Economy Focus_Economic challenges continue for Pakistan, (AKD Economic Focus, Aug 01, 2022)
AKD, Economic Focus
Economic challenges continue for Pakistan
- National CPI was recorded at 24.9% in Jul’22, driven by higher international oil prices and weakness in the currency. To recall, CPI rose by 21.3%YoY in Jun’22, taking FY22 average inflation to 12.15%, well above SBP’s forecast of 9% - 11%. Average inflation for FY23 is forecasted at 21.4%, compared to SBP’s forecast of 18%-20%.
- Policy rates have been increased to 15%, with a recent hike of 125bps announced in the last MPC. The continuance of inflationary pressures warrant further policy rate hikes. We expect policy rate to settle between 16% - 16.5%, with negative real interest rates continuing through FY23.
- The country’s liquidity issues and the resulting default fears have led to higher international bond yields, with the yield on the international sukuk with Dec’22 maturity increasing to 48.31%. The situation has been further exacerbated by the recent downgrade of Pakistan by Fitch.
- Majority of the participation in the Jul 27 T-Bill auction was concentrated in the lower-term 3M Tenor, with 94% of bid amount accepted in the tenor, signaling bond market players expecting further interest rate hikes.
- Investors are recommended to invest in short-term bonds, which offer higher liquidity and attractive rates, given the interest rate outlook.
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.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.