Pakistan Economy: Current Account weakness to continue
Current account deficit for FY18 reached record levels of US$18.0bn breaching its previous high of US$13.9bn in FY08, though in relative terms it remains significantly lower at 5.7% of GDP vs. 8.2% in FY08. Reflecting growth of 42.6%YoY from US$12.6bn in FY17, the higher deficit is primarily a function of growing trade imbalance (+16.5%YoY) while tepid remittance inflows (marginally up 1.4%YoY) are a further strain. Going forward, external account weakness is likely to persist in FY19F where we estimate deficit to remain elevated at 5.4% of GDP. Despite incorporating hefty growth in exports (10.6%YoY in FY19F), imbalance is being driven by higher oil import bill (+20.0%YoY in FY19F assuming average Arab light at US$70/bbl) and staggered machinery imports (where a sharp drop seems unlikely considering the upcoming IPPs next year). Additionally, lack of support from remittances (FY19F: growth of +1.0%YoY) will be an added burden on current account stability. This along with sizable debt repayments, estimated at US$7.5bn, is likely to push gross external financing at US$21.8bn in FY19F. In this backdrop, we believe the precarious economic situation at hand makes an entry into the IMF a certainty.
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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