Economic & Political Weekly 9th December, 2018

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World

Politics-

  • After 6,815 days a tearful Angela Merkel stepped down as leader of Germany’s ruling Christian Democratic Union (CDU).

After 6,815 days and a final, 10-minute standing ovation, a tearful Angela Merkel bowed out on Dec 07 as leader of Germany’s ruling Christian Democratic Union (CDU). Hamburg, the city of her birth, provided the bookends to her political career. It was here, in Germany’s second city, that Dr Merkel’s own East German party joined the CDU in October 1990.

·Luxembourg is set to make all public transport free Soon.

Luxembourg is set to become the first country in the world to make all its public transport free. Fares on trains, trams and buses will be lifted next summer under the plans of the re-elected coalition government led by Xavier Bettel, who were sworn in for a second term as prime minister on Dec 05.

· Islamic State re-emerges as guerilla force in Syria and Iraq.

Islamic State is carrying out a rising number of kidnappings, killings and bombings in Iraq and fighting fiercely in Syria as the extremist group returns to its insurgent roots having been driven out of almost all the territory it once controlled. A recent US defense department report said an effective clandestine Islamic State organization “appears to be taking hold”, four years after the group controlled swaths of Syria, as much as a third of Iraq, and declared a caliphate. But its re-emergence as a guerrilla force signals the continued threat posed by a group that inspired deadly terrorist attacks in Europe and shocked the world with massacres and beheadings in Iraq and Syria and the systematic sexual enslavement of women.

· Bitter harvest for Palestinian olive farmers in severe drought.

The autumn olive harvest is traditionally a period of optimism for Palestinians in an environment that often offers little reason for hope. The olive sector is not just an economic lifeline but also a cultural root to 100,000 families who depend on the symbolic tree first planted over 3,000 years ago. But the sector – worth up to the $190 million (€167 million) to the local economy – is coming under increasing pressure and not just from customary threats from settlements and restrictions to water and access to land. These perpetual problems have today fused with the global challenge of climate change that has the region facing an uncompromising swing toward near-perpetual drought.

·Police fires tear gas canisters at ‘yellow vest’ protesters in Paris.

Crowds of yellow-vested protesters tried on Dec 08 to reach the French presidential palace in Paris, some scuffling with police firing tear gas, amid huge security aimed at preventing a repeat of last week’s rioting. The Eiffel Tower and Louvre Museum were among tourist attractions that remained closed, fearing damage after rioting and looting last Saturday during which 130 people were injured. The grassroots movement began as resistance against a rise in taxes for diesel and petrol. But it has quickly expanded to encompass frustration at stagnant incomes, the growing cost of living and other grievances. Mr. Macron has agreed to abandon the fuel tax hike. But that has not defused the anger, embodied by the fluorescent safety vests French motorists are required to keep in their cars.

· Yemen talks in Sweden opened with prisoner swap agreement.

Yemen’s warring sides agreed to free thousands of prisoners on Dec 06, in what a UN mediator called a hopeful start to the first peace talks in years to end a war that has pushed millions of people on the verge of starvation. UN mediator Martin Griffiths told a news conference in a renovated castle outside Stockholm that just getting the warring sides to the table was an important milestone

·China launches first mission to the dark side of the moon.Chang’e 4 lunar probe is expected to land on the far side in January.

China has launched a daring space mission to boldly go where no one has gone before by landing a lunar probe on the dark side of the moon. A Long March-3B rocket, carrying a lunar Lander and a rover, blasted off from the Xichang satellite launch centre in the southwestern province of Sichuan in the early hours of Saturday i.e. Dec 08, the Xinhua news agency reported.

Economy-

· Arrest of Huawei CFO sends shockwaves through China

The arrest of Meng Wangzhou, chief financial officer of the electronics giant Huawei and daughter of the firm’s founder Ren Zhengfei, has sent shockwaves through China. Huawei is a domestic titan, a flagship firm pushing innovation as part of the country’s efforts to rise out of low-level manufacturing. The success of Huawei’s smartphones has made it a real name in the consumer arena, while it has successfully penetrated markets all over the world with its telecoms equipment.With over two thirds of its revenues coming from outside the country, Huawei is an exemplary firm at a time when president Xi Jinping is trying to boost China’s efforts to innovate and compete with foreign rivals. It is a significant player in the strategy to beat the US in the ongoing trade war.

  • US stocks plunge again as losses approach trillion-dollar mark.Tech stocks worst hit, as Apple sheds $45bn and Amazon is down $24bn.

US stocks plunged again on Dec 07, with technology shares bearing the worst of the selling, as the Trump administration pressed its trade war with China and the latest batch of economic data added to concern that growth has peaked. Almost $1 trillion has been wiped off the value of US stocks in four days. Apple has shed $45 billion, while Amazon is worth $24 billion less than it was a week ago. The declines came after European stocks had posted a limited recovery on Friday, and accelerated as US markets neared their close. Wall Street recorded its biggest weekly drop since March. The bond market is essentially saying we don’t see the kind of growth that we’ve had. So what the market is doing is repricing stocks, particularly those that have performed extraordinarily well, to a lower growth rate.

  • Global indices as of Dec 07 and 08 as compared to Nov 30, 2018.
Name Current Value Change
US MARKETS
 Nasdaq (Dec 08) 6,969.25 -219.01
EUROPEAN MARKETS
 FTSE (Dec 07) 6,778.11 74.06
 CAC (Dec 07) 4,813.13 32.67
 DAX (Dec 07) 10,788.09 -22.89
ASIAN MARKETS
 Nikkei 225 (Dec 07) 21,678.68 177.06
 Straits Times (Dec 07) 3,111.12 -4.40
 Hang Seng (Dec 07) 26,063.76 -92.62
 Taiwan Weighted (Dec 07) 9,760.88 76.16
 KOSPI (Dec 07) 2,075.76 7.07
 SET Composite (Dec 07) 1,649.99 -3.74
 Jakarta Composite (Dec 07) 6,126.36 10.87
 Shanghai Composite (Dec 07) 2,605.89 0.71
 SGX Nifty (Dec 08) 10,647.50 -91.50

 

Global Indices as of Nov 30

US Markets Current value Change
Nasdaq (Nov 30) 7,330.54 57.46

European Markets

FTSE 100 (Nov 30) 6,980.24 -58.71

CAC 40 (Nov 30) 5,003.92 -2.33

DAX (Nov 30) 11,257.24 -40.99

Asian Markets

Nikkei 225 (Nov 30) 22,351.06 88.46

Straits Times (Nov 30) 3,117.61 8.17

Hang Seng (Nov 30) 26,506.75 55.72

Taiwan Weighted (Nov 30) 9,888.03 2.67

KOSPI (Nov 30) 2,096.86 -17.24

 SET Composite (Nov 30) 1,641.80 5.31

 Jakarta Composite (Nov 30) 6,056.12 -51.05

Shanghai Composite (Nov 30) 2,588.19 20.75

SGX Nifty (Dec 1) 10,912.50 2.50

 

Pakistan

 

Politics

  • Punjab government on Dec 05 assured the Supreme Court to form new Joint Investigation Team (JIT) to probe into Model Town incident where a skirmish between Punjab police and Pakistan Awami Tehreek workers took lives of 14 people including two women and more than hundred people sustained serious injuries during 2014.

Chief Justice Mian Saqib Nisar said that during a protest of the PAT in D-Chowk Islamabad besides general public the Supreme Court judges also faced difficulty to reach apex court, adding Supreme Court is the apex institution to dispense justice.
Later, issuing directives to the Punjab government for constitution of JIT in the matter in hand, the bench disposed of the case. –

  • Baluchistan and Thar (Sind) are two areas showing pictures like Yemen where children’s are dying of hunger and illness with no attention of the government either Federal or provincial governments.

Baluchistan

Sindh (Thar)

· Azam Swati quits cabinet, PM accepts resignation.

Federal Minister for Science & Technology Muhammad Azam Swati calls on Prime Minister Imran Khan,on Dec 06.  Senator Azam Swati, who is under investigation over alleged misuse of authority, resigned from the post of federal minister for science and technology. Prime Minister Imran Khan has accepted the resignation and told Swati to present himself before the Supreme Court in the ongoing misconduct case.

  • Chief Justice Mian Saqib Nisar on Dec 05 called for immediate steps to address the issue of alarming growth in population whereas Prime Minister Imran Khan said the government will leave no stone unturned in implementing task force recommendations to curb population growth in the country.

Law and Justice Commission of Pakistan (LJCP) in collaboration with the Ministry of National Health Services, Regulations and Coordination (NHSR&C), organized the Symposium on December 05 to call for action in the matter. Addressing to the Symposium, Chief Justice Mian Saqib Nisar expressed the Supreme Court has taken up various issues that are vital to general public such as construction of dams, health and education issues and the present government should take a lead in tackling these issues in order to create a welfare state. He further stated that as per directions in Human Rights Case No. 17599/18 a task force was formed which prepared a set of eight key recommendations to accelerate government efforts to reduce the population growth rate, lower the total fertility rate, and increase the contraceptive prevalence rate and it is now the prerogative of the government to implement the recommendations of the task force. The CJP was of the view that population growth rate in Pakistan has reached devastating proportion and in the near future, the position will worsen to such an extent that there would be no resources to cater to the needs of a very large population.

Prime Minister Imran Khan said the Supreme Court has initiated the process of Rule of Law in the country through recent landmark judgments and also taken up various important issues related to public importance. Khan was of the view that issues like construction of dams and alarming population growth were not considered previously by the governments as the main focus was on short-term targets within the lifespan of the governments.

  • Prime Minister’s Adviser on Institutional Reforms and Austerity Dr Ishrat Hussain on Dec 07 said India and Pakistan had a trade potential of $37 billion which could be proved a powerful engine for the shared prosperity and reducing inequalities in the region. He was speaking at the concluding ceremony of the four-day 21st sustainable development conference hosted by the Sustainable Development Policy Institute (SDPI).

Improving barter system between two countries will improve status of producers, consumers, PM’s adviser tells conference “We are going to enter the 4th industrial revolution, therefore, we need to invest in science and technology to tap its potential, and otherwise, we will lag behind. “The challenge for us today is to invest in labor productivity in services and agriculture sector and for that we have to invest in human development.”

  • About 30 to 40 per cent of Karachi’s economy is informal, a fact this government ignored when razing all the shops in and around Empress Marketwhile throwing out all the vendors there,” said architect and urban planner Arif Hasan on Dec 07.

He said “The informal economy provides a livelihood to some two million people. And if they encroached upon any place it was because they were living and earning in an unplanned city. There were no proper cargo terminals, bus terminals, toilets, etc, so the people make them on the roads,” he said, explaining: “The vendors took over any spot that they could find because there were no permanent small or retail markets. And as the city grew and places to live became scarce, the katchi abadis also came up.” “It is sad how the people whose only crime was earning a livelihood were displaced. What happened to them was also against the law because their shops were either leased or rented. Still, they can easily be resettled from where they have been removed,” the town planner pointed out while making some demands.

He demanded that the government share its plan regarding the action. “We demand to know the real reason behind this action,” he said. “We also demand that the ones displaced and deprived of earning a livelihood be rehabilitated and the plan for their rehabilitation be prepared not by the government but a committee of experts, affected people and people-friendly organizations,” he added.

  • Prime Minister Imran Khan on Dec 07 formulated a high-level committee which will focus on civic issues in the federal capital and devise ways of addressing them.

The committee has been directed to take strict action against members of the land mafia.The four-member committee will be headed by the State Interior Minister Shehryar Afridi and will comprise Health Minister Aamir Kiyani, and Pakistan Tehreek-e-Insaf (PTI) MNAs for Islamabad Raja Khurrum and Ali Nawaz Awan. Awan also serves as a special assistant to the prime minister on the Capital Development Authority’s (CDA) affairs. The committee has been tasked with formulating a policy to address the issue of encroachment permanently, in light of the directives issued by the Supreme Court. However, the committee will focus on measures which ensure that small house owners, shopkeepers, daily wage earners, street vendors are not disturbed.

  • At least six people were injured in a blast which occurred in Karachi’s Gulistan-i-Jauhar area late on Saturday night i.e. Dec 07.

The blast reportedly targeted a Mehfil-i-Milad being held near the Perfume Chowk in Block 18 area of the neighborhood. According to police some unidentified attackers riding a motorcycle reportedly hurled a cracker near the venue and fled. Following the blast, police and rescue teams rushed to the site and shifted the injured to a nearby hospital where the condition of two was said to be critical who were later shifted to Jinnah hospital. IT Minister Khalid Maqbool Siddiqui and MQM leader Khawaja Izharul Hasan were present at the event at the time of the blast but remained unhurt.

  • Railways minister claims PM Imran had offered him to join information ministry.

A few days after Prime Minister Imran Khan indicated at some changes in the federal cabinet on the basis of 100-day performances of the ministers, Minister for Information and Broadcasting Fawad Chaudhry and Minister for Railways Shiekh Rashid on Dec 08 engaged in a brief exchange of statements. Rashid kicked off a controversy earlier in the day by saying that he had spoken with the prime minister, who wanted him to take over as the information minister. Chaudhry, who is currently in the UK, retorted on Twitter immediately, saying that he was ready to quit in favor of Rashid. Later, the railways minister backtracked on his statement.

 

Economy

  • The Joint Coordin­ation Committee (JCC) of the China-Pakistan Economic Corridor (CPEC) will meet on December 20 in Beijing to sign a framework agreement on industrial cooperation and pave the way for development of special economic zones starting with Rashakai in Khyber Pakhtunkhwa.

 

An official said a final version of the framework agreement on industrial cooperation had been shared with the Chinese side. He said all the four provincial chief ministers, prime minister of Azad Jammu and Kashmir and chief executive of Gilgit-Baltistan would be part of the Pakistani delegation. The Pakistani side will attend the 8th JCC led by federal planning minister.The committee also issued instructions to relevant agencies to finalise a schedule for the groundbreaking of Rashakai Economic Zone at the earliest by removing all bottlenecks. The KP government has already entered into an agreement with the China Road and Bridge Corporation (CRBC) for the development of Rashakai Industrial Zone in two years. The two sides, he said, would formally launch the Rashakai development project under which the Chinese firm would simultaneously launch a marketing campaign to attract investors.

F.C Exchange Rates of PKR
Countries PKR rate as of Ist Dec 2018 PKR rate as of 8th Dec 2018
U.S.A. 139.15 139.50
U.K. 175 175.90176.9
Euro 156 156.90157.9
Japan 1.24 1.2400
Saudi Arabia 37 37.00
U.A.E. 38 37.90

 

  • The week ended with some recovery in the stock markets as of 30th November 2018 after going down in the mid week as compared to 23rd November 2018.
Position as of 7th Dec 2018

 

Symbols                                   KSE100                                 PSX-KMI
Advanced (Cur.)                  208
                                 38562.05
                                 18802.23
Declined (High) 107
                                 38651.88
                                  18863.39
Unchanged (Low)                                  20
                                 37779.67
                                  18394.72
Total (Change) 335
                           261.42
                           67.19

 

Position as of 30th Nov 2018
Symbols                                                            KSE100                  PSX-KMI
Advanced (Curr.) 83
40496.03
19695.49
Declined (High) 236
                                                           40936.73

19837.95
Unchanged (Low) 26
40339.93
19611.86
Total (Change) 345
-142.80
-23.82

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