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Shares at PSX reverse trend after yesterday’s hammering

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Shares at PSX reverse trend after yesterday’s hammering

The benchmark KSE-100 index rose 448.88 points, or 1.17 per cent, to close at 38,791.09 points. It reached an intraday high of 38,945.97 points, up 603.76 points, or 1.57pc, around 3:28pm.

“The market was in the oversold territory after the sharp correction earlier in the week, so a pullback is not a major surprise,” said Intermarket Security’s Head of Equity Raza Jafri.

He said the market also received a boost from State Bank of Pakistan (SBP) Governor Jameel Ahmad’s assurance that opening of letters of credit (LCs) would be facilitated in a better manner.

“For the market to rise higher though, further clarity on politics and more comfort on the economy is a must,” Jafri added.

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Topline Securities Senior Manager Equity Mohammad Arbash attributed the index’s recovery to the SBP governor’s assurance of inflows and a stop to the rapid decline in foreign exchange reserves.

He added that the pressure caused by a sell-off by mutual fund managers and institutions also eased and a buying spree in the refinery and technology sectors at the lower level led to the index’s rise.

“Stocks showed a strong recovery in the earnings season on SBP chief’s affirmation over easing forex crisis in the coming days and institutional interest in oversold scrips,” commented Arif Habib Corporation’s Ahsan Mehanti.

He noted that mid-session pressure remained because of political uncertainty and a delay in the disbursement of a $1.1 billion loan by the World Bank. However, investor speculations over imminent inflows from the United Arab Emirates and Saudi Arabia for financial support played a catalyst role in the bullish close, he added.

Pakistan secured a lifeline of about $4bn from the UAE and Saudi Arabia last week to sail through the immediate challenge of a sovereign default amid rapidly shrinking foreign exchange reserves, massive flood damages and an overall economic slowdown.

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Two separate official announcements said the UAE pledged to roll over $2bn debt payable over the next two months and topped this with an additional $1bn support.

Separately, the Saudi Fund for Development signed an agreement in Islamabad to fund $1bn worth of oil imports on deferred payment.

A day earlier, the index plunged by 1,378.54 points, or 3.47pc, to close at 38,342.21 points, its lowest level since July 27, 2020.

Yesterday’s sell-off marked the highest one-day slide since June 24, 2022, according to Arif Habib Limited.

Analysts have attributed the index’s recent decline to the increasing political uncertainty as two provincial assemblies have been dissolved as part of the opposition’s strategy to force early general elections.

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Meanwhile, the country’s forex situation has worsened with the SBP’s reserves falling to $4.34 billion, the lowest since February 2014.

The country has been facing a serious dollar shortage, which is resulting in restricted imports of even food and industrial raw materials. The latest position of foreign exchange reserves reflects that the country doesn’t have sufficient dollars to cover even one month of average imports.

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Finance ministry cites higher inflation, external debt payments as risks

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Finance ministry cites higher inflation, external debt payments as risks

 The Ministry of Finance has again warned that Pakistan will continue facing multiple challenges mainly because of higher inflation and external debt repayments.

In its monthly economic update and outlook for May, the ministry, however, hoped that the inflation would peak at 34 percent to 36 per cent and start easing thanks to reduction in international commodity prices – thus absorbing the negative impact of currency depreciation.

The global commodity prices witnessed a 14 per cent reduction in the first quarter of 2023 and were roughly 30 per cent lower than their historic peak in June 2022 by March-end.

Moreover, the better crop outlook resulting from measures like Kissan Package and the recent reduction in POL prices would help achieve price stability.

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However, the continued rise in prices during May is due to flood damages, disruptions in supply chains, devaluation brought by the macro-economic imbalances and political uncertainty.

Pakistan’s economy experienced 0.29 per cent provisional GDP growth in the fiscal year 2022-23 on account of many challenges emanating from the uncertain external and domestic economic environment, the ministry noted.

“The challenges triggered CPI inflation to remain on a higher trajectory despite monetary tightening primarily due to the rupee depreciation. External payments also remained burdened due to lesser foreign exchange inflows.”

According to the ministry, tax collection by the Federal Board of Revenue (FBR) by 16.1 per cent during the July-April period but remained less than the target.

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NEPRA approves Rs1.60 hike in power tariff for April

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NEPRA approves Rs1.60 hike in power tariff for April

 The National Electric Power Regulatory Authority (NEPRA) on Wednesday approved an increase of Rs1.60 per unit in the electricity prices.

The price hike comes in shape of monthly Fuel Charges Adjustment (FCA) for April after the Central Power Purchasing Agency (CPPA) requested an increase of Rs2.01. However, the NEPRA ascertained an Rs.160 per unit upward adjustment.

All the consumers of various power distribution companies (Discos) except those falling in the lifeline category would be affected by the move.

Moreover, the latest price hike isn’t applicable to the consumers covered by K-electric, which supplies electricity to Karachi and some surrounding areas.

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Pakistan censures IMF for interfering in domestic affairs

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Pakistan censures IMF for interfering in domestic affairs

State Minister for Finance and Revenue Dr Aisha Ghaus Pasha on Wednesday censured the International Monetary Fund (IMF) over its “interference” in Pakistan’s internal matters, a day after the comments passed by a top official of the international lender.

She described terming IMF Mission Chief for Pakistan Nathan Porter’s statement — regarding the political situation in the country — “extraordinary”. Pakistan’s conduct was in line with the law, the state minister said.

However, Dr Pasha Dr Pasha confirmed that Prime Minister Shehbaz Sharif contacted IMF Managing Director Kristalina Georgieva and assured her that Pakistan would meet all the obligations.

When asked about Pakistan’s plan of action in case it fails to convince the fund before the expiry of the programme on June 30, she said the finance ministry was not sitting with its eyes closed.

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“There is always a Plan B but out priority is to revive the IMF programme,” Dr Pasha said, adding that the delay in agreement was not in the interests of both Pakistan and the IMF.

On Tuesday, Porter had said, “We take note of recent political developments, and while we do not comment on domestic politics, we do hope that a peaceful way forward is found in line with the Constitution and the rule of law.”

He also said that they were engaging with Pakistan to pave the way for the international lender’s board meeting and talks would focus on the budget for next financial year.

Porter’s statement also had a long list of demands including restoration of foreign exchange proper market functioning, keeping in mind programme goals in preparation of the upcoming budget, and adequate financing.

He said broadly speaking, “overcoming the present economic and financial challenges would require sustained policy efforts and reforms for Pakistan to regain strong and inclusive private-led growth.”

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