BMA Today for March 20, 2019 
 
     WEDNESDAY 20 March 2019 
 
 

 

   

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At a Glance

Previous Market Session

Local Market    
 KSE 100 N.A N.A
 KSE T. Value PKRbn N.A N.A
 10YR PIB N.A N.A
 6M KIBOR N.A. N.A.
 PKR/USD N.A. N.A.
Asia Pacific    
 BSE SENSEX 30 N.A N.A.
 NIKKEI 225 N.A N.A.
 STRAITS TIMES INDEX N.A N.A.
 KUALA LUMPUR N.A N.A.
 JAKARTA COMP. N.A N.A.
 THAI SET 50 N.A N.A.
Middle East    
 DFM GENERAL N.A N.A.
 TADAWUL ALL SHARE N.A N.A.
 MSM30 INDEX N.A N.A.
 KUWAIT SE WEIGHTED N.A N.A.
 DSM 20 INDEX N.A N.A.
Global Markets    
 OIL (NYMEX) N.A. N.A.
 US 10YrBOND N.A. N.A.
 LIBOR6MTH N.A. N.A.
 FTSE 100 N.A N.A.
 DOWJONES N.A N.A.
 S&P 500 N.A N.A.
       
 
In Focus
Pakistan Economy: Fiscal Deficit - Government in a fix

   We believe size of the fiscal deficit (FD) and financing of the same will continue to pose major challenge to the governments efforts on fiscal consolidation well beyond FY19. Resultantly, the upcoming budget for FY20 (due in May/Jun) has assumed greater importance. The slowdown in economic activity and structural inflexibility in curtailing expenditure (interest cost+Defense+Admin=120% of total revenues) poses double whammy for the government in its efforts to meaningfully reduce fiscal deficit without compromising economic growth. We now project FD of over 6% in FY19 up from 5.5%. Furthermore, we believe FD in FY20 may range between 5.3-5.5%. Pakistan’s impending entry into a fresh IMF program throws up more challenges for the government. Notwithstanding government’s efforts to undertake major tax reforms, expediency of producing near-term results suggests reliance on tried and tested means of increasing revenues and controlling expenditure. We see two major implications for the market (i) the constrained outlay of development spending and lower economic growth presents a not-so-encouraging backdrop for cyclicals and to a certain extent agri plays and (ii) heightened focus on fiscal numbers.

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Media Watch

Economy: Tribal districts to get Rs100 bn annually PM / The News
Economy: Imran Khan-led govt to reimburse inflated gas bills amounting Rs2.5b / Tribune
Sectoral: Pakistan Oxygen plans new ASU / Dawn
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DISCLAIMER
This memorandum is produced by BMA Capital Management Limited and is only for the use of their clients. While the information contained herein is from sources believed reliable, we do not represent that it is accurate or complete and should not be relied upon as such. Opinions expressed may be revised at any time. This memorandum is for information only and is not an offer to buy or sell, or solicitation of any offer to buy or sell the securities mentioned.