Pulse by Capital Stake

Another week, another pulse! 

Good morning, everyone! This week has been a wild ride. Imagine the earth heating up like a sizzling tandoori grill, while some water brands are now labeled unsafe—yikes, time to check your bottle before you take a sip! As if that wasn’t enough drama, petrol prices went up by Rs 1 and our country's reserves took a hit. But there’s a silver lining: Fitch Ratings says if Pakistan keeps up with its reforms, our credit future could brighten up. The stock market started off on a bumpy note with some selling pressure, and trade tensions with Mexico and Canada added to the mix. As for the cricket fans, there's good news too—the Pakistan ODI tri-series has kicked off at Gaddafi Stadium in Lahore! Here’s your five-minute digest of the week’s most exciting news in business, finance, and tech.

PSX Alert! Two fresh IPO contenders are cracking onto the scene: Zarea Limited, the B2B powerhouse, and Barkat Frisian Agro Ltd, the Pakistan-Dutch egg producer, are set to launch next month.

Key Events to Watch This Week!🔥

Week at PSX!

Stay Ahead of Market Updates!

Next week will be busy at the Pakistan Stock Exchange as companies gear up to release their financial results. Track all updates in real-time with StockIntel’s Announcement Calendar and never miss a key update!

📅 Check updates here

Fitch Ratings Sees Positive Economic Recovery for Pakistan in FY25

What Happened:

Fitch Ratings has expressed optimism about Pakistan’s economic recovery in FY25, highlighting that structural reforms will be crucial in shaping the country’s credit outlook. The agency emphasized that continued progress will determine Pakistan’s ability to secure financial support from institutions like the IMF.

Why It Matters:

A stronger economy means more job opportunities, stable prices, and improved financial conditions for the public. Key policy decisions, such as the State Bank of Pakistan cutting the interest rate to 12% (📊See Chart) and inflation (📊See Chart) dropping to just over 2% in January 2025 (from nearly 24% in FY24), signal positive momentum. However, the success of these reforms will decide whether Pakistan can maintain financial stability.

What’s Next:

For Pakistan’s economy to keep growing, the government must consistently pursue its reform agenda and secure additional international funding. Lower inflation and interest rates have provided a boost, but long-term success depends on maintaining investor confidence and strengthening foreign currency reserves. Historically, governments have not always completed their full terms, leading to interrupted reform efforts. Now, the key question is whether this time it will be any different and the government can fully implement these reforms—an outcome that will be crucial for Pakistan’s future stability and growth.

Pakistan's Foreign Exchange Reserves Experience Slight Decline

What Happened: 

As of January 31, 2025, Pakistan's total liquid foreign exchange reserves decreased marginally by $8 million, settling at $16.044 billion from $16.052 billion the previous week (View trend), according to the State Bank of Pakistan (SBP). Notably, the SBP's own reserves increased by $46 million, reaching $11.418 billion, while reserves held by commercial banks declined by $54 million to $4.626 billion.

Why It Matters: 

Foreign exchange reserves are crucial for a country's economic stability, as they are used to manage external debt obligations, stabilize the currency, and finance imports. The slight overall decline, coupled with the contrasting movements between the SBP and commercial banks, indicates a nuanced shift in the country's financial landscape. Monitoring these changes is essential for understanding Pakistan's economic health and its ability to meet international financial commitments.

What's Next: 

Looking ahead, it's very important for Pakistan to keep a close watch on its stock of dollars, which helps the country pay off debts and deal with unexpected financial challenges. When there aren’t enough dollars in the market, the SBP steps in to buy extra dollars to stop the rupee from falling too fast. This can stabilize the currency in the short term, but it also slowly drains the country’s savings. In other words, while buying dollars now may seem like a quick fix, it leaves Pakistan with fewer reserves to cover future debt payments or unexpected problems, potentially putting the economy at risk if global conditions worsen. In the future, the government should work on boosting exports, attracting more foreign investment, and securing additional external financing to build up its reserves and reduce reliance on these short-term fixes.

PIA Approves Pay Raise Amid Financial Struggles

What Happened:

Pakistan International Airlines (PIA) has approved a cadre-wise salary increase for employees, marking the first pay raise in four years. This decision comes despite the airline’s ongoing financial difficulties and efforts to cut costs. The total number of PIA employees has now fallen below 7,000, and further downsizing is expected.

Why It Matters:

PIA’s financial troubles have long been a burden on Pakistan’s economy, with the airline relying on government bailouts to stay afloat. While the salary increase is a relief for employees struggling with high inflation, it also raises concerns about PIA’s ability to manage costs. The airline is already under pressure to restructure and privatize to reduce losses.

What’s Next:

To ensure long-term sustainability, PIA must focus on reducing operational inefficiencies and increasing revenue. The government’s privatization plan for PIA remains a key factor in determining its future. The success of these efforts will play a crucial role in easing Pakistan’s fiscal burden and improving overall economic stability.

Government Ends Wheat Support Price to Follow IMF Deal

What Happened:

The government has decided to stop setting a minimum wheat price for farmers, a practice that ensured they got a fair price for their crops. This decision was made as part of an agreement with the IMF. The government will no longer buy wheat at a fixed rate, leaving prices to be determined by the market.

Why It Matters:

Farmers who rely on the support price for stable income may face uncertainty, as wheat prices will now depend on market demand and supply. The wheat price has already taken a hit by declining 35% in one year. (📊See Chart) However, the government says there is enough wheat in the country, so no imports will be needed this year. The private sector is expected to play a bigger role, with commercial banks helping farmers with storage facilities.

What’s Next:

With no fixed price guarantee, farmers may need to sell wheat at market rates, which could fluctuate. The impact will depend on demand, supply, and private sector involvement. While the government promises smooth wheat movement across the country, farmers and consumers will be closely watching how prices behave in the coming months.

Reko Diq Adds 23% More Gold to Barrick’s Reserves

What Happened:

Barrick Gold has increased its gold reserves by 23%, adding 13 million ounces from Pakistan’s Reko Diq copper-gold project after a feasibility study. This makes Reko Diq one of the largest untapped gold and copper sites globally. Meanwhile, gold prices in Pakistan have hit a record high, crossing Rs300,000 per tola for the first time, driven by global economic uncertainty and rising international prices.

Why It Matters:

Pakistan owns a 50% stake in Reko Diq, meaning the project could bring significant economic benefits, create jobs, and attract foreign investment. At the same time, soaring gold prices impact consumers, making jewelry and investments more expensive while reinforcing gold’s role as a safe haven asset during global market uncertainty. The combination of increased gold reserves and record-high prices highlights Pakistan’s growing role in the gold market.

What’s Next:

Reko Diq is expected to start production by 2028, with infrastructure development, investment, and regulatory approvals being key next steps. Meanwhile, gold prices are likely to stay elevated if global trade tensions persist and economic indicators continue to influence markets, potentially keeping gold an expensive but attractive investment.

FUNDS IN VIEW:

With interest rates declining further, this week we review the equity funds that have delivered the highest industry-wise returns over the past three years! While short-term performance is notable, true success lies in consistency—viewing fund performance over the longer run is key to unlocking sustainable, long-term returns.

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

Riddle Answer! 🥁

Here for the answer to last week's riddle?

Drum roll, please... 🥁 The answer is "Mutual Funds"!

Mutual funds grow when the market rises and may decline during downturns. They come in various forms, including equity and Shariah-compliant options, with returns that fluctuate in tune with market conditions.

• AlBaik’s Pakistan Expansion:
  Saudi fast-food giant AlBaik is on the verge of entering Pakistan, with the expansion process in its final stages following a memorandum of understanding signed last year.

• ‘Made in Pakistan’ Expo in Jeddah:
  Commerce Minister Jam Kamal Khan recently launched the country’s first-ever ‘Made in Pakistan’ exhibition in Jeddah, marking a major step in boosting trade ties with Saudi Arabia by showcasing Pakistan’s diverse industrial strengths.

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