Economic and Political Weekly 01-09-2019

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 World

Politics

· Queen Elizabeth has suspended British parliament on recommendation of British PM Boris Johnson first time after many hundred years.

British Prime Minister Boris Johnson on 28th August proposed suspending the UK parliament for at least a month to curtail efforts by MPs to prevent a no-deal Brexit on October 31st, as Downing Street also threatened rebels with a general election in early November. MPs will return on 3rd September next week from their summer break but parliament is to be suspended – or prorogued – for longer than usual during the party conference season, until a Queen’s Speech on October 14th. On 28th August afternoon the queen approved the order to prorogue parliament no earlier than September 9th and no later than September 12th, until October 14th. The prime minister had earlier confirmed that the House of Commons would return on September 3rd before being prorogued, ending the longest parliamentary session in 400 years. He will use the Queen’s Speech to set out a new legislative agenda. British opposition leaders have demanded that Boris Johnson should reverse his decision to suspend parliament or put it to a Commons vote. With this heavy protests are going on in UK.

·Sajid Javid confronts Boris Johnson after sacking of adviser

A furious Sajid Javid confronted Boris Johnson on 30th August and demanded an explanation of why his media adviser was sacked without his knowledge, amid claims that a “culture of fear” has taken hold within the British government. Sonia Khan, Mr. Javid’s media adviser, was escorted from No 10 by an armed police officer after a meeting with Mr Johnson’s top strategist, Dominic Cummings, in which she was accused of being dishonest about her contact with the former chancellor Philip Hammond and one of his ex-advisers, who have been trying to block a no-deal Brexit. Ms Khan is the second adviser working for Mr. Javid, the Chancellor of the Exchequer, to be sacked by No 10. She is also the fourth young woman in a month to be axed from the prime minister’s network of advisers and senior staffers.

·  Hong Kong police in wave of arrests of pro-democracy activists

Hong Kong police have launched a wave of arrests against prominent democracy activists, marking a new phase in government efforts to stop mass protests that have plunged the city into months of political crisis. On 30th August, police detained pro-democracy lawmakers and activists, including Joshua Wong and Agnes Chow, student leaders of pro-democracy protests in 2014. The pair were charged with unlawful assembly and released on bail. Police said 28 people were arrested.

· Ukraine gets youngest ever PM as political novices pack parliament

Lawyer Oleksiy Honcharuk has become Ukraine’s youngest ever prime minister as political newcomers poured into the nation’s parliament and its president urged them to make history by fulfilling long-frustrated hopes of reform. Mr Honcharuk (35) was approved as premier on 29th August by 290 of the 424 deputies in Ukraine’s parliament, where president Volodymyr Zelenskiy’s Servant of the People party has an outright majority after dominating July’s elections.

  • Yemen’s internationally recognized government accused the Emirati air force of attacking its troops on 29th August as they were heading to the key southern port city of Aden to fight separatists backed by the UAE. The air strikes killed at least 30 government forces, a Yemeni commander said.

 

The development raises concerns about the future of a Saudi-led coalition that has been fighting Yemen’s Houthi rebels since 2015 and adds another complex layer to the civil war that has ravaged the Arab world’s most impoverished country. Col Mohamed al-Oban, a commander of the government’s Special Forces in Abyan province, said the troops were on the road, headed from Abyan toward Aden on29th August, when the strikes took place, killing at least 30. He didn’t say who was behind them, saying only the planes were from the Saudi-led coalition.

  • Indonesia’s Papua plunged into chaos again on 29th August as angry protesters torched buildings in its capital after nearly two weeks of riots and demonstrations in the easternmost province of the

 

More than a thousand demonstrators marched around Jayapura hurling stones and setting fire to shops and an assembly building following a deadly clash in another part of the jungle-clad province, which shares the island with independent Papua New Guinea. Carrying placards bearing the image of a banned flag, many called for independence from Indonesian rule and an end to racism against the minority group. Papuans are ethnic Melanesians and have few cultural ties with the rest of Indonesia. State Power Company PLN said the violence forced it to cut electricity in parts of Jayapura, a city of about 300,000 people. “Several public facilities and buildings were damaged by the rioters,” said National Police spokesman Dedi Prasetyo. “Security forces are still trying to control the situation,” he added. The protest comes a day after violence flared in remote Deiyai, where a clash between protesters and Indonesian security forces left at least one soldier and two demonstrators’ dead, according to officials.

Economy

  • Global bond yields flirted with record lows while stocks inched down on 29th August as global recession worries from intensifying United States-China frictions and the specter of a no-deal Brexit drove investors to safer harbors.

MSCI’s broadest index of Asia-Pacific shares outside Japan fell 0.15 per cent; Singapore shares hit eight-month lows, while Japan’s Nikkei shed 0.07pc. On Wall Street, the S&P 500 gained 0.65pc on 28th August due in part to gains in the energy sector following a rebound in oil prices. But US stock futures lost 0.2pc in Asia. European shares are expected to slip again, with pan-European Euro Stoxx 50 futures down 0.21pc.

Bond markets around the world painted a gloomier picture, with yields on 30-year US Treasuries and 10-year German bunds yield both hitting record lows — 1.905pc and minus 0.716pc on 28th August . Inversion remains a prominent feature across the US yield curve, where long-dated yields are below short-dated ones — an unsettling sign as yield curve inversions have been a reliable leading indicator of future US recessions.

GLOBAL INDICES AS OF 30th and 31st August 2019

As compared to 23rd and 24th August 2019

Global indices as of 30th and 31st August 2019
Name Current Value Prev.

Close

US MARKETS        
 NASDAQ (Aug 30) 7,962.88 7973.39     
EUROPEAN MARKETS        
 FTSE (Aug 30) 7,207.18 7184.32     
 CAC (Aug 30) 5,480.48 5449.97     
 DAX (Aug 30) 11,939.28 11838.88     
ASIAN MARKETS        
 SGX NIFTY (Aug 31) 11,012.50 11054.50     
 NIKKEI 225 (Aug 30) 20,704.37 20460.93     
 STRAITS TIMES (Aug 30) 3,106.52 3081.83     
 HANG SENG (Aug 30) 25,724.73 25703.50     
 TAIWAN WEIGHTED (Aug 30) 10,618.05 10462.43     
 KOSPI (Aug 30) 1,967.79 1933.41     
 SET COMPOSITE (Aug 30) 1,654.92 1639.14     
 JAKARTA COMPOSITE (Aug 30) 6,328.47 6289.12     
 SHANGHAI COMPOSITE (Aug 30) 2,886.24 2890.92

 

 

Global indices as of 23rd and 24thth August 2019
Name Current Value Prev.

Close

US MARKETS      
 NASDAQ (Aug 23) 7,751.77 7991.39
EUROPEAN MARKETS      
 FTSE (Aug 23) 7,094.98 7128.18
 CAC (Aug 23) 5,326.87 5388.25
 DAX (Aug 23) 11,611.51 11747.04
ASIAN MARKETS      
 SGX NIFTY (Aug 24) 10,865.50 10829.50
 NIKKEI 225 (Aug 23) 20,710.91 20628.01
 STRAITS TIMES (Aug 23) 3,110.35 3127.74
 HANG SENG (Aug 23) 26,179.33 26048.72
 TAIWAN WEIGHTED (Aug 23) 10,538.11 10529.78
 KOSPI (Aug 23) 1,948.30 1951.01
 SET COMPOSITE (Aug 23) 1,646.68 1633.56
 JAKARTA COMPOSITE (Aug 23) 6,255.60 6239.25
 SHANGHAI COMPOSITE (Aug 23) 2,897.43 2883.44

 

Pakistan

Politics

  • PM Imran Khan called on all Pakistanis on 30th August to come out and rally in support of Kashmir Hour at noon on Friday (30th August) for half an hour, to show Kashmiris that the nation stands in solidarity with them.

All traffic signals turned red at noon; small and large rallies were also held across the country by citizens, lawyers, and people with demonstartions from other walks of life.

  • Pakistan has successfully carried out the night training launch of Ghaznavi, a surface to surface ballistic missile, Director General Inter-Services Public Relations (ISPR) Maj Gen Asif Ghafoor said on 29th august.

The missile “is capable of delivering multiple types of warheads up to 290 kilometres”, said Maj Gen Ghafoor via a tweet, which also included a video of the launch.

· ‘In a nuclear war, no one will win’ – Imran Khan

Pakistan’s prime minister Imran Khan has again raised the specter of a nuclear confrontation with India over the Kashmir region, which is divided between the neighbors but claimed by both in its entirety. In a countrywide televised address on 26th August, Mr Khan said that “other countries should remember that both countries [India and Pakistan] have nuclear weapons. And in a nuclear war, no one will win”. “The entire world will face the consequences [of a nuclear exchange],” Mr Khan said. He was reacting to the Indian federal government’s decision on August 5th to revoke Kashmir’s seven-decades-old status guaranteeing its autonomy. “I believe the entire nation [Pakistan] should stand with Kashmir,” Mr Khan said. Some days earlier Mr Khan had warned Pakistan’s parliament over the possibility of a “conventional war” with India over Kashmir, leaving the issue of nuclear weapons hanging in the air. Pakistan’s army chief General Qamar Javed Bajwa also said that his county’s military would go to “any extent to support the Kashmiris”. India’s defense minister Rajnath Singh recently hinted that New Delhi could change its no-first-use doctrine for employing nuclear weapons. “India remains firmly committed to the doctrine of no-first-use, but what happens in the future depends on the circumstances,” Mr Singh said during a visit to the western Pokhran desert region, where India conducted five underground nuclear tests in May 1998.

  • India on 29th August said it has ‘information’ that Pakistan is trying to infiltrate terrorists into the country to carry out attacks amid rising tensions over New Delhi’s decision to abrogatethe autonomy of Indian-occupied Kashmir. The allegation has been denied by Pakistan.

Indian External Affairs Ministry spokesman Raveesh Kumar told reporters that Indian security forces were prepared to deal with any eventuality. He was reacting to Indian media reports that cited unidentified Indian intelligence sources as saying Pakistan-trained commandos have allegedly entered Indian waters to attack port facilities in western Gujarat state. He said Pakistan is trying to infiltrate terrorists to create ‘an alarmist situation’ after New Delhi imposed a lockdown and ended occupied Kashmir’s autonomy early this month.

Pakistan Army spokesperson Maj Gen Asif Ghafoor rejected the Indian claim, saying Pakistan was a responsible state and “we would be insane to allow infiltration” across the Line of Control.

  • At least 24 people, including women and children, were killed when a jeep carrying members of a wedding party plunged into a stream after a bridge collapsed in the Kandia area of Upper Kohistan on 30th August evening.

 

“All 24 people belonging to the same tribe drowned when a bridge collapsed and the jeep they were travelling in plunged into a stream,” Ahsanul Haq, the chief civil defence warden of Upper Kohistan, told reporters. The jeep was going to Kandia from Bagru when it met with the accident. According to the area residents, bodies were swept away by the stream and local people had started efforts to recover the bodies.

Economy

  • State Bank of Pakistan (SBP) Governor Dr Reza Baqir on 30th August said the International Monetary Fund (IMF) had set the GDP growth target at 2.4 per cent for Pakistan, but “we foresee a growth of 3.5pc for the fiscal year 2019-20”.

He also said the State Bank stood prepared to meet any external shocks, either in the form of a military challenge due to the situation in Kashmir, or from the rising oil prices in world markets.

Addressing business and industry leaders at an interactive session organized by the Federation of Pakistan Chambers of Commerce and Industry (FPCCI) where the heads of all commercial banks were also present, the SBP governor assured them that the economy is moving in the right direction. However, he was quick to add that “we have to sustain our policies in order to gain the confidence of local and foreign investors”. Responding to a number of issues raised by the industry leaders, Mr Baqir said that in order to pull the country’s economy out of the woods, the SBP focused on three major areas — exchange rate, foreign currency reserves and interest rates.

  • Following two sessions of minor gains, investors lost their cool on 29th August and jettisoned shares causing the KSE-100 index to plunge 479 points (1.6 per cent) and close at 30,159.

 

The exploration and production sector wiped off 155 points from the index as investors ran to dump shares in the Oil and Gas Develop­ment Company (OGDC) and Pakistan Petroleum Ltd (PPL) after the formal advertisement of the Privatization Commission (PC) regarding divestment of government stake in both companies by 7pc and 10pc respectively. That spooked the investors who believed that a sizeable increase in market float would result in further discounting price of two stocks. PPL hit its lower circuit while OGDC also closed near its lower limit. Already jittery, the announcement by the PC could not have come at a worse time. Analysts said the retreat came amid lingering concerns on border tensions, the Financial Action Task Force uncertainties and the surging budget deficit, where missing revenue targets could result in a mini-budget to raise taxes to meet the International Monetary Fund quarterly reviews.

  • The Asian Development Bank (ADB) on 29th August promised a $7.5 billion assistance to Pakistan over the next three years (2020-24) under its next Country Assistance Strategy.

This was the crux of a two-day visit of ADB’s high-level delegation to Islamabad led by its Vice President Shixin Chen. The delegation, including Adviser Ehsan Khan and Country Director for Pakistan Ms. Xiaohong Yang, also held meetings with Prime Minister Imran Khan and his ministers. The Ministry of Planning and Development in an announcement said the ADB had promised an indicative assistance of $7.5bn over the next three years. It said the Minister for Planning Makhdum Khusro Bakhtyar welcomed “the ADB’s indicative assistance of $7.5bn over the next three years for Pakistan” and hoped the ADB portfolio may be expanded to include other priority areas.

The Standard & Poor’s rating agency on Thursday affirmed Pakistan’s ‘B-’ long-term and ‘B’ short-term sovereign rating while maintaining the long-term outlook at ‘stable’ rating.

The New York-based rating agency also affirmed ‘B-’ long-term issue rating on Pakistan’s senior unsecured debt and sukuk trust certificates. It said Pakistan’s rating remained constrained by a narrow tax base and domestic and external security risks, which continue to be high. It forecast Pakistan’s economic growth to slow down to 2.4 per cent of the GDP during the current fiscal year — a 12-year low. Taken together with the country’s relatively fast population growth of approximately 2pc per year, real per capita economic growth will fall to an anemic 0.4pc. That will contribute to a decline in the country’s 10-year weighted average per capita growth to 1.8pc, below the global average of 2.3pc for economies at a similar level of income, noted the S&P releases issued on Thursday. The agency forecast GDP per capita to fall to just above $1,200 by the end of this fiscal year, versus $1,565 in fiscal 2017-2018 owing to over 25pc exchange rate loss.

F.C Exchange Rates of PKR as of 30th August 2019 as compared to 23rd August 2019
Countries PKR rate as of 23rd August 2019 PKR rate as of 30th August July 2019
U.S.A. 157.90 157.30
U.K. 192.50 193.50
Euro 174.50 175.50
Japan 1.48 1.49
Saudi Arabia 41.75 41.95
U.A.E. 42.75 42.90

Pakistan Stock Exchange Indices

As of 30th August 2019 As Compared

To 23rd August 2019

 

Position as of 30th August 2019
Symbols KSE100 Index PSX-KMI All Shares Index
Advance 76 (Curr) Current 29672.12 Current 13627.98
Decline 198 (High) High 30309.64 High 13955.79
Unchanged 15 (Low) Low 29559.82 Low 13592.21
Total change 289  -486.84  -281.02

 

Position as of 23rd August 2019
Symbols KSE100 Index PSX-KMI All Shares Index
Advance 123

(Curr)

Current 31350.01 Current 14726.97
Decline 177

(High)

High 32100.56 High 14996.98
Unchanged 15 (Low) Low 31225.06 Low 14667.62
Total Change 315  -534.44  -191.06

 

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