Last update: Thu, 08 Dec 2016 12pm

BR Research: All


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.
Investing in Pakistan’s bubbling real estate market may not be within the reach of an average investor. This is the reason why this asset class has remained in the hands of a few privileged investors. The ticket, however, lies in REITs, where even small investors can reap the gains of real estate boom. Finally after a long cooling-off period, Pakistan is jumping on the REIT bandwagon.
Its the season of doves at the State Bank of Pakistan and a further cut in the policy rate is inevitable in the Monetary Policy Statement set to be announced on the coming Saturday. But the question, just how low will they go?