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Pakistan Commodities :Limited gains, continued pain of COVID-19 , (AKD Daily, Jun 16, 2020)

Pakistan Commodities: Limited gains, continued pain of COVID-19

  • Global macros depict a weak picture leading up to May’20 where economic activity took a backseat to enacting unprecedented transport, healthcare and business activity lockdowns to curb the spread of COVID-19. May’20 was the month of limited re-openings in major developed economies pushing the TRJ index ~13%YoY higher, but still down 29%CYTD.
  • Intermittent pain caused by severe global lockdowns (peaking in mid-April) are expected to impact global growth over the medium term, where questions over “second wave” and “infection peak” have fueled uncertainty over the shape of any recovery
  • Energy commodity prices responded to Asian economies re-opening, allowing for increased demand expectations, showcased by rising Oil benchmarks (up 57-60%MoM, assisted by OPEC+ members complying with agreed cuts) and Coal (+13%MoM, but average price still down). Additionally, large spillovers for chemical feedstocks have caused significant distortions (PVC/Ethylene delta –24%MoM, PTA/PX margins flat Mom).
  • Dislocated agriculture production, global food supply chains and radical shifts in consumer demand (following from historic employment shifts) have softened FAO food price index to 17 month lows, while Urea prices have also receded during May’20. Cotton prices underwent minor moves despite being burdened by weak fundamentals.
  • Length and severity of global lockdowns, accompanied by consumption data are likely to dictate prices as major economies refrain from setting growth targets. Rise in energy prices are negative for Pakistan, with demand for exported agriculture products (including meat, fruits, vegetables, rice) having to find new markets due to global trade dislocations.
AKD Securities Limited
AKD Securities 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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