KSE-100 Index: Foreign Outflow to continue
- Pakistan Equity Market has witnessed foreign net selling of US$300.4mn in CY18TD, cumulatively US$1.4bn since CY15. While idiosyncratic country risks did influence market sentiments, EM market sell-off acted as the final nail in the coffin.
- Emerging Markets (EM) are trading at a CY18F P/E of 11.6x, lowest since 2013 and at a discount of 35% to Developed Markets (DM) vs. 23% avg. since 1995. Yet, betting on EM stocks at this juncture would be gutsy in our view, considering the contrast between EM macros and fundamental trends coupled with investor attractive developments in the US.
- US growth prospects are influenced from protectionist measures the Trump administration has taken. Part of such measures is the re-negotiation on NAFTA agreement which can spur industrial growth and employability in the US in our view. Additionally, factors such as unwinding of Quantitative easing program (diversion of fund to debt market) and incentive for Trump administration to settle trade related issues before mid-term elections, make US market attractive.
- Pakistan macros have not remained immune to EM trends - currency devaluation and interest rate hikes - which should affect growth prospects. While KSE-100 has remained flat CYTD, possibility for further correction exists based on domestic policy turbulence and imported bearish pressure from EM markets. We recommend investors to accumulate on a corrective rally as bottom-up valuation remains strong. Our top picks are MCB, HUBC, ASTL, OGDC, INDU, PPL.
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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