AKD STOCK SMART
Weekly Review
Continuing with previous week’s trend, KSE-100 index lost another 3.5%WoW to close at 33,902pts. Apart from the regulatory tightening that has been the dominant factor hurting market performance for the past weeks, i) fiscal year-end phenomena (where historically market has remained under pressure), ii) exchange rate volatility (PkR/USD touched a high of 163.5 before closing at 159.5), and iii) revision in gas prices (up to 191%), impacted weekly performance. Concerns over tail risks have overshadowed the positives including the US$3bn commitment from Qatar in the form of deposits and FDI. Average volumes improved to 146.4mn shares vs. 124.8mn shares driven by year-end repositioning particularly by mutual funds (net sell: US$14.7mn). Amongst the major sectors, resurgence of oil price (WTI +2.8%WoW) due to tensions in middle-east and currency devaluation failed to invigorate interest in E&Ps (down 4.97%WoW) while weak demand scenario for Cements and OMCs impacted respective sector performance (down 5.35%WoW and 5.42%WoW respectively). This is despite recovery in cement prices by PkR15-20/bag over the last week. Commercial Banks lost 2.6%WoW possibly on concerns over NPL accretion whereas fertilizers were down 2.6%WoW on gas price hike. Top performers in AKD Universe during the week were, i) FATIMA (+10.6%WoW), ii) EFOODS (+6.9%WoW), iii) KEL (+3.3%WoW), iv) KAPCO (+2.5%WoW) and v) INDU (+2.3%WoW), while i) PSMC (-18.6%), ii) GWLC (-11.2%), iii) NBP (-10.8%WoW), iv) PAEL (-10.8%WoW) and v) PIOC (-9.9%WoW) remained the worst performers.
Outlook
Market performance is likely to remain volatile in the upcoming week, taking cue from i) IMF board approval of US$6.6bn EFF facility to Pakistan, ii) Jun’19 inflation announcement which would indicate future course of interest rates, and iii) OPEC meeting which can impact global oil price movement. We advise investors to take at least two years investment horizon and follow macro themes (interest rate, exchange rate, and circular debt resolution) in picking investments and as such our preferred sectors are Banks, E&Ps, and selected Power and OMCs.
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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