Pakistan Economy: Trade imbalance keeps CAD elevated, (AKD Daily, Nov 16, 2018)
- Latest SBP data on external account paints a not so encouraging picture, with CAD widening by 34%MoM to US$1.218bn in Oct’18. Once again, trade imbalance is the key culprit, where sequential growth in imports (+24%MoM) outpaced growth in exports (+15%MoM).
- Encouragingly, remittances have staged strong recovery backed by higher inflows from USA (+34%MoM/43%YoY), UK (+47%MoM/10%YoY) and GCC (+39%MoM/13%YoY).
- While we continue to stick with our earlier CAD estimates (FY19F CAD: 5.4% of GDP), recent price trends in commodities particularly energy complex are encouraging, where continuation of the same should ease pressures on the external front.
- GoP’s multipronged strategy to plug the net financing gap has worked well so far, considering assurance of support from two friendly countries (i.e. Saudi Arabia & China). Assuming US$6bn from Kingdom and further US$3bn inflows from China, our estimated net financing gap for next two years comes at ~US$8bn (vs. previously US$13.5bn), cutting our reliance on a bailout from the IMF to US$6-8bn.
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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