the first half of FY’24.
- Legal cigarette production dropped by 40% in 5 months, primarily due to increased excise duty, resulting in a widening price gap between legal and illegal cigarettes as the tobacco industry suffers in Pakistan.
- The government is finalizing a plan to increase gas prices, aiming for a revenue target of Rs 98-100 billion, following OGRA's recommendation of a 23.16% average hike from January 1, 2024. The IMF stated that proposed tariff rationalization and circular debt management plans do not tackle Pakistan's energy sector's core problems.
- The Pakistan Stock Exchange (PSX) continued its downward trend on Tuesday, with the benchmark KSE-100 index losing 1,000 points shortly after trading began. This marked the third consecutive session of the market plunging over 1,000 points.
- US stocks surged on Monday, with the Nasdaq, dominated by tech firms, edging near its record high, as investors prepared for key inflation reports later in the week. Notably, Nvidia surpassed Amazon in value for the first time in 20 years. Bitcoin also surged to over $50,000.
COMMODITIES - CROPS, LIVESTOCK & HORTICULTURE
- Pakistan's Tobacco Industry Struggles Amid Taxation Crisis: The legitimate tobacco industry in Pakistan is facing a crisis due to heavy taxes, leading to a significant decline in production and tax losses. Legal cigarette production dropped by 40% in 5 months, primarily due to increased excise duty, resulting in a widening price gap between legal and illegal cigarettes. [BR] [ET] [ET] [PT]
- Pakistan's Export Shift to China: In the first half of the 2023/24 fiscal year, Pakistan experienced a decline in exports to high-priced European and North American markets, with the United States no longer ranking among its top 25 export destinations. China maintained its position as Pakistan's leading trading partner, importing a higher volume of goods, marking a 66% increase from July to December of that fiscal year. [The News]
- HBL & UAF Partner Up: HBL Zarai Services Limited and the University of Agriculture Faisalabad have signed an agreement for a strategic collaboration to connect industry and academia. [BR]
- Japanese Professor Advocates Strawberries for Diabetes Control: Japanese professor Yoshiaka Takaya proposed using strawberries, rich in antioxidants and possessing alpha-glucosidase inhibitory activity, as a method to control diabetes. This suggestion was made at the 'Emerging Trends in Basic Medical Science' conference organized in Sindh. [Dawn]
- Edible Oil Manufacturers Seek Duty Reductions & Policy Changes: Edible oil manufacturers seek reduced duties on Crude Palm Oil (CPO), elimination of the Sales Tax Act's section 8B, and increased taxes on commercial importers to boost industrial growth and support farmers. With over 3.2 million metric tonnes of palm oil imported annually, the sector produces 4.5 million metric tonnes of Banaspati and cooking oil to meet national demand. [ET]
- Leather Garments Export: Rs 5.52 billion was the export value of leather garments in Dec 2023, down 7.23% compared to Rs 5.95 billion in Dec 2022, according to the PBS. [ET]
AGRI-INPUTS, WEATHER, WATER & POWER
- IMF-Backed Gas Price Hike: The caretaker government, in line with IMF directives, is finalizing a plan to increase gas prices, aiming for a revenue target of Rs 98-100 billion, following OGRA's recommendation of a 23.16% average hike from January 1, 2024. The proposal includes raising CNG prices to Rs 3800 per mmBtu from Rs 3600 per mmBtu. [The News]
- IMF Urges Energy Sector Reforms: The IMF stated that proposed tariff rationalization and circular debt management plans do not tackle Pakistan's energy sector's core problems. IMF Mission Chief Nathan Porter emphasized the need for broader reforms, including reducing energy costs, improving compliance, tackling theft and line losses, discontinuing captive power, fixing DISCOs' governance, and ensuring regular tariff adjustments for economic recovery and fiscal sustainability. [BR] [ET]
- LNG Price Forecast: The Ministry of Energy (Petroleum Division) has shared spot LNG price forecasts with Sui gas companies, NTDC, and CPPA-G until September 2024. According to Pakistan LNG Limited, projected prices per MMBTU are as follows: March-April 2024: $9.43, May 2024: $8.81, June 2024: $8.39, July 2024: $7.56, August 2024: $7.37, and September 2024: $8.35. These forecasts are subject to change based on market conditions. [BR]
- Sazgar Engineering Sales Growth: In January 2024, Sazgar Engineering Works Limited (PSX: SAZEW) saw a surge in auto rickshaw sales with 2,229 units sold, up from 275 in the previous month. Production also increased to 1,675 units, marking a 66.83% month-on-month growth. Additionally, the company sold 967 four-wheel vehicles, compared to just 29 units in the previous month, with production reaching 509 units, up from 424 units in December 2023. [MG]
- Ghani Chemicals Ventures into Power & Gas Sectors: Ghani Chemicals Industries Limited (PSX: GCIL) has decided to expand into power generation and new gas business areas, authorizing the creation of a wholly owned subsidiary named Ghani Power (Private) Limited. [MG]
AGRI UPDATES & PAKISTAN POLICY
- PML-N Pursues Nawaz Sharif for Fourth PM Term: Despite falling short of a simple majority in the 266-seat National Assembly, PML-N aims to nominate Nawaz Sharif for a fourth term as prime minister. Negotiations continue for a power-sharing formula, with discussions ongoing within the party leadership to finalize the candidate and seek approval from the PPP. [Dawn]
- Political Leaders Resign After Elections: Several political leaders and entities have announced their decision to step down following last week's elections, with some experiencing a "walk of shame" while others remained defiant. Jahangir Khan Tareen, the leader of the Istehkam-e-Pakistan Party, formed by PTI deserters before the polls, declared his exit from politics after his party's poor performance. Siraj-ul-Haq (JUI) and Pervaiz Khattak (PTI-P). [Dawn] [ET] [PT] [DT] [BS]
- Pakistan's Remittances Rise: In January 2024, Pakistan received worker's remittances of $2.4 billion, showing a slight increase from the previous month. On a month-on-month basis, remittances grew by 0.6%, and on a year-on-year basis, there was a significant increase of 26.2%. Specifically, home remittances amounted to $2.397 billion, up $15 million from December 2023. Remittances in January 2024 were $497 million higher than January 2023. [BR] [Dawn] [ET]
- Government Debt Soars: Government debt increased by 7.14% to Rs 65.188 trillion in the first half of the current fiscal year due to rising expenditure and slow foreign inflows. Year-on-year, debt rose by 27.67% in December to Rs 51.058 trillion, driven by growing expenditure demands, high mark-up payments, particularly on domestic debt due to record interest rates, and limited foreign currency inflows from July to December 2023. [The News] [ET]
- PSX Plunges on Post-Election Political Instability: The Pakistan Stock Exchange (PSX) continued its downward trend on Tuesday, with the benchmark KSE-100 index losing 1,000 points shortly after trading began. According to the PSX website, the KSE-100 index was down 1,121.24 points, or 1.84%, standing at 59,944.07 points from yesterday’s close of 61,065.31. This marked the third consecutive session of the market plunging over 1,000 points. Last Friday, the KSE-100 index had dropped 1,200 points due to delays in announcing the results of the general elections, settling below 63,000. [Dawn]
INTERNATIONAL – OVERVIEW & MARKET OUTLOOK
- Israeli Genocide Shifts to Rafah: The United Nations warned on Monday of the alarming possibility of a full Israeli incursion into Gaza's densely populated Rafah, citing the risk of "terrifying" casualties. UN human rights chief Volker Turk urged restraint from world powers as fears of a ground incursion grew among over 1.4 million Palestinians in the area. [Dawn] [Dawn] [ET] [UN] [SCMP] [Barrons] [NDTV] [TRT]
- Indian Farmers' March to Delhi Over Crop Prices: Indian police blocked roads on Monday to stop farmers from marching to New Delhi to demand better crop prices, as promised to them in 2021. Government ministers are anticipated to meet with farm union leaders to prevent a recurrence of the year-long protest, which aimed to compel the government to repeal farm laws aimed at deregulating agricultural markets. [Dawn] [ET] [USN] [Reuters] [Al Jazeera] [DW]
- Russian Upper Hand in Ukraine: Norway's intelligence service cautioned that Russia is gaining an upper hand in the conflict in Ukraine, bolstered by increased troops and supplies from China, North Korea, and other nations. Nils Andreas Stens?nes, the head of the military intelligence unit, emphasized that Ukraine would require substantial Western military assistance to reverse the situation, during the presentation of the annual risk report alongside other Norwegian security services. [Dawn] [ET] [TRT] [RTE] [MSN] [Barrons] [Al Jazeera]
- Saudi Arabia Halts Oil Expansion, Eyes Energy Diversification: Saudi Arabia's energy minister revealed that the decision to halt the planned expansion of oil production capacity signals the kingdom's interest in diversifying into other energy forms. This move, announced by Aramco, involves maintaining production at 12 million barrels per day instead of aiming for 13 million bpd by 2027. [BR] [BBG] [Reuters] [CNBC] [CNBC] [WSJ]
- Nasdaq Surges, Nvidia Overtakes Amazon in Market Value: US stocks surged on Monday, with the Nasdaq, dominated by tech firms, edging near its record high, as investors prepared for key inflation reports later in the week. Notably, Nvidia surpassed Amazon in value for the first time in 20 years, propelling the Nasdaq to surpass its previous closing peak from November 2021 and itching it within a percentage of its all-time intraday high of 16,212.229. [BR] [BBG] [Reuters] [CNBC] [Yahoo]
- BTC Hits $50,000: BTC surged to $50,000 despite disappointment over the absence of a related Super Bowl commercial. Optimism for the BTC halving around April 24 remains high, with spot BTC ETFs driving market activity, hitting a 30-year record in assets under management in their first month of trading. [Dawn] [TV] [FXS] [Coindesk] [Changelly]
- Gold Prices Dip on Dollar Strength: Gold prices dipped slightly on Monday due to a rise in the dollar, with investors awaiting US inflation data and Fed comments. Spot gold fell 0.2% to $2,021.13 per ounce, trading within a narrow $5 range, while US gold futures also declined by 0.2% to $2,035.60 per ounce. The dollar index rose 0.1%, reducing the attractiveness of gold currency holders. [BR] [BBG] [Reuters] [CNBC] [FXE] [Investopedia]
- Dutch Court Halts F-35 Parts to Israel; UAE Backs Ties Amid Gaza Conflict: A Dutch court ordered the halt of F-35 fighter jet parts delivery to Israel within seven days, citing concerns over potential breaches of international humanitarian law. Meanwhile, the UAE defended its decision to maintain ties with Israel despite growing concerns over the Gaza conflict, highlighting the diplomatic relationship established in 2020 under the US-brokered Abraham Accords. [BR] [BR] [AP] [Al Jazeera] [Reuters] [BBC] [Politico]
- New Government Plans IMF Talks, Privatization on Agenda: Caretaker PM Kakar announced that the incoming government will need to initiate negotiations with the International Monetary Fund (IMF) for a new program. He mentioned that the IMF has no objections to the privatization of State Owned Enterprises (SOEs). [BR]
- Opinion: Family-Owned Enterprises: A Perspective - “There were 22 families in the 60s controlling most business empires in Pakistan and now there are 40 plus family conglomerates that have a finger in most business pies. The pattern is familiar. The founder fathers have done a wonderful job in starting business lines that were tough and risky. Competition in them initially was limited. The business grew that allowed them to invest vertically or horizontally. The 60s were the golden era where countries like South Korea sent their think tanks to learn from Pakistan’s 5-year planning model.” - By Andleeb Abbas [BR]
