Pakistan Economy: Emerging Contagion-More smoke less fire
- Recent crisis in Argentina and Turkey has fuelled speculation of a contagion in Emerging Markets. Economies most vulnerable in this regard are the ones with high current account deficit and greater reliance on foreign lending.
- Dollar adjusted return for the KSE-100 is directionally in line with regional markets (-11%CYTD vs. EM at -20%CYTD) where primary reason for increased correlations with regional emerging markets (REMs) appears to be currency deval. (11.04%CYTD).
- That said, with PSX’s correlation against REMs at 0.57x still below peak reading at 0.78x (crisis of 2008), we believe the correlation number only partially explains the market’s dismal performance. In this regard, we believe indigenous factors contributed more towards weaker returns rather than contagion risks.
- Currency volatility in EMS could possibly keep PkR under pressure where we maintain our FY19 end estimate at PkR133/US$.
- We recommend thematic exposure to sectors (Banks, E&Ps, Power and IT) that benefit from a policy shift
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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