Pakistan Economy_Feb’21 inflation to reach 8.7%YoY, (AKD Daily, Feb 25, 2021)
AKD Daily
Pakistan Economy: Feb’21 inflation to reach 8.7%YoY
- Feb’21 inflation is likely to stand at 8.7% vs. 5.7% in Jan’21, predominantly due to resurging food prices (monthly food inflation to turn slightly positive after recording two consecutive monthly declines, +0.96%MoM) and revision in electricity tariffs (PkR1.95/unit hike in base tariff and PkR1.54/unit fuel price adjustment).
- Inflation for the next 4 months is likely to average at 10.2%YoY, following surging commodity prices (TRJ index +36.7%FYTD), Govt. likely allowing pending tariff adjustments (PkR1.35/unit base tariff adjustment remains), and approaching Ramadan season.
- In the medium run, inflationary pressures are likely to further jack-up with the IMF setting Govt’s tax revenue target at PkR5.9trn for FY22 vs. PkR4.7trn in FY21, which should prompt SBP to reverse monetary policy course. That said, in the near term we expect SBP to hold interest rates stable despite high inflationary readings, taking solace in stable external account outlook.
- Resumption of IMF program, unlocking bilateral/multilateral flows, and potential positive developments under FATF (acknowledged by IMF, decision scheduled today) is likely to extend the current market’s bull run. In this backdrop, structural theme remains intact where we continue to advocate for Cements, Steel, Power and OMCs (PSO).
AKD Research
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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