Pulse by Capital Stake

A new player has entered the AI arena, and its impact is shaking the markets to their core. Deepseek’s debut sent shockwaves through the financial world, with global stocks tumbling as China’s latest AI breakthroughs triggered a wave of uncertainty. Closer to home, Pakistan’s stock market wasn’t spared either, with the KSE-100 Index losing almost 3% by Wednesday before recovering to the same levels as it started the week with by Friday. The recovery on Thursday and Friday can also be attributed to the recent monetary policy cuts. But beyond the trading screens, another crisis is brewing—literally. Arabica coffee prices have surged past $3.60 per pound, putting your daily caffeine fix in jeopardy.

As the dust settles, here’s your 5-minute digest of the week’s most impactful news in business, finance, and tech.

In other news, the SECP has announced amendments to the Research Analyst Regulations, sparking a heated debate on X. While some argue that overregulation could stifle timely research, others believe it may hinder freedom of speech. Catch the heated discussion and see the latest opinions on X! 🗣️

Key Events to Watch This Week!🔥

How the Market Closed This Friday – KSE-100 Update

Pakistan Cuts Key Interest Rate to 12% Amid Easing Inflation

What happened:
Pakistan’s central bank has lowered its key interest rate by 1% to 12%. This decision comes as inflation starts to ease, and after a series of rate cuts (📊See Chart) in the past few months. The interest rate was as high as 22% last April, which was one of the biggest cuts seen globally in recent times.

What’s next:
With inflation slowing down, the central bank may continue making adjustments to its interest rates. People and businesses will be watching closely to see if borrowing becomes easier, but it will also be important to ensure that the economy doesn’t overheat with too many cuts too quickly.

Why it matters:
This rate cut means borrowing costs for loans, mortgages, and credit will become more affordable for people and businesses, potentially giving the economy a boost. It also reflects a shift in policy as inflation starts to cool down, but there are concerns about balancing growth with the risks of further rate reductions. In line with the central bank’s rate cut, the Central Directorate of National Savings (CDNS) has also reduced the rates of return on a number of its National Savings Schemes (NSS). The rate on Savings Accounts (SA) has been lowered by 200 basis points (bps) to 11.50%, effective from January 31, 2025. A lower rate also means lower returns on investors invested in Income and Cash Mutual Funds. 

Govt Revises Tariffs with 14 IPPs, Saving Consumers Rs813 Billion

What happened:
The government has made a deal with 14 power companies, including Nishat Power, Nishat Chunian, Liberty Power Tech, and Atlas Power, to reduce electricity costs. This deal is expected to save consumers Rs813 billion and also help tackle the Rs 329 billion circular debt in the power sector.

Why it matters:
As part of the agreement, these companies have agreed to return Rs 31 billion in extra profits, which is less than the Rs 55 billion they were initially asked to return. In return, the government will close investigations by NAB and NEPRA against some of these companies. This move is designed to reduce electricity prices and address the financial problems in the power sector.

What’s next:
This deal should lead to lower electricity bills for consumers. The government will use the savings to help pay off the power sector's debts. With the investigations being dropped, the government aims to smooth relations with these companies, but there is still work to be done to fix the overall power sector.

Good News! Power Consumers to Enjoy Rs1.03 Relief per Unit

Power consumers are set to receive relief of Rs 1.03 per unit due to a fuel cost adjustment for December 2024. This reduction was approved after a petition from the Central Power Purchasing Agency-Guarantee (CPPA-G), discussed during a public hearing by the National Electric Power Regulatory Authority (Nepra).

Why it matters:
The price cut will help reduce electricity costs for consumers, providing some financial relief. This is a positive step to ease the burden of rising power bills.

What’s next:
The Rs1.03 per unit reduction will take effect soon, benefiting consumers by lowering their electricity bills. However, the ongoing challenges in the power sector, including issues with plant closures, will need to be addressed in the long term.

Aurangzeb Talks About Tax Relief for Salaried Pakistanis

What happened:
Finance Minister Muhammad Aurangzeb has acknowledged that salaried people in Pakistan are facing an unfairly high tax burden and hinted at possible changes to the tax system. Speaking at an event organized by the Pakistan Business Council (PBC), he said that the government is considering revising the tax slabs to make it fairer for people working in salaried jobs.

Why it matters:
Many salaried individuals feel that they are paying more taxes than they should. The finance minister’s comments suggest that the government might review the current tax rates and make it easier for them to file their taxes.

What’s next:
The government has started working on the budget for 2025, and they plan to consult business groups in February. By March-April, more details will emerge, and we might see changes to the tax system that could bring some relief to salaried people in the future.

Pakistan Could Become a Trillion-Dollar Economy by 2035, Says World Bank VP

What happened:
The World Bank’s Vice President for South Asia, Martin Raiser, has stated that Pakistan could reach a trillion-dollar economy by 2035 if it achieves an annual growth rate of 7%. He emphasized that while long-term predictions are tough, Pakistan could easily hit this target with the right economic recovery plan in place.

Why it matters:
Reaching a trillion-dollar economy would mark a huge milestone for Pakistan, improving living standards, job opportunities, and overall economic stability. However, it will require serious reforms and strong policies to make it happen.

What’s next:
The World Bank has promised to support Pakistan by providing $20 billion over the next 10 years, but this will depend on Pakistan’s ability to implement the necessary economic reforms. The country must focus on making these reforms a reality to achieve the growth needed to reach the trillion-dollar goal.

FUNDS IN VIEW:

With a potential rate cut on the horizon, we’ve curated a list of the top-performing equity and Shariah-compliant funds delivering the highest YTD returns. Discover where your money could work best this year!

_{Credits: http://behtari.com}

RIDDLE OF THE WEEK!

I grow when the market climbs,
But sometimes I dip with the times.
I can be equity or Shariah-based,
With returns that vary at a fast pace.
What am I?

Hint: The answer could just help you find the best-performing funds of the year!

Want to know the answer? Come back next week to find out!

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