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CCP Approves Acquisition of Faysal Asset Management Funds by Alfalah Asset Management

Khashif Sarfraz
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CCP Approves Acquisition of Faysal Asset Management Funds by Alfalah Asset Management

CCP Approves Alfalah Asset Management’s Acquisition of Faysal Asset Management’s Fund Management Rights

The Competition Commission of Pakistan (CCP) has approved Alfalah Asset Management Limited’s acquisition of management rights for certain funds currently managed by Faysal Asset Management Limited. This approval follows a Transfer of Management Rights Agreement executed between the two asset management companies.

Overview of Alfalah Asset Management Limited

Alfalah Asset Management Limited is a leading public unlisted company that operates as both an Asset Management Company (AMC) and an investment advisor. The Securities and Exchange Commission of Pakistan (SECP) licenses the company under the Non-Banking Finance Companies (Establishment and Regulation) Rules, 2003, positioning it well in the asset management industry. Faysal Asset Management Limited also functions as an AMC and investment advisor under the same regulatory framework.

Agreement Details

According to the agreement, Alfalah Asset Management Limited will acquire management rights for specific funds currently managed by Faysal Asset Management Limited. This transfer will slightly increase Alfalah Asset Management’s market share, while Faysal Asset Management’s market share will see a corresponding decrease.

CCP’s Evaluation and Approval

The CCP conducted a comprehensive evaluation of the transaction and identified the relevant product market as “Asset Management Services.” Because the transaction is horizontal and the two companies have overlapping operations, the CCP concluded that the acquisition would not allow Alfalah Asset Management to gain a dominant position in the market.

Impact on the Financial Sector

The CCP’s approval underscores its commitment to maintaining a competitive environment in the financial services sector. By approving this transaction, the CCP ensures that the asset management industry continues to grow sustainably, fostering innovation while maintaining healthy competition.

This transfer is anticipated to strengthen Alfalah Asset Management’s market position, although it will result in only a slight increase in market share, which will help maintain robust competition within the industry.

Petroleum Prices Drop for Third Consecutive Fortnight Amid Lower International Market Rates

Khashif Sarfraz
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Petroleum Prices Drop for Third Consecutive Fortnight Amid Lower International Market Rates

Introduction

For the third consecutive fortnight, the prices of major petroleum products—petrol and high-speed diesel (HSD)—are anticipated to decrease by approximately Rs5-6 per litre. This reduction is primarily attributed to the declining international market rates for the fortnight commencing September 1.

International Market Influences

Informed sources have indicated that the prices of petrol and HSD have fallen in the international market by between $2 to $2.30 per barrel over the past fortnight. Depending on the final exchange rate calculations and existing tax structures, this international price drop is projected to translate into a domestic price reduction of Rs5 to Rs5.50 per litre for both petrol and HSD.

Detailed Price Movements

  • Petrol Prices:

    • International Decline: The average international price of petrol has decreased to approximately $80.40 per barrel from $82.50 per barrel.
    • Local Pricing: The ex-depot price of petrol currently stands at Rs260.96 per litre. In the previous pricing review on August 14, the government reduced petrol prices by Rs8.47 per litre.
    • Total Reduction: Over the last two fortnights, petrol prices have been reduced by a total of Rs14.64 per litre, which includes a Rs6.17 per litre decrease on July 31.

  • High-Speed Diesel (HSD) Prices:

    • International Decline: HSD prices declined internationally to about $88 per barrel from $90.30 per barrel.
    • Local Pricing: The ex-depot price of HSD is currently Rs266.07 per litre. The last pricing review on August 14 saw a reduction of Rs6.70 per litre.
    • Total Reduction: In the last two fortnights, HSD prices have decreased by Rs17.56 per litre, including a Rs10.86 per litre reduction on July 31.

Factors Contributing to Price Reductions

  1. Import Premium Adjustments:
    • The import premium on petrol has decreased by approximately 50 cents per barrel to $8.50.
    • The import premium on HSD has remained unchanged at $5 per barrel.
  2. Exchange Rate Fluctuations:
    • The local currency has appreciated against the US dollar by 25 cents during the fortnight, contributing to the reduction in local fuel prices.

Historical Price Trends

  • Recent Increases:
    • In the first fortnight of July, petrol and HSD prices increased by Rs17.44 and Rs15.74 per litre, respectively.
  • Long-Term Reductions:
    • Between May 1 and June 15, petrol and HSD prices were reduced by approximately Rs35 and Rs22 per litre, respectively.

Impact on Various Sectors

  • Petrol: Primarily used in private transport, small vehicles, rickshaws, and two-wheelers, petrol price reductions directly benefit the middle and lower-middle classes by easing their transportation costs.
  • High-Speed Diesel (HSD): HSD is predominantly used in the transport sector, including heavy vehicles, trains, agricultural engines, trucks, buses, tractors, tube wells, and threshers. Therefore, price reductions in HSD are considered inflationary as they can lower transportation and production costs, potentially reducing the prices of vegetables and other essential commodities.

Taxation and Government Revenue

Despite the price reductions in petrol and HSD, the government has increased the maximum limit of petroleum levy to Rs70 per litre in the finance bill. This move aims to collect Rs1.28 trillion in the next fiscal year, up from Rs1.019 trillion in the previous year, which is nearly Rs150 billion above the Rs869 billion budget target.

Current tax structure on petroleum products includes:

  • Petrol and HSD:

    • Petroleum Development Levy (PDL): Rs60 per litre
    • Custom Duty: Rs18 per litre
    • Distribution and Sale Margins: Approximately Rs17 per litre to oil companies and their dealers

  • Light Diesel and High Octane Blending Components & 95RON Petrol:

    • Tax: Rs50 per litre, primarily affecting luxury imported vehicles

The government currently charges around Rs78 per litre in taxes on both petrol and HSD. Although the General Sales Tax (GST) on all petroleum products is zero, the combination of PDL, custom duties, and distribution margins significantly impacts the final price paid by consumers.

Conclusion

In conclusion, he recent decline in international petroleum prices has led to a modest reduction in domestic petrol and HSD prices in Pakistan for the third consecutive fortnight. While these reductions provide some financial relief to consumers, particularly in the transportation and agricultural sectors, the increased taxation policies by the government aim to bolster fiscal revenues. The overall impact on inflation and the cost of living remains nuanced, with potential benefits in transportation costs offset by the tax-induced price structures on essential commodities.

Pakistan Stock Exchange Ends Flat Amid Volatility and Profit-Taking

Khashif Sarfraz
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Pakistan Stock Exchange Ends Flat Amid Volatility and Profit-Taking

Market Overview

On Friday, the Pakistan Stock Exchange (PSX) witnessed continuous fluctuations, with the KSE-100 index ending the day flat despite some volatility. The market was under pressure due to the nearing end of the corporate earnings season and the futures rollover, which influenced investor sentiment.

Trading Session Highlights

The trading day started positively, with the KSE-100 index reaching its intra-day peak of 79,173.94 within the first hour. However, as the session progressed, bearish sentiments took over, driving the index below the 79,000 mark. Despite remaining largely in the positive zone, the index experienced profit-taking, dragging it to the intra-day low of 78,760.03.

Key players in the pharmaceutical sector provided some stability, helping the market close virtually unchanged. By the end of the session, the KSE-100 index had a slight increase of eight points, settling at 78,801.43.

Analyst Insights

Ahsan Mehanti, Managing Director of Arif Habib Corp, commented, “Stocks closed flat amid pressure as the earnings season neared its end and due to futures rollover.” He noted that earlier gains were wiped out by concerns over the rising power tariffs leading to industrial closures and the falling rupee. However, falling bond yields and record sales in the pharma sector acted as positive catalysts.

Topline Securities also reported that while the KSE-100 traded mostly in the positive zone, some profit-taking towards the end led to the flat close. The pharmaceutical sector was notably active, with eight out of 12 listed companies closing at their upper circuit. Investor interest was likely fueled by a pharma conference and the announcement of strong earnings by Haleon Pakistan and Glaxo.

Sectoral Performance

Arif Habib Limited (AHL) highlighted that the KSE-100 index gained 0.8% on a weekly basis, setting the stage for potential moves towards the 80,000 level in the coming week. United Bank Limited (+1.67%), Highnoon Laboratories (+9.95%), and Abbott Laboratories (+10%) were the biggest contributors to the index’s gains. On the other hand, Dawood Hercules (-3.2%), Lucky Cement (-1.38%), and Habib Metropolitan Bank (-2.88%) weighed down the index.

Trading Volumes

Trading volumes focused on small-cap stocks, with Kohinoor Spinning Mills leading with 81.7 million shares traded, followed by K-Electric and Pace Pakistan. Overall trading volumes decreased to 682.4 million shares from Thursday’s 804.3 million, with a total value of Rs18.2 billion.

Market Outlook

Looking ahead, JS Global analyst Mohammed Waqar Iqbal suggested that the market might continue its consolidation phase, though positive economic developments could potentially lift market sentiment.

Conclusion

The PSX ended the week on a flat note, with the KSE-100 index experiencing minor fluctuations. As the earnings season concludes, market participants are likely to remain cautious, keeping an eye on any upcoming economic developments that could influence trading activity.

ANOVA: Types and One-Way ANOVA Calculation in R

Khashif Sarfraz
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Introduction to ANOVA

Analysis of Variance (ANOVA) is a statistical method used to compare means across multiple groups. It helps determine if there are any statistically significant differences between the means of three or more independent groups. ANOVA is widely used in various fields, including biology, economics, psychology, and more.

Types of ANOVA

There are several types of ANOVA, each suited to different kinds of data and experimental designs:

  1. One-Way ANOVA: This is used when you have one independent variable with more than two levels (groups) and one dependent variable. It assesses whether there is a significant difference in the means of the groups.
  2. Two-Way ANOVA: This is used when you have two independent variables. It helps in understanding the interaction between the two variables and their impact on the dependent variable.
  3. Repeated Measures ANOVA: This type is used when the same subjects are used in all treatment conditions, meaning that the data points are not independent. It accounts for the correlation between the measurements taken on the same subjects.
  4. MANOVA (Multivariate Analysis of Variance): This is an extension of ANOVA when there are multiple dependent variables. MANOVA assesses the differences in the dependent variables based on the levels of the independent variable(s).

Calculating One-Way ANOVA in R Programming

To calculate a One-Way ANOVA in R, follow these steps:

  1. Step 1: Prepare Your Data: First, ensure your data is organized in a way that one column represents the groups (factor) and another column represents the values (numeric). 
    # Example dataset
data <- data.frame(
Group = factor(c("A", "A", "B", "B", "C", "C")),
Value = c(23, 25, 30, 28, 35, 32)
)
  2. Step 2: Perform One-Way ANOVA: Use the aov() function in R to perform the analysis. The formula Value ~ Group indicates that you are testing how the Group variable affects the Value.

     

    # Performing One-Way ANOVA
anova_result <- aov(Value ~ Group, data = data)

# Displaying the summary of ANOVA
summary(anova_result)
  3. Step 3: Interpret the Results: The output of the summary(anova_result) function will provide you with an F-statistic and a p-value. If the p-value is less than the significance level (commonly 0.05), you can reject the null hypothesis, indicating that there are significant differences between the group means.

Conclusion

ANOVA is a powerful tool for statistical analysis when comparing multiple groups. By understanding the different types of ANOVA and how to perform a One-Way ANOVA in R, you can effectively analyze and interpret data in your research or studies.

Pakistan Weekly Market Update – August 23, 2024: Optimism Grows Amid IMF Progress

Khashif Sarfraz
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Pakistan Weekly Market Update – August 23, 2024: Optimism Grows Amid IMF Progress

Market Commentary

Pakistan Weekly Market Update: The week commenced with slight market pressure due to Pakistan’s absence from the IMF Executive Board’s schedule for August 2024, leading to concerns about the disbursement of the expected tranche. However, optimism returned midweek when the Finance Minister announced progress in negotiations with the IMF, suggesting the possibility of securing approval from the IMF Executive Board by September 2024. This positive sentiment was further reinforced by a T-bill auction later in the week, where cutoff yields decreased by 74-148 basis points across all tenors. This drop indicated market expectations of a potential rate cut in the upcoming monetary policy meeting in September 2024. Additionally, the State Bank of Pakistan’s (SBP) reserves saw a modest increase of USD 19 million week-on-week, reaching USD 9.3 billion. The Pakistani Rupee also remained stable against the USD at 278.5. Consequently, the market closed at 78,801 points, reflecting an increase of 756 points or 0.97% week-on-week.

Sector-wise Performance

Positive contributions to the market were driven by the following sectors:

  • Commercial Banks: 369 points
  • Fertilizer: 177 points
  • Cement: 134 points
  • Leather: 79 points
  • Refinery: 47 points

On the other hand, sectors that contributed negatively included:

  • Automobile Assembler: -40 points
  • Food & Personal Care Products: -34 points
  • Technology: -20 points
  • Miscellaneous: -11 points
  • Exploration & Production (E&P): -10 points

Top Scrip-wise Contributors:

  • Positive: FFC (197 points), NBP (164 points), UBL (123 points), SRVI (79 points), OGDC (75 points)
  • Negative: MARI (-108 points), HBL (-65 points), MTL (-43 points), SYS (-41 points), ENGRO (-35 points)

Foreign Activity

Pakistan Weekly Market Update: Foreign selling was observed during the week, totaling USD 0.62 million, a sharp contrast to the net buy of USD 5.26 million in the previous week. Major selling was concentrated in the Fertilizer sector (USD 0.92 million) and Other Sectors (USD 0.92 million). On the local front, buying activity was led by Mutual Funds (USD 3.5 million) and Banks / DFIs (USD 3.5 million). Average trading volumes increased by 4.6% week-on-week to 578 million shares, while the average value traded declined by 25.2% week-on-week to USD 56 million.

Other Major News:

  1. Banking sector deposits increased by 19% to Rs30.6 trillion in July.
  2. Car financing in Pakistan declined for the 25th consecutive month.
  3. Roshan Digital Account (RDA) attracted USD 161 million in July.
  4. Large-scale manufacturing output contracted in FY24.

Outlook and Recommendation

Looking ahead, we expect the market to maintain its positive momentum in the coming week, particularly if there are favorable developments related to the IMF. Additionally, as the earnings season progresses, select stocks are likely to attract attention, driven by expectations of strong financial results.

Our Preferred Stocks:

  • OGDC
  • MCB
  • UBL
  • MEBL
  • FABL
  • HBL
  • LUCK
  • MLCF
  • FCCL
  • FFC
  • HUBC
  • PSO
  • SYS

The KSE-100 Index is currently trading at a price-to-earnings ratio (PER) of 4.1x for 2025, compared to its 5-year average of 5.9x. Additionally, it offers a dividend yield of approximately 10.3%, higher than its 5-year average of around 8.2%.

Start Your Trading Journey at PSX with Arif Habib Limited

Pakistan Extends a Hand of Support to Bangladesh Amid Devastating Floods

Aarooj Manzoor
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Pakistan Extends a Hand of Support to Bangladesh Amid Devastating Floods

Pakistan Offers Assistance Amidst Devastating Crisis

Bangladesh is facing a dire situation as heavy rains have triggered severe floods across the country, resulting in widespread devastation. The floods have already claimed the lives of at least 13 people and affected around 4.5 million others, according to the latest reports from the disaster management and relief ministry. As the country struggles to manage the crisis, neighboring Pakistan has stepped forward to offer its support.

Pakistan’s Offer of Assistance

On Friday, Pakistan’s Prime Minister Mohammad Shehbaz Sharif expressed his deep sorrow and grief over the tragic events unfolding in Bangladesh. In a letter addressed to Dr. Muhammad Yunus, the Chief Advisor of Bangladesh, PM Shehbaz conveyed Pakistan’s solidarity with the Bangladeshi people during this challenging time.

The Prime Minister highlighted that the people of Pakistan stand with those in Bangladesh who have lost their loved ones, homes, and livelihoods due to the floods. He affirmed Pakistan’s readiness to provide any assistance that may be required to help Bangladesh cope with the ongoing crisis.

The Extent of the Devastation

The floods have ravaged 11 of Bangladesh’s 64 districts, with the worst-hit area being Feni, located approximately 100 kilometers northwest of the main port city of Chittagong. The situation in Feni has been described as catastrophic, with rescue efforts underway to save as many lives as possible.

Zahed Hossain Bhuiya, a 35-year-old rescue volunteer in Feni, shared the grim reality on the ground, stating, “It’s a catastrophic situation here. We are trying to rescue as many people as we can.” The disaster has forced nearly 190,000 people into emergency relief shelters as the floodwaters continue to rise.

The Humanitarian Response

The international community has been closely monitoring the situation in Bangladesh, with several nations and organizations already offering aid. Pakistan’s offer of assistance is a testament to the strong ties between the two nations and their commitment to supporting each other in times of need.

As the situation in Bangladesh remains fluid, the focus is on providing immediate relief to those affected and preventing further loss of life. The Pakistani government’s swift response highlights the importance of regional cooperation in addressing natural disasters and providing humanitarian aid.

SBP Reserves See Modest Increase Amidst Economic Challenges

Aarooj Manzoor
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0
SBP Reserves See Modest Increase Amidst Economic Challenges

SBP Foreign Exchange Reserves Post Marginal Weekly Increase

The State Bank of Pakistan (SBP) has reported a slight increase in its foreign exchange reserves for the week ending August 16, 2024. According to the latest data released by the central bank on Thursday, the reserves held by the SBP have risen by $19 million on a weekly basis.

The Numbers in Detail

As of August 16, the SBP’s foreign currency reserves were recorded at $9.292 billion. This marks an increase of $19 million compared to the $9.273 billion recorded on August 09. While this increment may appear small, it is a significant indicator of the central bank’s efforts to stabilize the economy and maintain a steady reserve position.

Moreover, the overall liquid foreign currency reserves held by Pakistan, which includes net reserves held by banks other than the SBP, stood at $14.667 billion. This represents an increase of $22 million over the previous week, highlighting a broader improvement in the country’s foreign exchange reserves. The net reserves held by banks were recorded at $5.376 billion, showing an increase of $3 million during the week.

Economic Implications

The increase in SBP reserves, although slight, comes at a time when Pakistan is navigating through a complex economic landscape. The country’s foreign exchange reserves are crucial for maintaining currency stability, meeting international obligations, and managing imports. A stable reserve position helps in mitigating the impact of external shocks and ensures that the country can meet its short-term financial needs.

The rise in reserves, albeit modest, could also be seen as a signal to international investors and financial institutions that Pakistan is making strides toward economic stability. This could potentially lead to improved investor confidence and might even pave the way for more favorable terms in future negotiations with international lenders.

Challenges Ahead

Despite the positive news, Pakistan’s economic challenges are far from over. The country continues to face significant external debt obligations, a trade deficit, and inflationary pressures. The modest increase in reserves, while welcome, is just one part of the broader economic picture. Continuous efforts are needed to sustain and further enhance the reserve position, which would require strategic management of the country’s financial resources, improved export performance, and controlled import bills.

Pakistan’s Exports and FDI at Risk Over Climate Compliance Concerns

Khashif Sarfraz
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Pakistan’s Exports and FDI at Risk Over Climate Compliance Concerns

Pakistan is facing potential threats to its exports and foreign direct investment (FDI) due to the possibility of failing to meet global climate change compliance requirements. As international buyers increasingly demand transparency from domestic producers regarding their environmental practices, Pakistan’s position in the global market could be jeopardized.

At the launch of the report titled “Pakistan’s Climate Crossroads: Private Sector Solutions to Climate Challenges,” hosted by the Overseas Investors Chamber of Commerce and Industry (OICCI) on Wednesday, OICCI President Rehan Shaikh highlighted the country’s critical need to comply with global climate standards. He noted that despite Pakistan’s minimal contribution of less than 1% to global greenhouse gas (GHG) emissions, there is a significant opportunity to attract $500 billion in international green financing by promoting climate-friendly projects.

Dr. Abid Qaiyum Suleri, Executive Director of the Sustainable Development Policy Institute (SDPI) and International Advisory Committee Member for COP29, emphasized that the government’s work on the carbon credit policy is nearing completion. He stated that finalizing this policy ahead of the COP29 meeting would enable Pakistan to attract financing through the sale of carbon credits to high GHG emitters, mainly from developed countries. The Ministry of Climate Change is currently consulting with provinces on implementing the policy, which falls under provincial jurisdiction.

Suleri also pointed out that the temperature in Karachi, Pakistan’s industrial hub, has remained two degrees Celsius above pre-industrial levels since the 1970s, in contrast to the global goal of limiting temperature increases to 1.5 degrees Celsius or less to mitigate climate change impacts.

He warned that climate compliance might be used as a geopolitical tool in the coming years. Rehan Shaikh reiterated the importance of climate compliance for maintaining competitiveness in international markets, cautioning that any increase in GHG emissions could harm Pakistan’s export potential.

Global buyers have already started linking their purchases from Pakistani producers to climate compliance since October 2023. It is crucial that all producers adopt these reporting practices by 2026. While some textile manufacturers and exporters, who contribute nearly 60% of Pakistan’s total export earnings, have begun to comply with climate guidelines, other key industries such as cement, fertilizer, and steel have yet to follow suit. Though these industries have a limited share in global exports, their future success will depend on adherence to climate standards and compliance with the Paris Agreement and COP protocols.

The production of methane during rice cultivation in Pakistan could also pose a threat to Basmati rice exports, which contribute significantly to the country’s annual rice export earnings of $3.7 billion.

Shaikh noted Pakistan’s progress in mitigating climate challenges, including large-scale renewable energy projects, the production of organic cotton worth billions of dollars, and plans to increase the sale of electric vehicles (EVs) to 30% by 2030. He emphasized the need for greater collaboration among government, private sector, and international stakeholders to address climate challenges effectively, stressing the importance of good governance and policy implementation.

Dr. Khalid Waleed from SDPI added that Europe has imposed a carbon tax on industries exceeding GHG emission benchmarks, forcing them to comply with environmental guidelines due to the high cost of production. He suggested that Pakistani producers, who generate significantly lower emissions, could benefit by selling carbon credits to those exceeding GHG limits.

US Dollar Continues to Climb in Interbank Market, Reaches Rs278.60

Khashif Sarfraz
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0
US Dollar Continues to Climb in Interbank Market, Reaches Rs278.60

The US dollar maintained its upward momentum in the interbank market on Thursday, increasing by eight paisas and bringing its value to Rs278.60. This rise follows a similar increase on Wednesday when the dollar gained 11 paisas, reaching Rs278.45.

The recent surge in the dollar’s value is attributed to the continued delay in the approval of Pakistan’s much-anticipated $7 billion bailout package from the International Monetary Fund (IMF). Sources have revealed that Pakistan’s name has not been included in the latest IMF Executive Board meeting schedule, which runs through August 30. The board will review applications from three countries, including Vietnam, during this period, but Pakistan’s request for financial assistance has been postponed until next month.

Pakistan Dominates Day 2 with Centuries from Muhammad Rizwan and Saud Shakeel

Khashif Sarfraz
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Pakistan Dominates Day 2 with Centuries from Muhammad Rizwan and Saud Shakeel

Scoreboard Update: 349/4 (93.2 overs)

On Day 2 of the Rawalpindi Test against Bangladesh, Pakistan’s Muhammad Rizwan and Saud Shakeel both scored brilliant centuries, leading their team to a strong position.

The scoreboard currently reads 349/4 after 93.2 overs, with Pakistan making 256 runs for the loss of four wickets. Muhammad Rizwan contributed significantly with 89 runs, while Saud Shakeel also made a substantial impact, scoring 86 runs.

Bangladesh’s bowlers struggled to make an impact in the first session of the second day, failing to take any wickets as Pakistan built a commanding lead.

The first Test between Pakistan and Bangladesh is being held at the Rawalpindi Cricket Stadium, where Pakistan has established a firm grip on the match with these impressive batting performances.

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