🌍 Geopolitics 💧 Liquidity 📈 Inflation

Another Week, Another Pulse!

Just when things seemed to be calming down, the Middle East flipped the script. Donald Trump claimed US forces seized an Iranian linked vessel near the Strait of Hormuz and within hours Iran responded by shutting the passage again and stepping away from further talks. For Pakistan this is not distant drama. Any disruption here feeds directly into oil prices inflation and the cost of living back home.

Pakistan returned to global markets after a long pause raising 500 million dollars through Eurobonds at a steep 7 percent which is a clear signal that access to capital is open but expensive. At the same time the government is exploring Chinese markets through Panda bonds to diversify funding sources. In Washington Muhammad Aurangzeb secured a 3 billion dollar deposit extension from Saudi Arabia during the IMF World Bank Spring Meetings along with confirmation of a 2 billion dollar inflow which provides short term stability to external accounts.

The relief however is not reaching the ground level yet. Inflation has surged to a 75 week high with SPI rising over 12 percent year on year keeping everyday expenses under pressure. At the same time Pakistan posted a strong current account surplus of 1.07 billion dollars in March showing external balances are improving. But a 2.8 billion dollar trade deficit shows that exports remain weak and structural challenges persist.

A quiet but important shift came from the State Bank of Pakistan which has now allowed banks to open accounts for licensed virtual asset service providers. This softens the earlier stance on digital assets and signals a gradual move toward bringing crypto related activity into the regulated financial system in a controlled way.

Globally the International Monetary Fund trimmed Pakistan’s growth outlook to 3.5 percent and raised its inflation forecast to 8.4 percent for the coming year. Fitch Ratings kept the country’s rating at B minus reflecting that while default risks are contained, vulnerabilities remain. There is some optimism though as the IMF board is expected to review a staff level agreement next month which could unlock around 1.2 billion dollars in fresh funds.

On the ground pressures continue to build. The government has announced more than two hours of daily load shedding during peak times to manage energy constraints. At the same time diesel prices have been reduced by 32.12 rupees per litre while petrol remains unchanged. The IMF continues to push for deeper reforms including phasing out subsidies and broadening the tax base for long term stability.

In the investment space a new opportunity is opening up. The Securities and Exchange Commission of Pakistan has approved the JS Rental REIT which gives investors access to income generating real estate an asset class that has traditionally been limited for most retail investors.

Pakistan equities delivered a strong recovery during the week, as investor confidence improved and geopolitical concerns eased. The KSE-100 Index surged 4 percent week on week to close at 173,939 points, reflecting broad based buying interest and renewed market momentum across key sectors.

Prema Milk Owner Raises Rs. 800 Million in Sukuk Auction

At-Tahur Limited, the company behind the Prema dairy brand, raised 800 million rupees through its Sukuk III issuance, slightly above the base size due to investor participation in the green shoe option. The funding reflects continued investor interest in Islamic debt instruments even in a tight financing environment. The proceeds will support the company’s operations and growth plans, with attention now on how effectively it is deployed to strengthen its dairy business.

🚨 REGULATORY UPDATE: SECP Proposes Swing Pricing for Open-End Funds!

The SECP has issued a consultation paper to introduce "Swing Pricing" a mechanism designed to ensure equity among mutual fund investors.

Key Highlights:

🎯 The Goal: To stop the dilution of returns for long-term investors.

💸 The Change: Investors responsible for large transactions will bear the associated costs.

🏛️ Status: Currently in the consultation phase; SECP is inviting stakeholder feedback.

This move aims to enhance fund stability and bring Pakistan’s industry in line with global best practices. 🇵🇰📈

🔗: https://tinyurl.com/58mpa5j4

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