Pakistan Strategy_Mar’19_Dull spell continues at the bourse
KSE-100 Index’s performance remained muted during Mar’19, closing at 38,649.34pts (down 1.04%MoM) with average volumes clocking in at 158.9mn, lowest since Jan’16. Investors remained on the sidelines weighing negative FATF related news flows over potential certainty over an IMF financing deal.
In another development, Monetary Policy Committee (MPC) raised policy rate by 50bps to 10.75% (DR: 11.25%) citing, i) inflationary pressure to continue (Mar’19E CPI at 9.01%, real interest rate would have stood at 1.1% had MPC maintained status quo - a level similar to Dec’17), ii) fiscal deficit remains elevated, and iii) current account deficit, despite recording improvement, still stands beyond authorities’ comfortable limit.
We expect market participation to remain dull with investors preferring to remain on the sidelines as the Government moves ahead with reforms. To highlight, avg. volumes since the new gov’t came into the power stands at 164.8mn (Aug’18-Feb’19) vs. 216.0mn (Jun’13-Dec’13) in the early tenure of the PML-N gov’t.
We have preference for macro-hedged sectors encompassing banks, E&Ps, selected Power and Textiles as opposed to dividend yield plays. Our top picks include, BAHL, MEBL, OGDC, HUBC and NML.
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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