AKD STOCK SMART, Aug 30, 2019
The market retraced 62% of its rally of the previous week, tumbling down by 5.35% (1,678 points) to 29,672 points during the outgoing week. The placement of Pakistan on ‘enhanced expedited follow up list’ by APG on Friday August 23rd, 2019 crushed investor sentiment, with market closing the first trading session in red. In addition to that, the reported potential divestment of PPL (10% of shares) and OGDC (7% of shares), index heavy weights, built further pressure on KSE-100. The GoP also introduced presidential ordinance to waive off 50% of outstanding GIDC overdues from the CNG, power, fertilizer and industrial gas consumers, while allowing them the option to avail non-cash settlement against outstanding sales tax, subsidy and duty drawback receivable from GoP. The development was majorly positive, especially for Fertilizer sector, except for select steel and cement players. However, HASCOL’s disappointing results spooked out the positive sentiment of GIDC development. Major news during the week included: (i) SECP and NCCPL considering steps to enhance market liquidity, (ii) 10 state units picked for privatization, (iii) fiscal deficit for FY19 revealed, which clocked in at 8.9% of GDP, (iv) GoP considering airspace closure and banning trade routes for India, and (v) Royal Vopak discussed its investment plan worth US$2.8bn in Pakistan, targeted specifically towards LNG terminal, Polypropylene plant and PARCO coastal refinery. Top performers during the week included GWLC (+3.63%) and FFC (+1.31%), while HASCOL (-19.79%), PAEL (-15.95%) and OGDC (-14.49%) remained the worst performers. Average daily turnover decreased 29% WoW to 123mn shares. LOTCHEM (53.63mn shares), KEL (34.86mn shares), MLCF (29.68mn shares), UNITY (25.22mn shares) and OGDC (21.55mn shared) remained major volume churners.
Outlook
No major results are scheduled for the upcoming week, and thus the market sentiment will be swayed by any developments on macro level, that is inflation reading for August 2019. Our house estimates for monthly inflation are 11.67%YoY vs. 10.34% in the previous month, expected to mark a 7 yr high. Inflation reading in upcoming months will remain critical in determining monetary policy outlook, where higher than expected inflation could be definite sentiment dampener, in our view.
AKD Research
Pak Elektron Limited. Pak Elektron Limited is engaged in manufacturing and sale of electrical capital goods and domestic appliances. The Company operates through two segments: Power Division and Appliances Division. The Power Division is engaged in manufacturing and distribution of transformers, switchgears, energy meters, power transformers, construction of grid stations and electrification works. The Appliances Division is engaged in manufacturing, assembling and distribution of refrigerators, deep freezers, air conditioners, microwave ovens, washing machines and other home appliances. It offers services to power utilities, industries, individual customers, housing and commercial projects. Its engineering, procurement and construction (EPC) contracting division delivers custom designed and built high voltage and extra high voltage grid stations, electrification of housing projects and industrial parks. The Company's subsidiary is PEL Marketing (Private) Limited.
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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