Fitch raises Pakistan's rating due to stronger external liquidity

Morning! Savoring steaming hot chai by the window, enduring day-long power shortages, submitting work-from-home requests to our bosses, maneuvering through flooded streets, enjoying cozy weather, and catching the seasonal fever and flu…

Hi, monsoon, we have mixed feelings for you.

In this week’s edition:

💄 From toybox to silver screen

📈 From C- to C

🧵 Someone went bird-hunting and succeeded

🌱 Sowing seeds for a better future (literally) 

- The Itla Squad 💼

Business

Global 🌎️

Pink is the new black

Barbie is strutting her way onto the silver screen, generating a buzz that could spell good news for Mattel, the company behind the iconic doll brand. Warner Bros. Discovery is bringing us the highly anticipated Barbie movie, but Mattel has bigger plans in store.

Lights, Camera, Barbie! Mattel has faced challenges in recent years, including declining sales and profitability, but under the leadership of CEO Ynon Kreiz, the company has undergone a turnaround by aiming to leverage its intellectual property (IP) and create content based on its iconic brands and characters.

• With partnerships, TV shows, and its own publishing house, Mattel is expanding beyond traditional toy manufacturing.

• The Barbie movie, along with its digital, gaming, and media ventures, presents revenue-generating opportunities and enhances the brand's reach. Think Walt Disney, but with lots of pink.

• Mattel has also 14 potential movie adaptations in the works, including Hot Wheels and Masters of the Universe. They're aiming to build entire franchises, capturing the imagination of audiences.

Zooming out: The success of the Barbie movie could benefit all stakeholders involved, including Mattel's stock and financial performance. However, sustained growth and the realization of Mattel's turnaround strategy will require more than one hit movie.

TLDR: Barbie's movie debut is generating buzz and could be a game-changer for Mattel. With plans for 14 potential movie adaptations and a focus on leveraging its intellectual property, Mattel aims to build franchises and expand beyond traditional toys. The success of the Barbie movie has the potential to impact Mattel's stock and financial performance, but long-term growth will require more than just one hit film.

What else is new in news

✶Foxconn, the world's largest contract electronics maker, has withdrawn from a $19.5 billion semiconductor joint venture with Vedanta in India. This setback hampers Prime Minister Narendra Modi's chipmaking plans for the country.

Local 🇵🇰

From C- to C (and we are not talking about our college grades)

Fitch just gave Pakistan a boost by upgrading its long-term foreign currency issuer default rating (IDR) from 'CCC-' to 'CCC'. The upgrade is a result of improved external liquidity and funding conditions following the staff-level agreement with the IMF.

It’s not all rainbows: While things are looking up, Fitch reminds us that there are still some risks involved in implementing the IMF program and securing external funding. The volatile political climate and the country's large external financing needs could create some challenges along the way.

• Pakistan aims to secure $25 billion in new external financing for the fiscal year. However, market issuance and commercial bank borrowing pose challenges to achieving this target.

• Pakistan has made significant progress in narrowing its current account deficit (CAD) thanks to import restrictions, fiscal policies, and lower commodity prices. Fitch predicts a CAD of around $4 billion for the year. However, there are concerns about import backlogs and the need for reconstruction after last year's floods.

• Fitch expects Pakistan's consolidated general government fiscal deficit to widen to 7.6% in FY24, driven by higher interest costs on domestic debt. Efforts to consolidate finances aim to improve the primary deficit. However, Pakistan's debt/revenue and interest/revenue ratios are higher compared to peer nations.

TLDR: Fitch upgraded Pakistan's IDR to 'CCC' after the IMF agreement. Challenges persist in program implementation and securing external financing. Pakistan targets $25bn in new funding, facing hurdles in market issuance and bank borrowing. Current account deficit narrowed, but import backlogs and post-flood reconstruction remain concerns. Fiscal deficit expected to widen, but efforts to improve the primary deficit are underway.

News Flash

✶It's not just oil anymore—more and more goods are making their way from Russia under the Transport International Route (TIR) agreement. On Friday, a couple of cargo containers packed with pulses and other goodies rolled into Torkham from Russia.

Tech

Global 🌎️

Meta went bird-hunting and ate it for breakfast

In less than 48 hours, Meta's Threads, a rival app to the bird app, Twitter, has taken the social media landscape by storm, surpassing a staggering 70 million sign-ups.

Instagram is the real star: Threads owes its rapid success to its affiliation with Instagram, boasting a massive user base of over two billion. By seamlessly integrating with Instagram accounts, Threads sidesteps the challenges of starting from scratch, giving it a head start in the social media race.

Critics in 3 2 1…As the dust settles, users flocking to Threads to escape the chaos of Elon Musk's Twitter worry that it may only consolidate more power for Meta and its CEO Mark Zuckerberg.

Social Media Matrix: Threads holds a secret weapon that might quell competition concerns: interoperability.

• This fancy word means that users would be able to move their accounts and follower data to other platforms without being controlled by Meta.

• While this feature is not currently available, Instagram's CEO, Adam Mosseri says that it could lead to a decentralized social media network.

• This would offer users more choices and promote competition based on product quality rather than platform dominance.

Zuckerberg VS Musk: In a letter sent by Twitter to Mark Zuckerberg, the company claims that Meta hired former Twitter employees who retained confidential information and were involved in developing Threads. While Meta dismissed the accusations, this legal threat signifies Twitter's view of Threads as a competitive threat.

Zooming out: The legal action may serve as a strategy to slow down Meta's progress in the microblogging space.

TLDR: Meta's Threads app has achieved remarkable success with over 70 million sign-ups in under 48 hours, posing a challenge to Twitter. Integration with Instagram and the potential for interoperability give Threads an edge. Concerns arise about Meta's growing power, while legal battles with Twitter highlight the competitive landscape.

What else is new in news

✶AI is making its way into hospitals with Google's Med-PaLM 2, an advanced AI tool designed to answer medical questions. Since April, this cutting-edge technology has been undergoing testing at renowned medical institutions, including the Mayo Clinic research hospital.

Local 🇵🇰 

Pak is sowing seeds for a better future (literally)

Pakistan is stepping up its farming game with the Land Information and Management System, Center of Excellence (LIMS-CoE). This exciting initiative aims to revolutionize farming by utilizing over nine million hectares of uncultivated state land.

What will it do? The state-of-the-art LIMS-CoE is set to revolutionize the way agricultural development is approached.

• Real-time information on land, crops, weather, water resources, and pest control will be consolidated under one roof.

• With a focus on sustainable practices and innovative technologies, the center aims to optimize agricultural production while ensuring the well-being of rural communities and environmental preservation.

• Here's the secret sauce: hybrid seeds. Currently, Pakistan only utilizes 8 percent hybrid seeds, while the world average stands at a whopping 80 percent. By promoting certified hybrid seeds, the center aims to utilize the full potential of fields, aiming for a 30-50 percent increase in yields.

Zooming out: LIMS-CoE is not just a local endeavor. Saudi Arabia has provided an initial investment of $500 million to set up the facility, and collaborations with Saudi Arabia, the United Arab Emirates, Qatar, Bahrain, and China are underway.

TLDR: Pakistan's LIMS-CoE aims to revolutionize farming by utilizing uncultivated state land, providing real-time information and promoting sustainable practices. It seeks to increase crop yields with hybrid seeds and has received an initial investment from Saudi Arabia.

Tech tour of news

✶Farmdar, a prominent Agritech startup in Pakistan, has introduced AgromAI, a fintech venture in Brazil. This new initiative leverages artificial intelligence (AI) and geospatial data to offer innovative financial services.

More interesting Itla (اطلاع) we consumed:

🛋️ This interview takes us on an exclusive tour of OpenAI's cutting-edge offices, where we meet up with the genius behind ChatGPT, Mira Murati, the company's Chief Technology Officer. While the conversation was cool and all, the brilliant and classy interior design of the OpenAI’s office was almost enough to make it look like an Architectural Digest Video.

🎭 If you are a single, straight woman, you are missing out on this comedy set by Leslie Liao. Liao's got killer comedic timing and a laid-back, brutally honest approach that instantly connects and ends up with you immediately searching more for her work.