Daily news:18th May 2020

Good Morning

The SPI inflation during the week that ended May 14, 2020 against May 16, 2019 – Year-on-Year basis – recorded an increase of 9.26 percent for combined income groups, ie, from 116.52 points to 127.31 points, the Pakistan Bureau of Statistic (PBS) revealed. The Monetary Policy Committee (MPC) of State Bank of Pakistan (SBP) on Friday reduced the policy rate by 100 basis points (bps) to 8 percent on positive inflation outlook, the fourth time it has cut rates since the coronavirus pandemic hit two months ago. In other words, this is the fourth and cumulatively 525 bps cut in key policy rate. With current reduction, the policy rate has reached lowest level of 18 months as previously it was 8.5 percent in October 2018.

Market View: The KSE100 Index gained 203.43 points during Friday’s trading session, ending the week at 34,008.33 points. The 100bps interest rate cut seen following the market on Friday, while within expectations, is likely to lend support to the market today.

Commodities:

Brent oil (USD/bbl): 33.59 (+3.35% D/D)
Crude oil (USD/bbl): 30.70 (+4.32% D/D)
Gold (USD/oz): 1,771.10 (+0.8427% D/D)

National News

SPI inflation up 9.26pc YoY

The SPI inflation during the week that ended May 14, 2020 against May 16, 2019 – Year-on-Year basis – recorded an increase of 9.26 percent for combined income groups, ie, from 116.52 points to 127.31 points, the Pakistan Bureau of Statistic (PBS) revealed.

https://epaper.brecorder.com/2020/05/16/1-page/837304-news.html

Policy rate cut to 8pc on positive inflation outlook

The Monetary Policy Committee (MPC) of State Bank of Pakistan (SBP) on Friday reduced the policy rate by 100 basis points (bps) to 8 percent on positive inflation outlook, the fourth time it has cut rates since the coronavirus pandemic hit two months ago. In other words, this is the fourth and cumulatively 525 bps cut in key policy rate. With current reduction, the policy rate has reached lowest level of 18 months as previously it was 8.5 percent in October 2018.

https://epaper.brecorder.com/2020/05/16/1-page/837301-news.html

FPCCI terms 1pc policy rate reduction unfavorable for economy

President of Federation of Pakistan Chambers of Commerce and Industry (FPCCI), Mian Anjum Nisar while showing serious reaction on SBP reduction in interest rate by one percent said that despite clear message by all segments of economy particularly trade and industry the SBP reduction of one percent policy rate is surprising and unfavorable to bleeding economy.

https://epaper.brecorder.com/2020/05/17/2-page/837426-news.html

Bill to amend Cos Act being moved: FATF-related concerns to be addressed

The government is introducing a new bill to amend Companies Act, 2017, to address the Financial Action Taskforce (FATF)-related concerns specifically money laundering, countering terrorist financing, and information about beneficial ownership of companies.

https://epaper.brecorder.com/2020/05/17/1-page/837411-news.html

Fertilizer industry seeks consultation on subsidy to farmers

Fertilizer industry has asked the Ministry of Industries and Production to convene a meeting for consultation on release of recently approved subsidy to farmers.

https://epaper.brecorder.com/2020/05/17/1-page/837419-news.html

Provinces, PASSCO procure 3.422m tons of wheat so far

A meeting of the Economic Coordination Committee (ECC) of the Cabinet has been informed by the Ministry of National Food Security and Research that provinces and the PASSCO have so far procured only 3.422 million tons wheat against or 41.9 percent of the target of 8.25 million set for the fiscal year 2020.

https://epaper.brecorder.com/2020/05/17/8-page/837477-news.html

ECC allocates Rs75bn for labourers, daily wage earners

The Economic Coordination Committee (ECC) of the cabinet on Friday set aside Rs75 billion for distribution among labourers and daily wage earners through the Benazir Income Support Programme (BISP).

https://www.dawn.com/news/1557433/ecc-allocates-rs75bn-for-labourers-daily-wage-earners

Proposed development budget discussed

Minister for Planning and Development Asad Umar Saturday said that the government will ensure provision of funds for projects in Karachi.

https://epaper.brecorder.com/2020/05/17/8-page/837478-news.html

Innovation fund being set up for small units

The government is working to set up Pakistan Innovation Fund in an effort to support micro, small and medium-sized enterprises (MSME) for upgrading different segments of farming, fishing, livestock, poultry, dairy and agro-based industries.

https://tribune.com.pk/story/2222370/2-innovation-fund-set-small-units/

PIA resumes partial domestic operations

PIA Domestic Flight Operation resumed partially on 16 May 2020. The first domestic flight PK 8304 took off from Jinnah International Airport for Lahore on Saturday afternoon at 1:30 pm carrying 84 passengers while the return flight PK 8305 took off from Allama Iqbal International Airport at 4:30 pm for Karachi with 100 passengers.

https://epaper.brecorder.com/2020/05/17/1-page/837416-news.html

Power sector under extreme financial pressure: Nepra

National Electric Power Regulatory Authority (Nepra) has accused the Power Division of controlling Distribution Companies (Discos), which use it as a shield, which leads to competition and opening of the sector.

https://epaper.brecorder.com/2020/05/16/11-page/837378-news.html

Nepra raises question marks over KE’s performance

National Electric Power Regulatory Authority (Nepra) has raised question marks on the performance of K-Electric, saying that power utility kept its power plant “intentionally underutilized and undertook unauthorized load shedding.”

https://epaper.brecorder.com/2020/05/16/1-page/837300-news.html

PD-Ogra dispute lands in ECC

The dispute between Petroleum Division and Oil and Gas Regulatory Authority (Ogra) on a proposal meant to recover RLNG’s UFG from RLNG consumers in a staggered manner with the least impact on the current RLNG sale price has landed in the Economic Coordination Committee of the cabinet, sources close to Prime Minister’s Special Assistant to Petroleum told Business Recorder.

https://epaper.brecorder.com/2020/05/17/1-page/837410-news.html

Reduction in CNG prices likely after decline in RLNG prices

Compressed Natural Gas (CNG) Association has yet to announce a reduction in the prices of CNG following significant decline in the prices of re-gasified liquefied natural gas (RLNG) for May.

https://epaper.brecorder.com/2020/05/17/7-page/837465-news.html

PSO defaults on payments to LNG supplier, local refineries

The country’s public sector company – Pakistan State Oil (PSO) has recently defaulted on payments to LNG supplier- Gunvor – and payments on various POL products to some local refineries of PARCO (Pak-Arab Refinery Company), National Refinery Limited (NRL) and ENAR due to severe liquidity crisis that has touched new heights due to non-payment of dues of over Rs100 billion that Sui Northern has failed to pay to the entity against the LNG supply.

https://www.thenews.com.pk/print/659014-pso-defaults-on-payments-to-lng-supplier-local-refineries

Rules amended to facilitate Sukuk-II issuance

Power Division has amended Pakistan Energy Sukuk Rules, 2019 aimed at facilitating issuance of Rs 200 Sukuk-II through Pakistan Stock Exchange (PSE).

https://epaper.brecorder.com/2020/05/16/1-page/837296-news.html

Oil refineries, firms told to boost supplies

Amid tight demand-supply conditions of high-speed diesel during the wheat harvesting season, the government has asked the oil marketing companies and refineries to beef up supplies of major transport fuels ahead of Eidul Fitr.

https://www.dawn.com/news/1557910/oil-refineries-firms-told-to-boost-supplies

Imports of auto parts, accessories jump

The import of completely and semi knocked down (CKD/SKD) kits for locally assembled cars has risen substantially in the last two months amid shutdown of assembling units due to coronavirus.

https://www.dawn.com/news/1557706/imports-of-auto-parts-accessories-jump

Fuel imports fall by 55pc in April

Petroleum imports plunged by nearly 55 per cent in April owing to a steep reduction in domestic demand as a result of lockdown across the country.

https://www.dawn.com/news/1557462/fuel-imports-fall-by-55pc-in-april

‘Tax relief’ budget being prepared

On the directions of the Advisor to the Prime Minister on Finance and Revenue, Dr Abdul Hafeez Shaikh, the Federal Board of Revenue (FBR) is preparing a “tax relief” budget 2020-2021 for the business community and the general masses with a focus on greater relief measures rather than new taxation measures. Sources told Business Recorder that the government was committed to announcing a relief-focused budget.

https://epaper.brecorder.com/2020/05/18/1-page/837492-news.html

PAMA-PAAPAM ‘war’ intensifies

The fight between Pakistan Automotive Manufacturers Association (PAMA) and Pakistan Association of Auto Parts and Accessories Manufacturers (PAAPAM) – two premier bodies of auto sector – has intensified on facts, figures and impact of Statuary Regulatory Orders (SROs).

https://epaper.brecorder.com/2020/05/16/12-page/837385-news.html

FBR mulls withholding tax on construction, agri vehicles

The Federal Board of Revenue (FBR) is likely to expand the scope of withholding tax to cover vehicles used in agriculture and construction sectors in a bid to broaden tax base across the informal economy, sources said on Saturday.

https://www.thenews.com.pk/print/659674-fbr-mulls-withholding-tax-on-construction-agri-vehicles

Govt to finalise growth estimate for FY2020 by next week

The government is expected to finalise the revised growth estimate for the outgoing fiscal year by next week – information that is much sought in the midst of the corona tumult that has upended almost all the economic sectors for the first time in history, people familiar with the matter said on Friday.

https://www.thenews.com.pk/print/659429-govt-to-finalise-growth-estimate-for-fy2020-by-next-week

ADB to support provincial projects on regional connectivity

The Asian Development Bank (ADB) will provide project preparation support for schemes aimed at upgrading roads in and improving regional connectivity among Punjab, Sindh and Khyber Pakhtunkhwa.https://www.dawn.com/news/1557683/adb-to-support-provincial-projects-on-regional-connectivity

International News

Global economic losses may reach $8.8 trillion

The global economy could suffer losses in the range of $5.8 trillion to $8.8 trillion – equivalent to 6.4% to 9.7% of global gross domestic product (GDP) – as a result of the novel coronavirus (Covid-19) pandemic, says a new report released by the Asian Development Bank (ADB) on Friday.

https://tribune.com.pk/story/2222365/2-global-economic-losses-may-reach-8-8-trillion/

Asia stocks little changed; Fed Chair Powell assesses prospects of U.S. economic recovery

Stocks in Asia were little changed in Monday morning trade as U.S. Federal Reserve Chairman Jerome Powell said the economy stateside may need a coronavirus vaccine to fully recover.

https://www.cnbc.com/2020/05/18/asia-markets-jerome-powell-coronavirus-currencies-in-focus.html

Oil prices rise more than $1 ahead of WTI June contract expiry

Oil prices jumped by more than $1 a barrel on Monday to their highest in more than a month, supported by ongoing output cuts and signs of gradual recovery in fuel demand as more countries ease curbs imposed to stop the coronavirus pandemic spreading.

https://www.cnbc.com/2020/05/18/oil-markets-crude-output-coronavirus-in-focus.html

Gold jumps to highest since Oct 2012 on U.S.-China worries

Gold rose on Monday to its highest since October 2012 as worries regarding the souring U.S.-China relations and bleak U.S. economic data underpinned the safe-haven metal.

https://www.cnbc.com/2020/05/18/gold-markets-us-china-tensions-economic-data-in-focus.html

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