Pakistan Economy: Stagnant remittances to add on to BoP risks
Pakistan remittance flows improved slightly during 7MFY18, clocking in at US$11.38bn (up 3.5%YoY) vs US$10.99bn in 7MFY17. This was primarily attributable to growth from non-GCC countries (+15.4%YoY) which more than offset the drag from GCC countries (-3.3%YoY). Regarding non-GCC countries, remittances from UK/USA (3rd/4th largest contributors) recorded at USD$1.59/1.51bn in 7MFY18, reflecting an encouraging growth of 11.6%YoY/24.0%YoY respectively. That said, challenging labor market conditions and weak economic activity as evident in lower GDP growth for K.S.A/UAE at 0.3/1.4%YoY in 2017 vs 1.7/3.0%YoY in the previous year, hampered growth in overall remittances (K.S.A contribution to total remittances down to 26% in 7MFY18 from 29% last year). Consequently our remittances/trade deficit ratio has sharply come off to 0.6x in 7MFY18 vs 0.8x/1.0x in 7MFY17/FY16. Going forward, remittances are expected to remain under pressure on account of recent fiscal consolidation in GCC countries (imposition of 5% VAT in Jan'18), where we see flows to stagnate at US$19.8bn in FY18, reflecting nominal growth of 3%YoY. This is likely to take a toll on CAD (FY18F CAD:4.7% of GDP) that is already under pressure from the expanding trade deficit (FY18F: +13.7%YoY). In this backdrop, the reserve drawdown is likely to continue (US$2.3bn wiped out in the last 3 months) with SBP reserves ending at US$12.35bn (import cover of 2.7 months) making room available for further currency depreciation (AKD estimates: PkR118/US$ by end CY18).
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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