Pakistan Strategy: De-mystifying low volumes
Heightened trading activity in the run-up to, and during results season have historically been a foundation of 3QFY volumes, highlighted by KSE-100 average volumes over 3QFY10-18 rising 23.7%QoQ, while the average concentration of 3QFY volumes as % of total FY volumes rests at 27% during the last nine years, indicating seasonal attraction in markets during a period of heavy event/earnings developments
With only 11 trading days left in 3QFY19 (KSE-100/All average of 88.45/138.07mn shares), we look at the reasons behind -21.1/-24.8%QoQ decline in average KSE-100/KSE All volumes, highlighting the shallowness of markets as being motivated by lack of cohesive policy direction, relative attractiveness of other asset classes (fixed income), and idiosyncratic developments surrounding specific industrial segments
KSE-100 index has cumulatively de-rated by ~12% in the past one year (exc. dividends) to trade at a CY19F P/E of 8.2x, while flows have witnessed a flight to blue-chip plays, with average volumes for KSE100 as a proportion of KSE-All volumes for 3QFY19TD at 64.1% vs. 3QFY11-18 average of 59.7%
With widening appeal for re-rating, particularly in heavy-weight sectors (Banks and E&P, on ~11%QoQ earnings growth for 2QFY18) we re-iterate our CY19 Strategy stance, advocating for investors to build positions factoring-in a long term horizon, where any correction should be taken as an opportunity to accumulate.
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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