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Pakistan Economy: Inflationary concerns pose key threat to ongoing reforms! (AKD Daily, Feb 03, 2020)

Pakistan Economy: Inflationary concerns pose key threat to ongoing reforms!

  • Pakistan’s National headline inflation climbed to 9yr high of 14.56%YoY in Jan’20 (vs. 12.63%YoY in Dec’19 and 5.60%YoY in Jan’19), surpassing the consensus expectations of 13.6% by a wide margin.  Sequentially, the CPI index jumped 1.98%MoM.
  • The surprise came on many counts including i) higher than expected food inflation (actual: 23.6%YoY vs. expected: 21.1%YoY), ii) one-off sharp increases in marriage hall charges and personal care products prices, and iii) higher quarterly housing rent adjustment (rural only).
  • Near term inflation outlook remains uncertain, with a multitude of factors at play including price normalization in certain food items, timing and scale of utility rate adjustments, and fiscal considerations.
  • From monetary policy vantage, Jan’20 surprise may lead to a delay in easing cycle beyond 2HFY20 with consequent adjustments in easing magnitude for the year. We will be keenly watching upcoming inflation numbers to revise our base case of 150bps rate cut in CY20. 

AKD Research

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.

Umer Farooq

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