(Detailed Report) Patience wins the Game, (Pakistan Strategy)
Lacking in direction, Pakistan’s story was rightfully mirrored by the PSX in CY18 where economic conditions imposed on market sentiment. The end game, however, is likely to be played out in CY19 in our view as Pakistan finally tackles its vulnerabilities – both external and local. With the KSE-100 offering a limited 17% upside to our Index target of 43,500, we believe the journey will once again mirror economic re-building, as characterized in CY18. Investors will continue eyeing developments on the political and economic arenas where materialization of IMF inflows will be a key check point. Any announcement to this end may result in a de-coupling of the market from economic variables, at least in the short run. On the flip side, delays in an IMF package could trigger fresh waves of skepticism where we may potentially see the market de-rate to 33,800. Pace of currency and interest rate adjustment will remain contained in CY19 in our view, however, current interest profile has ramifications for the broader economy (GDP growth: 3.8%YoY), with particular emphasis on leveraged plays. Market valuations (P/E: 7.2x, D/Y: 7.6%; Earnings Growth: 14%), while conducive for long term investing, remain insipid on an interest adjusted basis. Preferred plays include a mix of growth and dividend where top picks include MCB, BAFL, HUBC, OGDC, LUCK, NML and INDU. Alpha plays we like include BAHL, APL, SYS and GATM.
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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