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Pakistan Strategy: Coronavirus has all the trappings of a ‘black swan’ (AKD Daily, Feb 11, 2020)

Pakistan Strategy: Coronavirus has all the trappings of a ‘black swan’

  • While the role of Chinese authority to curb the spread of N-COV remains commendable (confirmed cases concentrated to Hubei province, lower risk of major outbreaks) resulting pessimism over commodity markets (covered on ) and emerging gaps in global supply chains merit closer analysis
  • We delineate possible repercussions for a developing economy, geographically linked and closely aligned with China, as is the case with Pakistan, highlighting the detrimental impact of manufacturing disruptions in China on domestic import of goods, while commenting on possible supply chain disruptions
  • Conversely, we find select industry verticals (non-urea fertilizer manufacturers, synthetic fiber) industries that could capitalize on competing imported product disruptions, making inroads into the market and solidifying margins in the process
  • Lastly, negative spillovers for CAPEX, BMR and expansion activity may be felt if manufacturing halt in the Mainland is prolonged, where we highlight lower risk for long cycle infrastructure projects. That said, the market may be right to deflect negativity over the near term, as long as manufacturing output begins to resume during the ongoing week (in-line with Asian market expectations) and slowing number of additional confirmed infection cases emerge (contained to Mainland China).
  • From a market perspective, heavy weightage Banks and E&P sectors are well-shielded, while the increased risk of Asian contagion weights over commodities in resulting in a favorable positioning for Pakistan (slight relief in balancing external deficit) and could prove positive for energy intensive industry (Cements, RLNG reliant Textiles).

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AKD Securities Limited
AKD Securities Limited

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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