Pakistan Strategy_Strong Jan sets the right tone, (AKD Daily, Feb 01, 2021)
AKD Daily
Pakistan Strategy: Strong Jan sets the right tone
- In line with historical trend, KSE-100 racked up a 6.0% gain in Jan’21 to close at 46,385pts, marking the third consecutive month of positive close. In the process, cumulative 7MFY21 return has now reached 34.8%. Sector wise, while across the board bullish, top performing sectors included Tech (+17.8%MoM), Power (+16.7%MoM) and Refineries (+14.5%MoM).
- Investor sentiment remained buoyed on expectations of Govt. closing agreements with IPPs as well as the SBP’s intent of keeping interest rates stable in the near term. By and large, expectations of a strong 4Q result season further provided impetus to bullish euphoria.
- Bucking historical trend, FIPI witnessed an outflow of US$1.8mn compared to inflows in previous years while on the local front, Insurance, Banks and Brokers stood as net sellers with a cumulative outflow of US$52.6mn. On the buying side, selling was primarily absorbed by Individuals with a net buy of US$44.3mn.
- An anticipated strong 4Q result season, low inflation reading with Jan’21 CPI at 5.65% (lowest since Jan’19) as well as kickstart of Covid vaccinations in the country are widely expected to keep market sentiment bullish. That said, headwinds could include any adverse development in the Feb’21 FATF review (however unlikely) as well as any potential harsh conditions of the IMF program resumption.
- For medium-to-long term, we continue advocating for positions in Cyclicals (Cements, Steel due to pickup in demand as winter season recedes), Power and OMCs (read: PSO on circular debt resolution). At the same time, we also like Banks on dividend resumption and undemanding valuations.
AKD Research
Pakistan State Oil is a petroleum group based in Pakistan. Co.'s principal activities are the procurement, storage and marketing of petroleum and related products. Co. also blends and markets various kinds of lubricating oils.
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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