MSCI: Market gives a not-so-subtle salute!
- Blimey! The MSCI has retained Pakistan’s status as an Emerging Market - locals had hoped against hope for a downgrade. That said, UBL and LUCK have been downgraded to small caps from previous EM Standard while MLCF and HCAR have unexpectedly been deleted from the Small Cap Index.
- Pakistan’s weight is estimated to have fallen to 0.04% versus previous 0.07%. Whether the insignificant weight in EM leads to consultations for a downgrade remains to be seen.
- With the next leg in market performance likely to be dictated by locals, we believe eyeing events such as funding packages from the Chinese and Saudia as well as negotiations with the IMF take precedence over MSCI changes – a view corroborated by today’s performance with the market giving a not so subtle salute.
- Current valuations have already priced in MSCI changes in our view, with UBL and LUCK having already shed 15.8% and 17.3%, respectively over the past 3M. Moving ahead, we believe addressing of Pakistan’s external imbalances remains the key to unlocking performance.
- Top picks include Banks (HBL, UBL, BAFL) and Textiles (NML, GATM) while we also like LUCK, HUBC and ASTL.
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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