Pakistan Economy_SBP reverses it’s monetary stance
Beating market consensus, SBP opted to increase TR/DR by 25bps (TR/DR at 6.0%/6.5%) in Jan'18 MPS, marking the reversal of its accommodative stance (TR/DR static at 5.8/6.3%) . The surprise hike this early in the year came on the back of: 1) recent PKR depreciation by ~5% against dollar, 2) oil prices hovering near US$70/bbl (vs. avg. US$48.4/bbl in FY17), 3) a number of central banks have started to adjust their policy rates upward, adversely affecting PKR interest-rate differentials vis-à-vis their currencies and 4) multiple indicators showing that the output gap has significantly narrowed, indicating a buildup of demand pressures. Going forward, we maintain our stance of cumulative 75bps hike in CY18F (TR/DR ending at 6.5%/7.0%) based on IFB reaction model, where we highlight increasing pricing pressures and consequently falling real interest rates together with mounting external account pressures while higher oil prices strengthens our case. In the backdrop of an increasing interest rate scenario, the index heavy weight banking sector (17.1% as of Jan'25) should stand to benefit where a 25bps jump in TR enhances AKD Banking universe's earning by ~4%. On the other hand, historically leveraged sectors like Textile (subsidized financing) and Cements should also weather higher interest rate scenario given D/E ratios remaining under 20% as of Sep'17 (coming down from an avg. 45% in FY10).
Muslim Commercial Bank, and its subsidiaries, are engaged in commercial banking and the floating, administration and management of modaraba companies, modaraba funds and modarabas.
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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