Pakistan Daily Economy Update - 23 December

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1. Dec . 23, 2016 KCCI - eBulletin Chinese Consortium top bidder The Chinese consortium has won bid to acquire 40% stake of Pakistan Stock Exchange at PKR 28 per share against reserve price of PKR 26 per share. The deal will generate an additional liquidity of PKR 9Bn ($ 85.5Mn). The Chinese Consortium comprises of three Chinese Exchanges, i.e., China Financial Futures Exchange Company Limited, Shanghai Stock Exchange, Shenzhen Stock Exchange and two local financial institutions; Pak China Investment Company Limited and HBL. Out of the total 40% stake, 30% shares allotted to Chinese consortium while 5% stake will be given to HBL and Pak China Investment Company each. The deadline for completion of bidding process is Dec. 27, 2016. The remaining 20% shares would be offered to the general public through Initial Public Offering (IPO) and this process would be completed in six months after completion of the bidding process. BR. Economic Indicators Date / Period Unit Value Change Daily USD-Interbank 22-Dec PKR 104.85 0.00% USD-Open MKT 22-Dec PKR 108.45 0.32% KSE-100 index FIPI 22-Dec 22-Dec Pts. $ Mn 46,700 -1.19 -0.62% NM** Crude (FE'17) 22-Dec $/bbl 52.75 0.40% Gold (JA'16) 22-Dec $/oz 1,128 -0.27% Four new schemes to be part of CPEC Pakistan and China are set to make four new infrastructure schemes worth $ 8Bn part of the CPEC next week. The inclusion of the four schemes would increase the size of CPEC to nearly $ 54Bn and the total cost of the projects is over $ 8Bn out of which China is expected to give $ 5.5Bn loan. According to the Joint Cooperation Committee (JCC), ML-I Peshwar-Karachi railway line project would be also formally added into the CPEC framework. The JCC may also approve to include three projects of National Highway Authority (NHA) into the CPEC framework. These include $ 200Mn Khuzdar-Basima road project, Dera Ismail KhanZohb project of western route worth $ 800Mn and a missing section of Thakot-Havelian of the eastern route. Tribune. Gold (10g) Local 22-Dec PKR 43,114 1.51% Silver (JA'17) 22-Dec $/oz 15.78 -1.08% Cotton(KHI)-40 kg 22-Dec PKR 6,843 0.00% Kibor-6M 22-Dec % 6.15% 0.00% Forex Reserves 16-Dec $ Bn 23.13 -0.70% Governments end bickering ahead of CPEC Beijing meeting The federal and provincial govts have decided to take up the case of Pakistan jointly and effectively during the forthcoming meeting of Joint Co-ordination Committee (JCC) on CPEC scheduled for Dec. 29, 2016 in Beijing. In this regard, Ministers, senior officials and experts from both countries would review progress on the ongoing projects under CPEC framework on this occasion. Furthermore, focus of the meeting would be on industrial investment co-operation and new transportation projects as well as the next phase of Karakoram Highway. BR. Remittances Jul-Nov 16 $ Bn 7.87 -2.50% Exports* Jul-Nov 16 $ Bn 8.19 -3.93% Imports* Jul-Nov 16 $ Bn 19.96 8.83% Trade Balance* Jul-Nov 16 $ Bn -11.78 -19.90% Current Account Avg. CPI-FY17* Jul-Nov 16 Jul-Nov 16 $ Mn % -2,601 3.92 -90.97% KE management told to improve supply, cut tariff Sindh CM while speaking to a delegation of the new KE management led by its vice president has asked the new management of K-Electric to upgrade its supply, transmission and distribution system so that smooth power supply could be made to the citizens of Karachi. KE vice president Xia Meixing said that he had started the process of taking over the KE for which his company had worked out an incentive plan in power tariff and would work together with the government for community development. Dawn. Duty/tax collection: banks to stay open on Dec. 31, 2016 In order to facilitate collection of govt. duties/taxes, following the directives of the State Bank of Pakistan (SBP), the concerned branches of commercial banks will remain open on Dec. 31, 2016, till such time that is necessary to facilitate special clearing for govt. transactions. BR. SBP issues guidelines on suspicious transactions SBP has issued a set of guidelines for the financial institutions, which would help them identify possible suspicious transactions regarding money laundering or financing of terrorism. The SBP also directed the banks to check transactions involving foreign currency exchanges or deposits that are followed within a short time by wire transfers to locations of specific concern. The News. IRSA reduces releases from Mangla, Tarbela Indus River System Authority (IRSA) has massively reduced water releases from Tarbela and Mangla reservoirs due to forthcoming annual canal closure to be commenced from Dec. 26, 2016 for one month. Tarbela releases have been reduced to 20,000 cusecs from 30,000 cusecs and Mangla would be reduced to 10,000 cusecs from 30,000 cusecs. With this reduction, hydel electricity generation would massively be reduced for one month and govt. will have to rely on thermal generation. Water and Power Ministry has sufficient stocks of furnace oil in addition to RLNG aimed at running all thermal power plants at maximum capacity. BR. Iran offers 200 buses to help resolve Karachi transport crisis The Sindh transport minister, while speaking to Consul General of Iran has appreciated Iran for offering assistance in various transport-related projects and offering to provide 200 modern buses to improve public transport in the city. He further said that currently various development projects worth billions of rupees, including the Green Line and the Edhi Line buses, formerly known as Orange Line, were being implemented and after the completion of these projects people would feel a considerable improvement in the transport system. Dawn. Profit repatriation surpasses FDI by 28% The repatriation of foreign exchange in the form of profits and dividends on FDI surpassed the net FDI inflow by $131Mn (28%) in 5MFY17. SBP data shows that the outflow in the form of profits and dividends on FDI was $ 591Mn and country received a total FDI of $ 460Mn during the same five months. Dawn. Lahore Orange Line set to get exemption in taxes, duties The govt. is all set to grant PKR 20Bn exemption in duties and taxes, including withholding tax, on the equipment import of Lahore Orange Line mass transit project under CPEC. Quetta Mass Transit Project sponsored by Balochistan and Karachi Circular Railway (KCR) project sponsored by the Sindh govt. has also been agreed upon with the Chinese side for implementation through CPEC under Chinese financing. Grant of exemptions from withholding income tax beyond 6% of E&M contract price and taxes and duties on equipment import to be furnished for Quetta Mass Transit Project and KCR may be considered with the Chinese side in the forthcoming JCC meeting. BR. List of Indicators WoW YoY Nov-16 Discount Rate % 5.75 Sources: KCCI Research, PMEX , NCCPL, KSE, SBP, PBS* ** Not Meaningful WoW= week on week; YoY=Year on Year Major Currencies 175 165 155 145 GBP, 22-Dec-16, 129.1 135 125 115 EUR, 22-Dec-16, 109.3 USD, 22-Dec-16, 104.7 105 95 85 75 Dec-15 Mar-16 USD GBP Jun-16 EUR Sep-16 Dec-16 Source: KCCI Research ; Oanda.com Quote of the Day “If you want to know the real reasons behind that attitude, think of the thought behind that attitude” Ernest Agyemang Yeboah Chart of the Day Remittances Received from Top 10 Countries by Pakistan Saudi Arabia U.A.E. USA U.K. Kuwait Oman Bahrain Qatar Australia Canada 296 323 324 319 196 160 147 149 75 82 65 73 1,097 981 1,061 913 1,833 1,778 2,394 2,259 0 500 1,000 1,500 2,000 2,500 3,000 Reserves dip $ 163Mn Pakistan’s total liquid foreign exchange reserves amounted to $ 23.1Bn on 16th Dec’16, down $ 163Mn (0.7%) from a week 5MFY16 5MFY17 Source: KCCI Research, SBP Value in $ Mn ago. SBP’s reserves also decreased $ 133Mn to $ 18.19Bn. The decrease in SBP’s reserves was due to external debt servicing Disclaimer and other official payments. Net foreign exchange reserves held by commercial banks amounted to $ 4.9Bn on 9th Dec‘16, registering a nominal decrease over the preceding week. Dawn. This report has been prepared by KCCI Research & Development Cell. The information contained herein have been compiled or arrived at based upon information obtained from sources believed to be reliable and in good faith. Such information has not been independently verified. Outlook: Saudi Arabia projects $ 53Bn deficit in 2017 Saudi Arabia has projected a 2017 budget deficit of about $ 53Bn and a lower than expected shortfall for this year after govt. icon represents the sole viewpoint of the KCCI R&D Cell, and is stated to enrich the readers' cost-cutting in response to lower oil prices. Expenses next year will reach 890Bn riyals ($ 237Bn) against revenues of 692Bn understanding of the news item. The R&D Dept. bears no responsibility for its correctness or accuracy. Contact: res@kcci.com.pk riyals ($ 184Bn). Whereas, year’s deficit will be 297Bn riyals ($ 79Bn), down 8.9% from 2016’s budget forecast. Tribune.