- The documented tobacco industry in Pakistan is alarmed by the sale of around 850 million counterfeit cigarette sticks or 42.5 million packs with fake stamps nationwide as illicit trade reaches historic levels.
- Rs 26.98 billion was the export value of cotton yarn in Dec 2023, up 125% compared to Rs 11.99 billion in Dec 2022. APTMA has urged the government to implement a reduction in industrial electricity tariff from cents 14 to cents 9 per unit to maintain global competitiveness.
- Fertilizer sector profits are set to surge by Rs 36 billion year-on-year, with a projected 104% increase in Q4 2023 earnings to Rs 25 billion, driven by elevated retention prices.
- Proposals for the restructuring of the Federal Board of Revenue (FBR) will be presented in the upcoming cabinet meeting, aiming to increase tax revenue to 12.7% of GDP by FY25 and 20% by FY27.
- Pakistan and Iran have decided to fully restore diplomatic ties, including the return of ambassadors to their capitals by Friday, and a visit from Iranian Foreign Minister Hossein Amir Abdollahian to Islamabad.
- The S&P 500 hit a new record high of 4,868.41 points on Monday, extending a bull-market run into the new week boosted by gains in mega-cap and chip stocks. Oil prices rose 2% on Monday and were attributed to conflicts in the Middle East and Ukraine, along with cold weather in North America impacting supply.
COMMODITIES - CROPS, LIVESTOCK & HORTICULTURE
- Pakistan Tobacco Industry Raises Alarm Over Surge in Counterfeit Sales: The documented tobacco industry in Pakistan is alarmed by the sale of around 850 million counterfeit cigarette sticks or 42.5 million packs with fake stamps nationwide. Representatives from the Pakistan Tobacco Company (PTC) expressed deep concerns about the impact on business sustainability due to inappropriate policy measures and a significant surge in illicit trade, reaching historic levels. [BR]
- Pakistan's Non-Textile Exports Shrink in FY 2023-24 H1: In the first half of fiscal year 2023-24, Pakistan saw a contraction in exports of non-textile value products, including a 9.71% decline in leather garments and a 23.17% decrease in raw leather exports. Other sectors, such as carpets and rugs (-21.61%) and sports goods (-2.35%), also experienced negative growth, with a significant drop in football shipments (-21.9%). [Dawn]
- Exporters Appeal to SIFC Over FBR Hurdles in Copper Ingot Exports: Exporters are seeking intervention from the Special Investment Facilitation Council (SIFC) against the Federal Board of Revenue (FBR), alleging obstacles in copper ingot exports to China under the Export Facilitation Scheme (EFS). The steel sector claims that instead of facilitating, the FBR has become a major hurdle, prompting exporters to appeal to the SIFC for resolution. [BR]
- Dry Fruits & Nuts Import: Rs 2.42 billion was the import value of dry fruits and nuts in Dec 2023, up 152% compared to Rs 963 million in Dec 2022. [ET]
- Cotton Yarn Export: Rs 26.98 billion was the export value of cotton yarn in Dec 2023, up 125% compared to Rs 11.99 billion in Dec 2022, according to the PBS. [ET]
AGRI-INPUTS, WEATHER, WATER & POWER
- Fertilizer Sector Eyes Rs 36 Billion YoY Profit Surge in 2023: Fertilizer sector profits are set to surge by Rs 36 billion year-on-year, with a projected 104% increase in Q4 2023 earnings to Rs 25 billion, driven by elevated retention prices. Despite flat quarter-on-quarter earnings due to lower Urea sales volume, full-year 2023 after-tax earnings are expected to reach Rs 63 billion, up 63% YoY, fueled by higher gross profit from increased prices and DAP sales. [ET]
- Pakistan Grants PSO Diesel Import Monopoly: Pakistan State Oil (PSO) has been granted exclusive rights to import high-speed diesel (HSD) to address supply and demand deficits, with the Oil and Gas Regulatory Authority (OGRA) tasked to create a framework. In Q1 of fiscal year 2023-24, PSO's market share in diesel and gasoline increased, reaching 55% and 47.9%, and maintaining a 37.43% share of total HSD storage capacity. [BR]
- PTCL with 50G-PON Fiber Trial: Pakistan Telecommunication Company Limited (PTCL) has completed the first trial of 50G-PON technology, a high-speed fiber-optic broadband solution delivering 50 Gbps per port. This collaboration with Huawei signals a milestone for next-gen broadband services in Pakistan, offering potential applications like holographic technologies, smart manufacturing, remote surgery, and high-performance gaming. [The News]
- SEP Extends Deadline for K-Electric Stake Acquisition: China's Shanghai Electric Power Company Limited (SEP) has extended its deadline to acquire a majority stake in K-Electric Limited (KEL) by 90 days. The extension, facilitated by brokerage house Arif Habib Limited (AHL), is attributed to delays in regulatory approvals from both China and Pakistan for the acquisition of 66.40 percent of KEL's shares for $1.77 billion, originally agreed upon in 2016. [The News]
- OGDCL Boosts Production with Sono-9 Oil Well Success: Oil and Gas Development Company Limited (OGDCL) has successfully tested and completed the Sono-9 oil well in Sindh province, boosting production capacity. Located in Hyderabad district, the well, drilled to a depth of 2,350 meters, is the first to be directly completed with electrical submersible pump (ESP) technology, enhancing oil flow from the reservoir. [The News]
- USAID Signs MoU with Pakistani Firms for $53M Investment: The United States Agency for International Development (USAID) signed a memorandum of understanding (MoU) with 3 Pakistani firms – Shams Power, Walee Technologies, and Al Hadeed – during the "Investment and Climate Summit." The MoU, under USAID's Investment Promotion Activity (IPA), aims to generate $53 million in foreign direct investment within the next 9-12 months. [BR]
- APTMA Urges Swift Electricity Tariff Cut: APTMA has urged the government to quickly implement a reduction in industrial electricity tariff from cents 14 to cents 9 per unit, a proposal approved by SIFC, citing it as essential for enhancing Pakistan's global competitiveness by addressing cost structures in energy-intensive sectors. [BR] [BR] [ET] [The News]
- Afghan-Pakistan Trade Woes: Losses Mount Amid Bilateral Tensions - Afghan and Pakistani transporters are reporting significant financial losses due to political tensions and the repeated suspension of bilateral trade. Since January 13, when Pakistan refused entry to Afghan drivers lacking valid travel documents, over 1,000 vehicles, with or without goods, have been stranded on both sides of the border, according to statements made to Dawn on Monday. [Dawn]
AGRI UPDATES & PAKISTAN POLICY
- Govt Seeks G2G Deal with Saudi, UAE for Remittance Boost: The government is working towards a government-to-government (G2G) agreement with Saudi Arabia and the UAE for upfront foreign currency repatriation against future workers' remittances. The Finance Ministry is expected to provide updates during a meeting on January 24, recognizing the importance of remittances from Pakistani workers in both countries. [BR]
- $250M for CRISP program from World Bank: The Finance Minister met with the World Bank Country Director for Pakistan to finalize financing for two operations: an additional US$250 million for the ongoing "Crisis-Resilient Social Protection Program (CRISP)" implemented by the Benazir Income Support Program. [BR]
- Punjab Governor Promulgates Agricultural Authority Amendment: Punjab Governor Muhammad Balighur Rehman has re-promulgated the Punjab Agricultural Marketing Regulatory Authority Amendment Ordinance 2023 for the third time. This step, mandated by the ECP, aims to terminate the services of institution heads appointed on a political basis, including the removal of heads of agricultural market committees appointed politically. [BR]
- FBR Restructuring for Higher Tax Revenue Targets: Proposals for the restructuring of the Federal Board of Revenue (FBR) will be presented in the upcoming cabinet meeting, aiming to increase tax revenue to 12.7% of GDP by FY25 and 20% by FY27. The proposals include forming a Federal Policy Board, Oversight Boards for Customs and Inland Revenue, and a Tax Policy Office within the Revenue Division. Prime Minister Anwaarul Haq Kakar has called a federal cabinet meeting to approve the restructuring of the Federal Board of Revenue (FBR), resulting in the separation of the Inland Revenue Service (IRS) and the Customs Group. [BR] [ET]
- Pakistan & Iran Restore Full Diplomatic Ties, Ambassadors to Return: Pakistan and Iran have decided to fully restore diplomatic ties, including the return of ambassadors to their capitals by Friday, and a visit from Iranian Foreign Minister Hossein Amir Abdollahian to Islamabad. The announcement follows a telephonic conversation between caretaker Foreign Minister Jalil Abbas Jilani and his Iranian counterpart on January 19, 2024. [BR]
- ECP Finalizes Candidates for Feb 8 Elections Amid Rising Rival Clashes: The Election Commission of Pakistan (ECP) has finalized the list of candidates for the February 8 general elections. Despite the issued code of conduct, verbal clashes among rivals are increasing. Notable figures like Imran Khan, Chaudhry Shujaat Hussain, and Asfandyar Wali are not participating, but fierce competition is expected in various constituencies. [The News]
- Bilawal: PPP Confident, Takes Swipe at PML-N's Election Hopes - PPP chairman Bilawal Bhutto Zardari expressed confidence that the PML-N won't win upcoming elections, citing people's support for PPP. He made a satirical comment on the former PM's ambitions, stating they would fail due to insufficient public backing. Bilawal also emphasized PPP's belief in free healthcare for all as a contributor to a prosperous society. [ET] [Dunya]
INTERNATIONAL – OVERVIEW & MARKET OUTLOOK
- EU Urges Two-State Solution in Israel-Palestine Talks: EU foreign ministers in Brussels urged Israel for a two-state solution with the Palestinians following the recent conflict in Gaza. Meetings with Israel's foreign minister and the Palestinian Authority's top diplomat emphasized the importance of addressing the Israeli-Palestinian conflict despite recent tensions. [BR]
- Chinese Banks Act to Support Yuan Amid Market Decline: China's major state-owned banks took measures to support the yuan on Monday by tightening liquidity in the offshore foreign exchange market and actively selling US dollars onshore. The move aimed to prevent the yuan from depreciating rapidly as China's A shares experienced a decline, with the Shanghai Composite index posting its largest one-day drop since April 2022, down 2.7%. [BR]
- Bullish Monday: S&P 500 Surges - The S&P 500 hit a new record high on Monday, extending a bull-market run into the new week. Boosted by gains in mega-cap and chip stocks, it surpassed Friday's record and reached an intraday high of 4,868.41 points, confirming a bull market trend since its October 2022 closing low. Investors remained attentive to corporate earnings and hints about potential interest-rate adjustments. [BR]
- 7.0-Magnitude Quake Injures 50 on China-Kyrgyzstan Border: At least fifty people were injured in a 7.0-magnitude earthquake along the China-Kyrgyzstan border. The quake occurred in China's Xinjiang region, west of the city of Aksu, with the epicenter located about 140 kilometers away. Authorities have dispatched teams to assess the situation, and around 800 people are on standby for potential disaster relief efforts. [BR]
- India's Market Cap Overtakes Hong Kong at $4.33 Trillion: India's stock market capitalization has exceeded Hong Kong's for the first time, reaching $4.33 trillion compared to Hong Kong's $4.29 trillion. India is now the fourth-largest equity market globally, driven by growth prospects, policy reforms, and increased investor interest, with its value surpassing $4 trillion on December 5, half of which occurred in the past four years. [BBG] [Mint]
- US Textile Industry Battles for Survival: “That garment industry largely had already gone overseas,” Halsey Cook (chief executive of Milliken, a 159-year-old manufacturer in Spartanburg, S.C) said. The surviving U.S. textile manufacturers have adjusted to the realities of free trade agreements, Mr. Cook said, but the huge growth in the use of de minimis “has just completely opened up and undermined that system”. - By Jordyn Holman [NYT]
- Oil Prices Rise 2% Amid Middle East, Ukraine Tensions: Oil prices rose 2% on Monday, reaching $79.73 for Brent crude and $74.93 for the front-month US West Texas Intermediate (WTI) crude. The increase was attributed to concerns about conflicts in the Middle East and Ukraine, along with extreme cold weather in North America impacting the oil supply. Bullish signals from the US stock market also indicated demand growth. [BR] [Dawn]
- Banks Seek 16.6% Interest on PIA Loans of Rs 281 over 5 years, Minister Proposes 10%. [ET]
- Govt Plans Rs 100 Billion Sukuk Auction to Diversify Debt Portfolio: with three-year and five-year papers with fixed and variable rates, plus a one-year Ijarah Sukuk for institutional and retail investors at the PSX. [The News]
