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The market will likely be influenced by the Federal Budget 20-21, which largely unshot the expectations of the business community. The tax collection target for the FBR has been set at an ambition PKR 4.9tn with the introduction of any new taxation measures. Sector-wise relief also remained relatively limited. Therefore, the overall impact of the budget will likely remain neutral towards the market’s performance.

Coronavirus cases have been spiking with Asad Umer expecting cases to cross 1.2mn, inciting potential fears of a partial lockdown. Moreover, a 2nd wave of infection on the global landscape is also reflected in the international crude prices, which have fallen down to USD 35/bbl.

Market View: The KSE100 ended the earlier week up by 261 points, to close at 34,611 points. The emergence of the 2nd wave of the coronavirus coupled with Asad Umer’s commects about Pakistani cases peaking at high levels may compel investor to remain cautious on building new positions.

Commodities:

Brent oil (USD/bbl): 37.91 (-2.12% D/D)

WTI oil (USD/bbl): 37.91 (-3.71% D/D) Gold (USD/oz): 1,728.20 (-0.274% D/D)

National News

Budgets 2020-21: Budget aims for trillion rupee tax revenue hike with ‘no new taxes’

With Covid-19 as the context and the International Monetary Fund (IMF) programme as the yardstick, the government unveiled a budget built around austerity and belt-tightening and increasing tax revenue by over 27 per cent to Rs4.963 trillion, but without any discernible revenue plan behind it.

https://www.dawn.com/news/1563189/budget-2020-21-budget-aims-for-trillion-rupee-tax-revenue-hike-with-no-new-taxes

Govt admits tax target unachievable

Adviser to the Prime Minister on Finance Dr Hafeez Shaikh has advised the provinces not to make their budgets on the basis of proposed Rs4.963 trillion tax collection target, admitting that he is not confident if the target can be achieved. “I cannot say with confidence that it [Rs4.963 trillion target] can be achieved but we should make efforts,” said the de facto finance minister at the annual post budget press conference on Saturday.

https://tribune.com.pk/story/2242282/2-govt-admits-tax-target-unachievable/

POL supply crisis exposes PSO to losses of Rs17 bn

The state owned oil marketing company (OMC) — Pakistan State Oil (PSO) — suffered the loss of Rs16-17 billion in the ongoing POL availability crisis in the country because of refusal by other oil marketing company to share the losses. The OMCs denied bringing the POL products in the market to avoid the inventory losses when ECC refused to maintain the POL prices and instead reduce the price triggering the availability crisis in the country.

https://www.thenews.com.pk/print/672949-pol-supply-crisis-exposes-pso-to-losses-of-rs17-bn

Real estate, construction sector wins relief

The real estate and construction industry remained the main focus of the Pakistan Tehreek-e-Insaf (PTI) government in the budget for FY21 as it reduced taxes and allocated funds for giving a boost to construction and allied industries in an attempt to revive economic growth and create job opportunities.

https://tribune.com.pk/story/2241596/2-real-estate-construction-sector-wins-relief/

Govt to cough up Rs2.9tr on debt payments next year

Under a Godzilla-like debt burden, Pakistan will spend around Rs2.946 trillion of public money on interest payments and retiring principal amounts during the upcoming fiscal year of 2020/21, official documents revealed.

https://www.thenews.com.pk/print/672108-govt-to-cough-up-rs2-9tr-on-debt-payments-next-year

Remittances recover in May

Against the general fear that remittances would fall due to the pandemic, inflows from overseas Pakistanis instead witnessed an increase of 4.64 per cent month-on-month in May. Inflows in May rose to $1.873 billion, as against $1.790bn in April, registering an increase of $83 million in a month.

https://www.dawn.com/news/1563174/remittances-recover-in-may

Refineries call for revising petroleum policy

Refineries want the government to revise downstream petroleum policy, bailout package and fortnightly pricing to avoid severity of petroleum products shortage in future. Due to the Covid-19 pandemic, the total inventory losses of the refineries sector in Pakistan surged to Rs34 billion in only March and April 2020. To put this in context, the combined financial losses of the four refineries in the country were Rs47 billion for the last two financial years ie; 2018-2019 and 2019-2020.

https://tribune.com.pk/story/2242140/2-refineries-call-revising-petroleum-policy/

International News

Oil prices drop as rising U.S. coronavirus cases stoke fears of weak fuel demand

Oil prices fell on Monday, with U.S. oil dropping more than 2%, as a spike in new coronavirus cases in the United States raised concerns over a second wave of the virus which would weigh on the pace of fuel demand recovery. Brent crude futures fell 66 cents, or 1.7%, at $38.07 a barrel as of 0016 GMT, while U.S. West Texas Intermediate (WTI) crude futures fell 81 cents, or 2.2%, to $35.45 a barrel.

https://www.reuters.com/article/us-global-oil/oil-prices-drop-as-rising-u-s-coronavirus-cases-stoke-fears-of-weak-fuel-demand-idUSKBN23M01G
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Daily news: 15th-June-2020

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