KASB Morning Shout Out1 min read

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KASB Morning Shout: We expect to hear more on the front of Chinese financial assistance. Firstly we think the market is underappreciating the significance of the currency swap. In the past the SBP has used it to borrow money in yuan against PkR and then convert that into USD to shore up reserves. It is a way of short term borrowing. Its more significant than the deferred oil payments facility. Secondly, Asad Umer has been quoted that talks are underway for more financial assistance but the details have not been finalised yet. Thirdly, as we wrote in our blog on Sunday, we think that Pakistan has taken steps to mend the relationships with the US (release of Mullah Baradar and the SC verdict). US deputy Secretary of State Alice Wells is visiting the country ahead of the IMF talks. Lastly, foriegn investors could get comfort if the government announces that it’s going to take economic reforms under an IMF program. In the international markets, today the US will go through midterm elections and the outcome could have implications for US policy direction. Oil prices continue to decline on the back of exemptions giving to Iran to export oil to 8 countries. Also Russia and China are expected to continue to deal with Iran. Asian markets continued their slide down due to the concerns around US tarrifs. The Chinese market is now down more than 30% YTD.

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