By: Pearl Securities Limited
Economy: Pakistan’s Trade deficit has contracted by US$1.08bn (12% YoY) in 4mFY16 (Jul- Oct’15). 12.9% drop in import value (US$2.15bn) is proportionately larger than 13.5% export decline (Value: US$1.07bn).
Substantial drop in global oil prices remains the factor behind low import bill partially supported by lower food/commodities imports.
Unfavorable export performance is noticed in nearly all segments; in value terms, most notable decline is seen in the Textile group of 7% (US$315mn).
Moving forward, local exporting firms will benefit from Pak Rupee depreciation. US$ has climbed to PKR 105.6/USD, greater by 3.7% against rate at start of FY16.
On behest of the IMF, the Finance Minister has increased regulatory duties (RD) on a variety of imported goods to help shore up national revenue. This move is expected to help local manufacturers.
Increased RD on particular imports is directly beneficial to the Food, Auto & Allied, Engineering, and Textile sectors. Companies like PAEL, EFOODS, MFFL, NATF, INDU, HCAR, among others stand to benefit.