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BR Research: Miscellaneous


For political and business leaders, Davos is the place to be at right now. But Pakistan's Prime Minister has cancelled his sojourn to the World Economic Forum's annual meeting currently being held there. Reportedly, the now-receding but still-fresh petrol crisis has forced this cancellation.
Take a minute, and think about the exploration and production companies in this sliding oil price scenario. The E & P sectors fortunes rise and fall with the oil prices. The oil and gas giants around the world have enjoyed years when crude oil was more or less stable. However, with the price of oil down more than 50 per cent since June 2014, gazes are now moving on how the crash in prices will play out among corporates in the oil and gas sector worldwide.
While the crude oil prices continue to spiral down, gold prices can be seen to defy its relationship with the commodity. The simple economics behind oil-gold relationship is that the price of crude oil affects inflation; any increases in the crude oils price will result in increased petroleum product prices, which in turn push the cost of transport, and hence the price of goods - more commonly known as inflation and with inflation, the price of precious metal like gold tends to go up as well.
As expected, the latest Treasury bill auction saw yields coming down. They did not come down crashing, but fell more than expected. Recall that the previous treasury bill auction saw cut-off yields coming down by 35 bps and the latest auction resulted in a further 30 bps cut in yields for 12-month paper.
Interest rates are high, gas is short, security concerns are rife, the global economy is slowing down, commodity prices are falling… these are the most quoted reasons by media, analysts and policy makers alike, in their attempts to explain staggering exports of the country. One may wonder when all these issues are prevalent with most of them are hard to fix in short term, why on earth the exchange rate is not being used as an instrument to support export growth or simply to earn foreign exchange?
It would be an understatement to say that PML-N’s economic agenda has gone astray. After the petrol crisis, many folks feel a complete governance breakdown is imminent. While some folks may be venting at the state of affairs qualitatively (cursing and what not), the Islamabad-based free-market think tank, Prime put a number yesterday on the PML-N government’s economic management: 5.2 points out of 10.
Rising cost of energy, currency appreciation and higher interest rates all draw cries from the country’s business community, particularly exporters for making their goods dearer for international buyers. But with previous little data available regarding the cost composition of these industries, it is nearly impossible to assess the impact of such changes on the competitiveness of industries.
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Index Closing Chg%
Arrow DJIA 17,652.60 0.79
Arrow Nasdaq 4,757.88 0.16
Arrow S&P 2,051.82 0.55
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ICT 2014

Foreign Debt $61.805bn
Per Cap Income $1,386
GDP Growth 4.14%
Average CPI 8.6%
Trade Balance $-1.664 bln
Exports $1.966 bln
Imports $3.630 bln
WeeklyJanuary 22, 2015
Reserves $10.331 bln