Pakistan Strategy_Amidst WFH, retail participation grows , (AKD Daily, Jun 01, 2020)
Pakistan Strategy: Amidst WFH, retail participation grows
- After a slew of erratic months with double digit monthly moves for the benchmark KSE-100 index, sporadic profit taking and cementing of retail investor participation led the KSE-100 index lower by 0.5%MoM for May 2020 assisted by trimmed trading hours during Ramzan.
- Market liquidity tapered further, with KSE-100/All average traded volumes receding 16.2/1.4%MoM with mainboard scrips trailing in perceived attractiveness (in favor of small & mid-cap names in the KSE-All index) for three consecutive months (KSE 100 share of traded volumes at 65.6% vs. 77.2/72.6% for April’20/11MFY20 avg.) dragging value traded during the month down by 6%MoM to US$45.7mn
- FPI outflows continued to dictate investor flows scenarios, with May’20 recording net sell of US$39.9mn (taking CYTD outflows to US$247.1mn), matched by Individuals (US$41.2mn), Trusts & Others (US$8.4mn) and Insurance (US$4.3mn) as net buyers.
- Sectoral moves were divergent, with ‘work from home’ linked Technology (+28%MoM), core consumable demand driven, Edible Oil (+16%MoM) and Foods (+10%MoM) posting major recoveries. E&Ps (+6%MoM), was the only mainboard sector in the green for the month, while Banks (-4%MoM), Cement (-4%Mom) and Fertz (-1%MoM) were largely flat on profit taking. Pharma (+7%MoM) performed on expectations of successful COVID-19 anti-viral medication launching.
- In this backdrop, we advocate for a sell on strength, buy on dips approach in the immediate run while our preferred sectors include leveraged consumer stocks (PAEL) and OMCs (on circular debt/FX payment, PSO). Short term trading strategies are seen to perform in leverage/consumer/export (as countries relax rules of business) plays while long term positions can be built in E&P sector.
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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