Pakistan Strategy: No Bears in sight (AKD Daily, Aug 03, 2020)
AKD Daily
Pakistan Strategy: No Bears in sight
- Solidifying investor sentiment, driven in part by tamed COVID-19 testing outcomes (10 day avg. % of positive cases at ~4.8%, R-effective ~0.5) and a slew of policy actions geared to driving demand (financing incentives, down & mid-stream energy reforms, construction incentive) raised the KSE-100 index by ~14.1%MoM (-3.6%CYTD, +22.9%YoY).
- Market liquidity shot through the roof, with KSE-100/All average traded volumes up 117.7/93.2%MoM (KSE-All avg vol. trouncing ~300mn level from Nov-Dec’19, approaching Jan-Feb’17 levels) with mainboard scrips prominent (KSE 100 share of traded volumes at 65.9% vs. 69.7% for 7MCY20 avg.), pushing value traded 111%MoM to US$87.1mn, levels not seen since April’18.
- Domestic flows completely decoupled from foreign flows, where selling persisted (July’20 FPI recording net sell of US$68.9mn, taking CYTD outflows to US$361.8mn), matched by net buyers Insurance (US$33.8mn), Companies (US$19.8mn) and Individuals (US$17.2mn).
- Previously sluggish sectors rallied during the month where expectations of swift consumer durable demand recovery and GoP reforms led Autos/Refinery/Engineering sectors higher by 33.5/32.6/31.5% MoM.
- Based on medium term expectations of earnings recovery, bulls are likely to continue dominating the market in the short run with sharp decline in COVID-19 cases providing confidence on sustainability of economic recovery. However, medium to long run trend is dependent upon developments around COVID-19 and restart of the IMF program and the conditions associated with it (tariff hikes, measures for meeting revenue target etc.)
AKD Research
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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