AKD STOCK SMART, Nov 22, 2019
StockSmart
Weekly Review
A volatile week for the market where the KSE-100 index touched a low/high of 37,101.3/38,564.4pts closing at 37,926pts driven by expectations surrounding monetary policy with further assistance gained from release of current account position. To recall, the country posted US$99mn current account surplus in Oct’19 after a gap of more than four years (4MFY19: US$1.5bn vs. US$5.6bn in the corresponding period last year). Expectations of rate cut died soon as the latest TBill auction witnessed a marginal uptick in yields (3M/12M: +30/46bps). Amongst other news flows, i) Former PM was allowed to travel abroad for treatment, and ii) rebuttal by FBR chief on news flows suggesting IMF accepting Government demands of downward revision in revenue targets. Volumes remained healthy with ADT standing at 330.9mn vis-à-vis 311.2mn shares in the previous week with volume leaders being, i) BOP (103.65mn shares), ii) KEL (88.54mn shares), iii) PAEL (72.22mn shares), iv) TRG (64.90mn shares), and v) FCCL (49.47mn shares). Amongst major sectors, a pullback was witnessed in Automobile (+3.1%WoW) and related sectors (+7.8%WoW), followed by Power (+3.1% on possible issuance of power sukuk for resolution of circular debt after getting approval for increase in Government guarantee limit by the IMF) and Fertilizers (+1.7%WoW). Inflows from Foreigners (US$8.4mn) together with net buy of Individuals (US$11.9mn) absorbed selling by Banks and Others (c. US$17.3mn) and Insurance (US$2.62mn). Top performers in AKD Universe were, i) GWLC (+10.32%WoW), ii) EFERT (+9.34%WoW), iii) HUBC (+7.41%WoW), iv) FFC (+6.31%WoW), and v) PSO (+4.87%WoW), while laggards were, i) CHCC (down 8.17%WoW), ii) FFBL (down 6.51%WoW), iii) FCEPL (down 5.58%WoW), iv) PSMC (down 4.85%WoW), and v) MLCF (down 3.44%WoW).
Outlook
In the recent monetary announcement, SBP decided to maintain ‘Status Quo’, keeping the policy rate at 13.25% foreseeing inflationary pressures in the short term in line with our expectation. Resultantly, investors’ focus could again shift on the banking sector stocks (down 0.5%WoW, impetus could be provided by higher Nov’19 inflation expectation) while a slight sell-off could be witnessed in leveraged plays. From a market perspective, volatility could be witnessed in the upcoming week given upbeat investor sentiment and general phenomena of a roll-over weak acting together. Hence, any weakness should be taken as an opportunity to build positions.
AKD Research
Fauji Cement is engaged in the manufacturing and marketing of cement.
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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