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CFS Posiition / Foreign Trading
Started by MJI, Apr 06 2009 01:09 PM
CFS Posiition Foreign Trading investment
1745 replies to this topic
#1743
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Posted 19 May 2012 - 02:21 PM
FY12 CA Deficit to clock in at 1.7% of GDP
The Apr'12 Current Account deficit has come in at US$313mn. As a result, the 10MFY12 CA deficit has registered at US$3.39bn vs. a surplus of US$466mn in 10MFY11. The expansion in CA deficit is primarily due to wider trade deficit (goods), which reached US$12.7bn in 10MFY12 vs. US$8.5bn in 10MFY11, up 49%YoY following a rising import bill (up 14.5%YoY) and flat exports (up 0.1%YoY). On a positive note, the upward trend in remittances has continued, up 20%YoY to US$10.9bn in 10MFY12. On the Balance of Payments front, FDI continued its lackluster trend, declining by 21%YoY in 10MFY12 while risks to fx reserves stem from upcoming loan repayment to IMF of US$417mn this month and latent concerns on the PkR. While BoP risks remain (the Finance Minister has recently highlighted nascent concerns), we flag
1) uptick in US-Pakistan relations that could see release of US$2.9bn CSF and
2) falling global commodity prices particularly oil, as key factors that could alleviate the BoP position in the near-term. We expect the FY12 CA deficit to clock at ~US$4bn (1.7% of GDP).
Dissecting the CA: While 10MFY12 net current transfers and remittances have registered growth of 13%YoY and 20%YoY, respectively, the trade deficit (goods) has widened by a sizeable 49%YoY to US$12.7bn. Exports have stayed flat at US$20.5bn due to lower cotton prices while the import bill is up 14.5%YoY to US$33.2bn due to sticky int'l oil prices in the review period. Our trade deficit projection for FY12 is US$15bn.
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Falling global commodities a +ve: Recent fall in global commodity prices (TRJ-CRB Index is lower by 11.1% from CTYD peak) spells improvement at the margin for Pakistan, particularly if oil prices continue to come off. In this regard, Arab Light price has shed more than 15% from its CYTD peak with global macros painting an increasingly subdued picture. At the same time, int'l cotton price has come off by 14% from CYTD peak. In our view, considering Pakistan's 10MFY12 exports have been flat while the import bill has been higher, recent trend in commodity prices should incrementally have a net beneficial impact on CA numbers and consequently the BoP profile over the near-term.
Funds flow a swing factor: While risks to the BoP position stem from IMF repayments and latent pressures on the currency, we flag recent uptick in US-Pakistan relations as potentially a key positive. In this regard, the US Congress has comprehensively vetoed the Pakistan Terrorism Accountability Act 2012 bill which called for aid curtailment to Pakistan. Presently, negotiations are underway on a deal that will see reopening of overland Nato supply routes (Pakistan seeking US$2,500/container) which could also pave the way for gradual release of US$2.9bn CSF backlog.
CA Outlook: With current commodity prices likely to reflect in SBP data with a 3M lag (deferred payments), we retain our view that the full-year FY12 CA deficit will clock in close to US$4bn (1.7% of GDP). While risks certainly remain (we do not rule out an official return to IMF program in 2013), current trend in global commodity prices could potentially result in CA numbers delivering +ve surprises in 1QFY13 which would put to rest any immediate concerns on the state of the BoP position. Release of foreign funds could also be an important swing element.
(AKD)
The Apr'12 Current Account deficit has come in at US$313mn. As a result, the 10MFY12 CA deficit has registered at US$3.39bn vs. a surplus of US$466mn in 10MFY11. The expansion in CA deficit is primarily due to wider trade deficit (goods), which reached US$12.7bn in 10MFY12 vs. US$8.5bn in 10MFY11, up 49%YoY following a rising import bill (up 14.5%YoY) and flat exports (up 0.1%YoY). On a positive note, the upward trend in remittances has continued, up 20%YoY to US$10.9bn in 10MFY12. On the Balance of Payments front, FDI continued its lackluster trend, declining by 21%YoY in 10MFY12 while risks to fx reserves stem from upcoming loan repayment to IMF of US$417mn this month and latent concerns on the PkR. While BoP risks remain (the Finance Minister has recently highlighted nascent concerns), we flag
1) uptick in US-Pakistan relations that could see release of US$2.9bn CSF and
2) falling global commodity prices particularly oil, as key factors that could alleviate the BoP position in the near-term. We expect the FY12 CA deficit to clock at ~US$4bn (1.7% of GDP).
Dissecting the CA: While 10MFY12 net current transfers and remittances have registered growth of 13%YoY and 20%YoY, respectively, the trade deficit (goods) has widened by a sizeable 49%YoY to US$12.7bn. Exports have stayed flat at US$20.5bn due to lower cotton prices while the import bill is up 14.5%YoY to US$33.2bn due to sticky int'l oil prices in the review period. Our trade deficit projection for FY12 is US$15bn.
.
Falling global commodities a +ve: Recent fall in global commodity prices (TRJ-CRB Index is lower by 11.1% from CTYD peak) spells improvement at the margin for Pakistan, particularly if oil prices continue to come off. In this regard, Arab Light price has shed more than 15% from its CYTD peak with global macros painting an increasingly subdued picture. At the same time, int'l cotton price has come off by 14% from CYTD peak. In our view, considering Pakistan's 10MFY12 exports have been flat while the import bill has been higher, recent trend in commodity prices should incrementally have a net beneficial impact on CA numbers and consequently the BoP profile over the near-term.
Funds flow a swing factor: While risks to the BoP position stem from IMF repayments and latent pressures on the currency, we flag recent uptick in US-Pakistan relations as potentially a key positive. In this regard, the US Congress has comprehensively vetoed the Pakistan Terrorism Accountability Act 2012 bill which called for aid curtailment to Pakistan. Presently, negotiations are underway on a deal that will see reopening of overland Nato supply routes (Pakistan seeking US$2,500/container) which could also pave the way for gradual release of US$2.9bn CSF backlog.
CA Outlook: With current commodity prices likely to reflect in SBP data with a 3M lag (deferred payments), we retain our view that the full-year FY12 CA deficit will clock in close to US$4bn (1.7% of GDP). While risks certainly remain (we do not rule out an official return to IMF program in 2013), current trend in global commodity prices could potentially result in CA numbers delivering +ve surprises in 1QFY13 which would put to rest any immediate concerns on the state of the BoP position. Release of foreign funds could also be an important swing element.
(AKD)
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#1744
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Posted 19 May 2012 - 02:25 PM
CA – Back to a deficit
Current account deficit for Apr12 clocked in at USD 313mn, deteriorating sharply from a surplus of USD 142mn in the preceding month. Mar12 was the only month in the ongoing fiscal year that recorded a current account surplus. An expanding trade deficit explains the change in the current account status where imports shot up by 7% MoM on the back of higher oil prices. Exports on the other hand remained stagnant – resultantly, the trade deficit widened by 24% MoM to PKR 1.00bn. On a more positive note, remittances continue to remain strong, clocking in above PKR 1.10bn for the fourth consecutive month.
Financial account & foreign investment
Financial account has extended crucial support to the balance of payments during 10mo FY12, with a surplus of USD 1.20bn against USD 0.69bn in the corresponding period of last year. However FDI has declined by 48% YoY to USD 668mn while portfolio investment (both debt & equities) depicted an outflow of USD 24mn against an outflow of USD 7mn in the corresponding period of last year.
Outlook
While oil prices have edged down to their current level of USD 111/bbl from a high of USD 127/bbl in Mar12, oil import bill is likely to remain strong due to higher demand in the summer. On the flip side, recent progress on US-Pak relation including potential reopening of NATO supply routes bode well for possible disbursement under CSF. However, scheduled IMF repayments (USD 417mn in May12, USD 115mn in Jun12 and USD 1.10bn in 1H FY13) are likely to keep foreign reserves under pressure – reserves are already down by 20% FY12TD and the delays in projected external flows through 3G auctions and privatization proceeds are another key concern.
(Global)
Current account deficit for Apr12 clocked in at USD 313mn, deteriorating sharply from a surplus of USD 142mn in the preceding month. Mar12 was the only month in the ongoing fiscal year that recorded a current account surplus. An expanding trade deficit explains the change in the current account status where imports shot up by 7% MoM on the back of higher oil prices. Exports on the other hand remained stagnant – resultantly, the trade deficit widened by 24% MoM to PKR 1.00bn. On a more positive note, remittances continue to remain strong, clocking in above PKR 1.10bn for the fourth consecutive month.
Financial account & foreign investment
Financial account has extended crucial support to the balance of payments during 10mo FY12, with a surplus of USD 1.20bn against USD 0.69bn in the corresponding period of last year. However FDI has declined by 48% YoY to USD 668mn while portfolio investment (both debt & equities) depicted an outflow of USD 24mn against an outflow of USD 7mn in the corresponding period of last year.
Outlook
While oil prices have edged down to their current level of USD 111/bbl from a high of USD 127/bbl in Mar12, oil import bill is likely to remain strong due to higher demand in the summer. On the flip side, recent progress on US-Pak relation including potential reopening of NATO supply routes bode well for possible disbursement under CSF. However, scheduled IMF repayments (USD 417mn in May12, USD 115mn in Jun12 and USD 1.10bn in 1H FY13) are likely to keep foreign reserves under pressure – reserves are already down by 20% FY12TD and the delays in projected external flows through 3G auctions and privatization proceeds are another key concern.
(Global)
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#1745
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Posted Yesterday, 12:37 PM
KSE witnesses net foreign outflows of USD6.017 mn
Foreign Investors' Portfolio Investment (FIPI) data reported by National Clearing Company of Pakistan Limited (NCCPL) revealed that net outflow of $6.017 million or Rs 541.577 million was witnessed from Karachi Stock Exchange (KSE) during the week ended on May 18, 2012 as compared to that net inflow of $3.326 million or Rs 299.388 million reported last week.
According to the NCCPL data, the foreign institutional investors were gross buyers of Rs 1,797.273 million worth of shares and were gross sellers of Rs 2,338.850 million worth of shares during the week. Mutual Funds were net sellers of Rs 1,097.854 million worth of shares, but companies were net buyers of Rs 182.260 million worth of shares during the week under review. In the mean time, other organizations remained as net buyers of Rs 156.109 million worth of shares, individuals also remained as net buyers of Rs 862.031 million worth of shares and Banks/DFI were net buyers of Rs 656.624 million worth of shares during the week, data revealed by NCCPL.
Positive outcomes are expected from Chicago conference that will definitely affect the market trend. Market has lost substantial points in last week therefore investors are expected to buy at lower level. Investors are expected to remain cautions till the presentation of budget, hence heavy investment is not expected during the next week.
(MMSPL)
Foreign Investors' Portfolio Investment (FIPI) data reported by National Clearing Company of Pakistan Limited (NCCPL) revealed that net outflow of $6.017 million or Rs 541.577 million was witnessed from Karachi Stock Exchange (KSE) during the week ended on May 18, 2012 as compared to that net inflow of $3.326 million or Rs 299.388 million reported last week.
According to the NCCPL data, the foreign institutional investors were gross buyers of Rs 1,797.273 million worth of shares and were gross sellers of Rs 2,338.850 million worth of shares during the week. Mutual Funds were net sellers of Rs 1,097.854 million worth of shares, but companies were net buyers of Rs 182.260 million worth of shares during the week under review. In the mean time, other organizations remained as net buyers of Rs 156.109 million worth of shares, individuals also remained as net buyers of Rs 862.031 million worth of shares and Banks/DFI were net buyers of Rs 656.624 million worth of shares during the week, data revealed by NCCPL.
Positive outcomes are expected from Chicago conference that will definitely affect the market trend. Market has lost substantial points in last week therefore investors are expected to buy at lower level. Investors are expected to remain cautions till the presentation of budget, hence heavy investment is not expected during the next week.
(MMSPL)
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