Last update: Wed, 25 May 2016 02pm

BR Research: All


Formed 9 years ago, the mission statement of Pakistan Mercantile Exchange Limited says the exchange aspires to create a state of the art trading and settlement platforms and infrastructure that engenders confidence, brings the domestic economic players to the exchange platform thereby creating maximum economic value for stakeholders and the country. Yet, a spate of recent news suggests that the exchange is still many years from achieving its mission. In fact in anything, it is on the road backwards in some aspects.
Talk of turnaround stories and The Bank of Punjab's (BoP) is one really big one. Once a sinking ship, the public sector bank has moved from strength to strength over the years. The BoP announced its audited CY15 financial results last week, recording a stupendous 75 percent year-on-year growth in pre-tax profits.
The unthinkable is about to happen in Saudi Arabia. Thirty-one years old deputy crown prince Mohammed bin Salman has unveiled Kingdom's blueprint for economic diversification over the medium to long term period. The plan, which is known as 'Saudi Vision 2030' focuses on privatisation, lifting subsidies, reducing unemployment, increasing military industrial production domestically, and spinning off some of Aramco's assets among others. The important question is whether Saudi Arabia would be able to execute such a massive reform agenda?
Urea off-take has not picked up. The National Fertilizer Development Centre (NFDC) released fertilizer statistics for April, showing monthly urea off-take was at its lowest since 1998, at just 114 thousand tons. The 1QCY16 urea off-take is also at a five-year low. Farm economics has surely not picked up, as feared.
There was a time when stocks at Pakistan Stock Exchange would tumble on fears of various taxes to be implemented on trading and investment activities. For many years market participants played tug of war with different governments, pushing the indices south a month before the federal budget announcements, until the governments either rolled back or otherwise lowered tax rates a month after the announcements due to the pressure from market participants.
Oil prices might have pushed higher as raging wildfire near Canadas oil sands threatened production, but the uptrend in the commodity price has been noticeable in the ongoing year. Meanwhile, geopolitical tension in Libya has also disrupted around 120,000 barrels of oil per day.
A quick recap for those who missed out on "The cotton crunch (I)" (Published May 4, 2016): Cotton arrivals this year are down by 34 percent due to late sowing, untimely rains, and pests, among other things. A policy decision might be in the offing: whether or not to remove the RD on cotton imports. But this article is about what the industry really needs - research and better quality seeds.