Pakistan’s stocks gain 5% as political uncertainty surrounding new coalition government dissipates

This photo, taken on February 23, 2024, shows Pakistan Stock Exchange building in Karachi. (AN Photo)
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Updated 24 February 2024
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Pakistan’s stocks gain 5% as political uncertainty surrounding new coalition government dissipates

  • The IMF statement expressing its willingness to work with the next government generated positive market sentiment
  • The KSE100 index gained about 900 points to close at 62,816 on Friday, as Punjab Assembly held its inaugural session

KARACHI: Pakistan’s equity market responded positively to a power-sharing agreement between two major political parties this week, as the uncertainty surrounding the formation of a new government dissipated, making the stocks close the weekend trading session with a five percent gain on Friday.
The late Tuesday night agreement to form a coalition government at the center was negotiated between Bilawal Bhutto Zardari’s Pakistan Peoples Party (PPP) and the Pakistan Muslim League-Nawaz (PML-N) of three-time prime minister Nawaz Sharif.
Together, the two political factions achieved a simple majority sufficient to form a government, though they will also embrace smaller parties in the coalition.
The benchmark KSE100 index gained 901 points or 1.5 percent to close at 62,816 on Friday, buoyed by the commencement of the new government formation process. This process began with the oath-taking ceremony during the inaugural session of the Punjab Assembly on Friday and will be followed by a Sindh Assembly session on Saturday.
“Stocks closed sharply higher after the Punjab Assembly was sworn in, easing political noise and the International Monetary Fund’s affirmation on working with the new government on policies to ensure macroeconomic stability,” Ahsan Mehanti, CEO of Arif Habib Limited, told Arab News.
Pakistani equity traders said investor confidence has increased as things are moving smoothly toward the formation of government at the federal and provincial levels.
“After the unexpected election results were announced, causing considerable anxiety among investors regarding future outcomes, the process of forming a new government has begun. This development has somewhat reassured investors,” Abdul Rauf, an equity trader, told Arab News.

 

Citing a statement from the IMF, Rauf said the fund seems happy with the new coalition government as both parties are experienced in dealing with it.
“PML-N and PPP will form the government together, and they have remained in power several times in the past, so they also have experience in dealing with the IMF,” he said, adding: “It seems that the IMF was quite pleased with them and expects a better outcome from them.”
Analysts believe that future market direction mainly depends on the next IMF program after the formation of the government.
“We feel that in the coming days, the IMF program will play a key role, and if the government of Pakistan quickly avails of the fund program, then the situation could substantially improve,” Sheheryar Butt, portfolio manager at Darson Securities, told Arab News.
Butt said it was predicted at the beginning of the year that the KSE100 index would cross the 76,000 level, but it still depended on how the government moved forward with the IMF program and its reform agenda.
“Pakistan is also facing an external [payment] gap, and if the external inflows continue and the privatization process is expedited, then you will see how the stock market goes up,” Butt added.
Analysts are optimistic that the current bullish sentiments will gain further momentum as the political landscape begins to stabilize with the formation of a new government expected in the coming week.

 


Pakistan PM prays for recovery of Saudi Arabia’s King Salman

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Pakistan PM prays for recovery of Saudi Arabia’s King Salman

  • Saudi king is due to undergo treatment for lung inflammation, SPA reported
  • Shehbaz Sharif says King Salman sincere friend of Pakistan, guide for Muslim world

ISLAMABAD: Pakistan Prime Minister Shehbaz Sharif on Monday extended prayers for the recovery of Saudi Arabia’s King Salman, who is due to undergo treatment for lung inflammation.

The treatment will consist of a course of antibiotics at Al-Salam Palace in Jeddah, the state-run Saudi Press Agency reported on Sunday.

The king underwent medical tests at the royal clinics at the palace earlier on Sunday after he suffered from a high temperature and joint pain.

“I have learnt with grave concern about the health of His Majesty King Salman bin Abdulaziz. His Majesty is not only a sincere friend of Pakistan but as the Custodian of the Two Holy Mosques, a leader and guide for the entire Muslim ummah,” Sharif said on X.

“The people of Pakistan join me in praying to the Almighty for His Majesty’s complete recovery and swift return to full health.”

Pakistan and Saudi Arabia enjoy strong trade, defense and cultural ties. The Kingdom is home to a large number of Pakistani expatriates and serves as the top source of remittances to the cash-strapped South Asian country.

Saudi Arabia has also often come to cash-strapped Pakistan’s aid by regularly providing it oil on deferred payment and offering direct financial support to help stabilize its economy and shore up its forex reserves.


Net-metering, tax controversies cloud future of solarization in Pakistan despite government clarification

Updated 20 May 2024
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Net-metering, tax controversies cloud future of solarization in Pakistan despite government clarification

  • Government says it won’t end net-metering policy for solar power producers, promises to honor commitments made by companies
  • Pakistan’s energy woes stem from high capacity charges consumers pay due to long-term government contracts with power producers

KARACHI: Controversies about net-metering and imposition of a new tax have cast a cloud over Pakistan’s transition to solar energy despite the government’s ambitious plans, stakeholders said on Monday, adding the situation has left them in a state of uncertainty.

Pakistan approved the net-metering policy in 2017 that allows consumers to sell excess electricity produced by their solar systems to power distribution companies, resulting in significant savings in their monthly bills.

However, the energy ministry stirred a controversy last month by declaring that net-metering was promoting “unhealthy investments” in installation of solar power by affluent domestic and industrial consumers, hinting at cutting the buyback rates.

“Before this [controversy], people were shifting to solar [energy] in such a way that we thought that 100 percent Pakistan embraced solar energy,” Zulfiqar Ali, an importer, supplier and installer of solar panels, told Arab News on Monday.

“Now, we’re witnessing a stark contrast, a slowdown in inquiries, stagnation in projects, all amidst a talk of governmental reconsideration of solar energy policies.”

Ali said the net-metering issue had a lot of effect on the market as the purchasing groups suddenly went silent and the deals that were going on became stagnant. “The planned projects have gone into an idle position, people are neither saying yes nor no,” he added.

Recent reports published by local media about new taxes and an end to net-metering policy further compounded the situation and prompted Energy Minister Awais Leghari to explain the government’s position on the matter. 

“We completely reject these stories. The agreements our companies have made with net-metering users, whether they are for five years, six years, or seven years, will not be altered in any way and the government will not damage its reputation, nor will it cause any inconvenience to those investors,” Leghari said at a press conference in Lahore on Sunday.

He said the government was fully committed to renewable energy and solarization and was in favor of continuing the net-metering policy. 

“If, after studying it over the next few months, there is a need to revise it, it will be done very responsibly and in consultation with stakeholders,” Leghari said.

“After the approval of the entire government, if necessary, we will rationalize this. At this moment, we are committed to fulfilling all the contracts we have signed with various people. We will uphold the integrity of the entire government and move forward together.”

But despite the government’s assurances, an atmosphere of uncertainty prevails in the South Asian country with regard to solarization.

“I wanted to install solar panels at my rooftop to mitigate the impact of high electricity bills but now I am unable to take a decision because of the government’s intended moves of either taxing panels or curtailing net-metering benefits,” said Khalid Abbas, a resident of Karachi, adding that he would wait for clarity on the subject.

Solar panel suppliers said people, who were buying solar panels by selling their cars or jewelry, had stopped purchasing the equipment. 

“Residential consumers who wanted to install 5-20KW panels have stopped and are waiting for clarity,” Zulfiqar said.

Pakistan’s energy woes stem from the substantially high electricity bills, mainly due to the capacity charges that are as high as 65 percent and the nation is bound to pay these to power producers, even though their plants stand idle. 

The power purchase price (PPP), or the average per unit price based on the generation cost, is Rs20.60, which includes Rs14.09 capacity charges, and Rs6.21 fuel and variable charges, according to Pakistan’s reference tariff for fiscal year 2023-2024.

Pakistani energy experts believe the volume with which solar energy is increasing is still “insignificant” and does not even make 1 percent of the total power generation in the country.

“But the way it is going on in Pakistan, perhaps a significant portion of our net-metering will be done from it,” Dr. Khalid Waleed, an expert on energy economics, told Arab News. “Around 2,000MWs will be coming from net-metering. So, it should not be discouraged at all.”

When consumers switch to solar power, Waleed said, capacity charges are borne by other consumers that ultimately increases their power burden. 

Experts say the country won’t be able to get rid of the capacity charges before 2050 due to long-term contracts made with power producers.


Pakistan Deputy PM arrives in Kazakhstan to attend SCO Foreign Ministers’ meeting

Updated 20 May 2024
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Pakistan Deputy PM arrives in Kazakhstan to attend SCO Foreign Ministers’ meeting

  • The SCO is a major trans-regional organization and its member states collectively represent nearly half of world population
  • Deputy PM Ishaq Dar will meet Kyrgyz FM Jeenbek Kulubaev tonight to discuss the latest situation after Bishkek mob violence

ISLAMABAD: Ishaq Dar, Pakistan’s deputy prime minister and foreign minister, on Monday arrived in Kazakhstan to attend a meeting of the Council of Foreign Ministers of the Shanghai Cooperation Organization (SCO), the Pakistani foreign ministry said.

Founded in 2001, the SCO is a major trans-regional organization spanning South and Central Asia, with China, Russia, Pakistan, India, Uzbekistan, Tajikistan, Kyrgyzstan and Kazakhstan as its permanent members. The SCO member states collectively represent nearly half of the world’s population and a quarter of global economic output. 

The organization’s agenda of promoting peace and stability, and seeking enhanced linkages in infrastructure, economic, trade and cultural spheres, is aligned with Pakistan’s own vision of enhancing economic connectivity as well as peace and stability in the region.

Upon arrival at the Astana airport, Dar was received by Director of the Kazakh Ministry of Foreign Affairs Nursalimuly Yergalym, Pakistan’s Ambassador in Astana Nauman Bashir Bhatti and Pakistan’s National Coordinator for the SCO, Ambassador Marghoob Saleem Butt.

“In Astana, a meeting has been arranged between the Deputy Prime Minister Dar with the Foreign Minister of Kyrgyz Republic, Jeenbek Kulubaev, this evening in order to discuss the latest situation in Bishkek with a view to ensure the well-being of Pakistani students,” the Pakistan foreign ministry said in a statement.

Frenzied mobs targeted hostels of medical universities and private lodgings of international students, including Pakistanis, in Bishkek last week after videos of a brawl between Kyrgyz and Egyptian students went viral on social media.

Pakistan has since then ramped efforts to repatriate its students from the city and more than 600 Pakistani students have returned home via three different flights. According to official statistics, around 10,000 Pakistani students are enrolled in various educational institutions in Kyrgyzstan, with nearly 6,000 residing and studying in Bishkek.

In Astana, Dar will represent Pakistan at the two-day meeting of the SCO Council of Foreign Ministers. He will also hold bilateral meetings with his counterparts on the sidelines of the summit.

Since becoming a full member of the SCO in 2017, Pakistan has been actively contributing toward advancing the organization’s core objectives through its participation in various SCO mechanisms.

During his visit to China last week, Dar also met SCO Secretary-General Ambassador Zhang Ming and reiterated Pakistan’s commitment to the organization’s charter and its ideals, the Pakistani foreign ministry said in a statement.

“He expressed Pakistan’s strong commitment to advancing SCO’s security and development cooperation agenda,” the statement said.


Pakistan gear up for FIFA World Cup Qualifiers matches against Saudi Arabia, Tajikistan

Updated 20 May 2024
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Pakistan gear up for FIFA World Cup Qualifiers matches against Saudi Arabia, Tajikistan

  • Pakistan will play a home match against Saudi Arabia on June 6 in Islamabad
  • It will be followed by an away match in Tajikistan on June 11, the PFF says

ISLAMABAD: The Pakistan football team has begun practicing in Islamabad for the upcoming matches against Saudi Arabia and Tajikistan as part of the FIFA World Cup qualifier round-2, the Pakistan Football Federation (PFF) said on Monday.

The Pakistan side is scheduled to play a home match against Saudi Arabia on June 6 in Islamabad, which would be followed by an away match in Tajikistan on June 11. Pakistan is in Group G along with Saudi Arabia, Tajikistan and Jordan.

A total of 36 football squads have been split into nine groups with four teams each in the second round of qualifiers. The winners and runners-up from each group would progress through to the third round of the World Cup qualifiers.

“Head coach Stephen Constantine is leading the team’s efforts, focusing on refining their skills and tactics for the encounter against one of the football powerhouses (Saudi Arabia),” the PFF said in a statement.

“Goalkeeping coaches Rogerio Ramos and Noman Ibrahim have been dedicating their efforts to the goalkeepers, while fitness coach Claudio Altieri is ensuring peak performance in preparation for the crucial match.”

Preliminary Pakistan squad

Goalkeepers: Hassan Ali and Tanveer

Defenders: Haseeb Khan, Mamoon Moosa Khan, Huzaifa, Waqar Ihtisham, Abdul Rehman, Umar Hayat, Muhammad Adeel, Muhammad Saddam and Zain ul Abideen

Midfielders: Yasir Arafat, Alamgir Ghazi, Ali Uzair, Rajab Ali, Moin Ali, Junaid Ahmed and Fahim

Forwards: Adeel Younas, Shayak Dost, Ali Zafar and Fareedullah

The PFF said the names of diaspora players joining the national training camp later would be included in the final squad.


Pakistan heat wave to ‘intensify’ from May 23 onwards — chief meteorologist

Updated 20 May 2024
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Pakistan heat wave to ‘intensify’ from May 23 onwards — chief meteorologist

  • Pakistan’s largest province, Punjab, has announced school closures from May 25-31 due to heat wave
  • KP, Balochistan provinces, Kashmir, Gilgit-Baltistan regions to witness higher than average temperatures

KARACHI: A heat wave is expected to hit parts of Pakistan starting today, Monday, Pakistan’s chief meteorologist said, warning that it will “intensify” from May 23 onwards in the South Asian nation at the searing edge of climate change.

Pakistan’s disaster management authority warned last Thursday temperatures in certain areas of Pakistan’s southern Sindh and eastern Punjab provinces could surge to 40 degrees Celsius between May 15-30. On Sunday, the Provincial Disaster Management Authority (PDMA) warned of an “intense” heat wave in the southern districts of Punjab, with severe risk identified in Bahawalpur, Rahim Yar Khan, Dera Ghazi Khan and Multan districts from May 21 to May 27.

Heatwaves, which occur in summer, are caused by slow-moving high-pressure systems leading to prolonged high temperatures. The World Meteorological Organization defines a heat wave as five or more consecutive days during which the daily maximum temperature surpasses the average maximum temperature by 5 °C (9 °F) or more.

“Heatwave conditions are expected from today over Sindh, except Karachi, and the plain areas of Punjab and Khyber Pakhtunkhwa provinces,” Dr. Sardar Sarfaraz, the chief meteorologist at the Met Department, told Arab News. 

“Maximum temperatures are expected to remain 4-6 degrees Celsius above average until May 22 and then intensify from May 23rd with temperatures 6-8 degrees above average,” he said, urging citizens to exercise caution.

Pakistan experienced its first severe heat wave in June 2015 when temperatures as high as 49 degrees Celsius struck the country’s south, causing the deaths of about 2,000 people from dehydration and heatstroke. A heat wave in Sindh’s provincial capital of Karachi that year alone claimed 120 lives. 

Increased exposure to heat, and more heat waves, have been identified as one of the key impacts of climate change in Pakistan, with people experiencing extreme heat and seeing some of the highest temperatures in the world in recent years. The South Asian country of more than 241 million, one of the ten most vulnerable nations to climate change impacts, has also recently witnessed untimely downpours, flash floods and droughts.

Climate change-induced extreme heat can cause illnesses such as heat cramps, heat exhaustion, heatstroke, and hyperthermia. It can make certain chronic conditions worse, including cardiovascular, respiratory, and cerebrovascular disease and diabetes-related conditions, and can also result in acute incidents, such as hospitalizations due to strokes or renal disease.

Dr. Sarfaraz said other than Karachi, the rest of Sindh province would remain in the grips of scorching heat this month.

“While Karachi will not face a heat wave, the rest of the province and the plain areas of Punjab and Khyber Pakhtunkhwa will be in the grip of the heatwave from today,” he said.

“In Jacobabad, the hottest city of the [Sindh] province, the temperature is expected to reach 50 degrees Celsius during this wave.”

Jacobabad is considered one of the hottest places in the world, with temperatures rising to 50 degrees Celsius between May and August, forcing nearly half the city’s 200,000 people to leave for cooler cities and towns, officials say. 

The federal capital of Islamabad, the Khyber Pakhtunkhwa and Balochistan provinces and the Kashmir and Gilgit-Baltistan regions would also see temperatures 4 to 6 degrees Celsius above average from May 21-27, Dr. Sarfaraz said. 

SCHOOLS CLOSURES 

Separately, the Punjab government announced on Monday it would close public and private schools from May 25-31. 

“In view of the surge in temperature and heat wave in the province, all public and private schools shall remain closed for seven days with effect from 25th May 2024 to 31st May 2024,” a notification from the provincial education department on Monday read, adding that exams could be conducted during these days with necessary precautions in place. 

Punjab Education Minister Rana Sikander Hayat shared the notification on social media platform X, saying the safety of children would always remain the government’s “priority.”

According to the Global Climate Risk Index, nearly 10,000 Pakistanis have died while the country has suffered economic losses worth $3.8 billion due to climate change impacts between 1999 and 2018. 

In 2022, torrential monsoon rains triggered the most devastating floods in Pakistan’s history, killing around 1,700 people and affecting over 33 million, a staggering number close to the population of Canada. Millions of homes, tens of thousands of schools and thousands of kilometers of roads and railways are yet to be rebuilt.