Pakistan is once again EM certified
Pakistan has been reclassified as part of the MSCI Emerging Market (EM) Index effective Jun'17 with a lighter than expected pro forma weight of 0.14% (as of Apr 20'17 with prices impacted by Panama Leaks) in the MSCI EM Index contrary to expectations of close to a 0.19% weight as simulated by MSCI in Apr'16. If market momentum continues, Pakistan should regain weight in line with expectations in the next Semi-Annual Index Review by MSCI. Additionally, passive fund flow allocation will be at more reflective weights and will likely continue through to the rebalancing of MSCI indexes in Nov'17. The list of Tier 1 stocks as part of the reclassified MSCI Pakistan Index include: OGDC, HBL, UBL, MCB, LUCK and ENGRO while 27 other names have been nominated for the small cap index (see attached appendix for complete list). Pakistan's graduation is likely to have far-positive implications where apart from increasing foreign visibility (USD1.5-2tn pegged to EM funds vs. USD17-18bn in FM), it draws comparisons for multiple re-rating akin to 2006-2008. Macros lend further support (broad parallels can be drawn with macroeconomic indicators during the last time Pakistan was part of MSCI EM) where FY17-18F GDP growth of 5.1%, driven primarily by development initiatives under CPEC, remains well above the EM average of 3.8%, warranting improved valuation. Near term the broader market is likely to focus on the Federal Budget FY18 (expected on May 26'17) where we can expect targeted expansionary fiscal measures ahead of General Elections in 2018.
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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