AKD STOCK SMART
Weekly Review
Benchmark index continued its bull run into the 2nd week post announcement of caretaker setup, closing at 43,948pts, up 2.41%WoW. Investor interest was spread across the sectors, with Banks, Oil & Gas & Cements rallying 4.1/1.6/2.8%. More specifically, both the gas utilities (SNGP & SSGC) gained 12.3/6.9%WoW as OGRA announced revised tariff regime (applicable from FY19). Under the revised formula, return on assets is now linked to a market based WACC calculation (resulting in 17.43% RoA for both the utilities in their bundled form), in turn providing clarity to investors over their future outlook. Volumes returned over perceived political calmness despite shorter Ramadan days, averaging 183.79mn vs. 119.05mn in the preceding week, up by 54%WoW where 1) BOP (153.87mn shares), 2) PAEL (55.58mn shares), 3) TRG (30.23mn shares), 4) PIBTL (29.57mn shares) and 5) SSGC (26.52mn shares) remained the volume leaders. Other key news flows impacting the market included: 1) Supreme Court suspending a Lahore High Court (LHC) judgment that annulled the new nomination papers, paving the way for timely election. 2) headline inflation for May’18 ticking up to 4.2%YoY as the impact of petroleum price hike and rupee depreciation became more visible, 3) World Bank revising down Pakistan’s GDP growth to 5% against officially envisaged target of 6.2% for FY19, citing adverse impact of tighter policies, and 4) Petroleum products sales reaching 2.45mn tons in May’18, up 31%MoM/1%YoY. Performance leaders in the AKD universe were: 1) UBL (+7.91%WoW), 2) HBL (+7.54%WoW), 3) BAFL (+6.28%WoW), 4) LUCK (+6.16%WoW) and 5) FATIMA (+5.11%WoW) while laggards included: 1) KEL (-3.01%WoW), 2) INDU (-2.66%WoW), 3) PSMC (-1.56%WoW), 4) NCL (-1.13%WoW) and 5) KAPCO (-0.49%WoW). Foreigners continued with their selling spree, offloading US$29.55mn worth of securities vs. US$17.45mn last week.
Outlook
Accountability court’s decision in graft references case (due on Jun 9’18) against the former PM Nawaz Sharif will be the most looked after event in the upcoming week. Although accountability court judge has asked for another extension in the due date, any decision against the former PM can dampen sentiments. Moreover, Pakistan will be submitting its action plan next week for a review by the FATF in its plenary meeting, scheduled to take place in France from June 24 to June 29. Developments on these fronts can keep investor interest at bay.
AKD Research
AKD Securities Ltd. is one of the leading securities firm in Pakistan, providing a comprehensive range of investor focused services, including equity brokerage, economic and securities research, investment banking and financial advisory services. AKD Securities accounts for more than 6% of the average daily value of the Karachi Stock Exchange. AKD Securities was the first brokerage house to launch an online trading platform in Pakistan in November 2002 and now has the largest market share with over 6000 customers. This has helped diversify and expand the retail investor base in the country and ushered in a whole new universe of investors to the stock market.
AKD Securities Ltd. caters to a diversified group of domestic and international institutional investors, high net worth individuals and upscale retail clients, including expatriate Pakistanis. With high quality research, unparalleled execution and distribution capability for both regular and large block trades, AKD Securities Ltd. has earned an outstanding reputation in the Pakistani securities industry.Outside of commercial banks, AKD Securities Ltd. is one of the biggest capital market firms in the country. AKD Securities is the leader in raising and providing risk capital in underwriting, market making and mergers and acquisitions in Pakistan. Good corporate governance and professionalism are emphasized throughout the firm and AKD Securities Ltd. is amongst the very few companies to have introduced a firm-wide comprehensive CODE of ETHICS, overseen by an independent compliance manager.Ultimately, our success is based on the quality of service we provide to our customers and the trust and confidence reposed in us by them. Our focus, therefore, remains on customer satisfaction at all levels in the company.
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