Investors Celebrate Pakistan's Continuing Economic Recovery

[Riaz Haq]

Pakistan's benchmark KSE-100 index hit an all-time high after the announcement of the $7 billion IMF bailout deal today. Economic indicators such as inflation, exports and remittances are also showing significant improvement as well. Speaking to reporters after the IMF deal,  the Fund Managing Director  Kristalina Georgieva acknowledged progress made by Pakistan. She said  "The economy is on the sound path. Growth is up and inflation is down". The KSE-100 index rose in early trade to a record high of 82,905.73 points, before giving up those gains later in the day to close 0.7% down at 81,657. It still represents an annual gain of nearly 100%. 

Pakistani Stock Market Outperforms Asian Peers. Source: Bloomberg

Pakistan rupee has remained essentially stable at around Rs. 277 to a US dollar over the last year. Inflation has come down from 37% last year to less than 10% this year.  Exports have climbed 10.54% ($2.921 billion) to $30.645 billion during the fiscal year 2023-24 compared to $27.724 billion in the corresponding period of 2022-23. Overseas workers' remittances have surged 44% to $5.94 billion in the first two months (July-August) of the current fiscal year 2024-25, compared to the same period last year.  Current account deficit has declined to $681 million in FY24 from $3.275 billion in FY23. The budget deficit for the 2023–2024 fiscal year has been reduced to 6.8% of GDP from 7.7% in the previous year. 

The stock market gains are driven primarily by the increasing profitability of the firms making up the index, in addition to improvement in macroeconomic indicators. The companies listed on Pakistan’s KSE-100 Index have reported their highest-ever earnings of Rs1.7 trillion in FY24, marking a 25% year-on-year increase from Rs1.3 trillion in FY23. In US dollar terms, profits after tax (PAT) rose 10% to $5.8 billion during the same period, according to data compiled by brokerage firm Topline Securities.  Dividend payouts soared 30% as banking, fertilizer, and cement sectors led growth, according to media reports. 

Pakistan has a long tough road ahead to carry out the reforms promised to the IMF in the latest bailout deal. Renegotiating unsustainable IPP (Independent Power Producers) contracts and carrying out long-delayed  privatization of state-owned enterprises to reduce major drain on the taxpayers will not be easy, Boosting tax collection is not easy either. Offering incentives for savings, investments and exports while reducing budget deficits is a difficult feat. It will take a lot of fortitude, finesse and political will to get the results to improve the economy. Pakistani leaders' biggest challenge is to find a way to grow the economy to create enough jobs for the country's growing working age population. Failure to do so could cause major social unrest in the nuclear-armed country of 240 million people. 

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[Riaz Haq]

Arif Habib Limited
@ArifHabibLtd
*Trade deficit decreased by 26% YoY to USD 1.6bn during Oct’24*

During Oct’24, exports stood at USD 3.0bn (+11% YoY | +5% MoM). Imports during the month remained at USD 4.6bn (-6% YoY | -1% MoM).

During 4MFY25, trade deficit also decreased by 4% YoY to USD 7.1bn.

https://x.com/ArifHabibLtd/status/1857441100337664363

[Riaz Haq]

Arif Habib Limited
@ArifHabibLtd
As of Sep’24, Pakistan's Debt-to-GDP ratio has dropped to 65.7%, marking its lowest level since Jun’18. The Domestic Debt-to-GDP ratio is at 43.1%, while the External Debt-to-GDP ratio stands at 22.7%.

https://x.com/ArifHabibLtd/status/1856013052644061281

[Riaz Haq]

Pakistan Stock Exchange surpasses 93,000 points, signalling economic optimism - Dailynewsegypt


https://www.dailynewsegypt.com/2024/11/14/pakistan-stock-exchange-s...

The Pakistan Stock Exchange (PSX) 100 Index has crossed the 93,000-point mark, marking a new milestone for the country’s economic prospects. The surge in the index reflects growing investor confidence and a positive outlook for Pakistan’s economic future.

The PSX 100 Index crossing the 93,000-point mark represents a new chapter of economic optimism for Pakistan, reflecting investor confidence and resilience.

This historic milestone indicates that Pakistan is on an upward trajectory for economic stability and growth, inspiring trust among local and international investors.

“This historic milestone indicates that Pakistan is on an upward trajectory for economic stability and growth, inspiring trust among local and international investors,” said the Pakistan Stock Exchange in a statement, highlighting the significance of the milestone.

With the PSX reaching record highs, Pakistan is attracting foreign investment, strengthening its capital markets, and setting the stage for sustained economic growth.

The impressive rise in the PSX showcases Pakistan’s untapped economic potential, underscoring an era of modernization and innovation in key industries.

As Pakistan’s stock market booms, sectors such as technology, banking, and manufacturing are benefiting, creating opportunities and employment across the country.

The record-breaking performance of the Pakistan Stock Exchange aligns with the government’s economic reforms, affirming that structural improvements are fostering a stable, investor-friendly environment.

“The impressive rise in the PSX showcases Pakistan’s untapped economic potential, underscoring an era of modernization and innovation in key industries,” said the Pakistan Stock Exchange statement. “This reflects the government’s commitment to creating a favourable environment for business and investment.”

By reaching this historic peak, Pakistan is proving itself to be a promising frontier market, drawing interest from institutional investors worldwide.

The bullish PSX trend reflects growing investor confidence in Pakistan’s infrastructure, energy, and technology sectors, all of which are set to drive future economic expansion.

“By reaching this historic peak, Pakistan is proving itself as a promising frontier market, drawing interest from institutional investors worldwide,” said the Pakistan Stock Exchange.

The PSX’s performance highlights Pakistan’s transformation into a competitive and resilient economy ready to seize new opportunities on the global stage.

With the stock market on an upward trend, Pakistan is better positioned to finance mega-projects in infrastructure and energy, key drivers of sustainable economic growth.

The PSX symbolizes Pakistan’s commitment to reform, attracting investment, and laying the groundwork for a vibrant economic future.

“The PSX symbolizes Pakistan’s commitment to reform, attracting investment, and laying the groundwork for a vibrant economic future,” said the statement.

The continued strength of the Pakistan Stock Exchange is expected to encourage further investment and drive economic growth, demonstrating the country’s potential for a strong and prosperous future.

[Riaz Haq]

IT exports surge to $1.2bn in July-Oct - Business - DAWN.COM


https://www.dawn.com/news/1873376

KARACHI: Despite internet disruptions and firewall issues, Pakistan’s IT exports rose 35 per cent to $1.21bn during July-October 2024-25.

Nasheed Malik of Topline Securities said exports have risen due to IT export companies’ growing client base globally, especially in the Gulf Cooperation Council (GCC) region, relaxation in the permissible retention limit increasing it from 35pc to 50pc in the Exporters’ Specialised Foreign Curr­ency Accounts, and exch­ange rate stability encouraged IT exporters to bring a higher portion of profits back to Pakistan.

IT exports surged 39pc year-on-year and 13pc month-on-month to $330m in October.

These monthly IT exports in October 2024 are higher than last 12-month average of $287mn. This is the 13th consecutive month of YoY IT export growth, starting from October 2023, he said.

He said the MoM increase in IT exports is due to a higher number of working days in October (23) compared to September (20). Export proceeds per day were recorded at $14.3mn for October 2024 versus $14.6mn in September 2024.

Pakistani IT companies are actively engaged with global clients. He added that leading IT companies recently attended Oslo Innovation Week 2024 and the Pak-US Tech Invest­ment Conference.

According to a Pakistan Software Houses Asso­ciation (P@SHA) survey, 62pc of IT companies maintain specialised foreign currency accounts.

Nasheed said a major development in FY25 was SBP adding a new category of Equity Investment Abroad (EIA), specifically for export-oriented IT companies. IT exporters can now acquire interest (shareholding) in entities abroad utilising up to 50pc proceeds from specialised foreign currency accounts.

[Riaz Haq]

Pakistan's textile exports climb 10% to $6.146 billion in first 4 months of FY24-25

https://arynews.tv/pakistans-textile-export-climbs-to-6-146-billion/


ISLAMABAD: Textile exports witnessed an increase of 10.44 percent during the first four months of the current financial year (2024-25) as compared to the corresponding period of last year, Pakistan Bureau of Statistics (PBS) reported.

The textile exports from the country were recorded at US $ 6,146.105 million during July-October (2024-25) against the exports of US $ 5,565.058 million during July-October (2023-24).

The textile commodities that contributed in trade growth included cotton cloth the export of which increased by 5.25 percent to $ 679.427 million from $ 645.535 million while the export of knitwear surged by 18.69 percent to $ 1,759.991 million from $ 1,482.862 million.

The other commodities that witnessed growth in trade included bed wear, the export of which rose by 13.17 percent to $ 1,069.690 million from $ 945.181 million, towels by 5.47 percent to $ 356.461 million from $ 337.987 million, tents, canvas, and tarpaulin up by 7.02 percent to $ 40.412 million this year compared to the exports of $ 37.763 million last year.

Similarly, the export of readymade garments grew by 25.40 percent to $ 1,358.890 million from $ 1,083.679 million, art, silk and synthetic textile rose by 12.26 percent to $ 131.614 million from $ 117,241 million, made up articles (excl. towels and bed wear) increased by 12.46 percent to $ 263.777 million from $ 234.555 million while the export of other textile materials surged by 7.48 percent to $ 252.630 million from $ 235.054 million.

The textile commodities that witnessed negative trade growth included cotton yarn, the exports of which declined by 45.49 percent, from $ 407.564 – million to $ 221.759 million whereas the export of raw cotton dipped by 100 percent from 23.346 million to zero export during the months under review.

Meanwhile, year-on-year basis, the textile exports witnessed an increase of 13.11 percent during October 2024 as compared to the same month of last year. The textile exports from the country during October 2024 were recorded at US $ 1,625.782 million against the exports of US $ 1,437.287 million in October 2023.

On a month-on-month basis, the textile exports from the country however witnessed a nominal decrease of 1.30 percent during October 2024 as compared to the exports of $ 1,604.856 million recorded in September 2024, according to the data.