Pakistan Strategy_Market momentum bent not broken, (AKD Daily, Nov 02, 2020)
AKD Daily
Pakistan Strategy: Market momentum bent not broken
- Holding out against COVID-19 resurgence, FATF plenary outcome and political noise amidst a consolidating macro backdrop, the KSE-100 index succumbed, falling 1.7%MoM, with average volumes depleting 25%MoM, and a seasonal pivot to blue-chip plays ahead of earnings season
- Isolating sectoral performance MoM we highlight the role of side-stocks and idiosyncratic sectoral catalysts in driving market performance, where further comparison on CYTD basis emphasizes the role played by these “off-board” sectors favored by retail investors, where improved risk appetite drove performance more than improved fundamentals
- Conducive policy actions to address supply chain hurdles driving food inflation, limiting gas and power tariff hikes, rehabilitating macros and supportive policy guidance reinforced by execution of tax incentives for construction sector., bolster our view of catalysts over-powering risks emanating from political or event risks
- From a fund flow perspective, individuals took gains home (US$15.5mn net sell) followed by mutual funds (US$6.3mn) where as Insurance (US$26.5mn net buy) and Banks (US$15.7mn) were buyers for the month where FPI remained net sellers (US$39.1mn, US$426.7mn net sell CYTD)
- We believe the Government would prefer smart/micro lockdowns, restricting non-essential activities over completely disrupting business activities in the country. Our preference tilted towards Banks (particularly top tier) as expectation of resumption in payouts could drive stock performance in the near term, Construction-related sectors, Power and Textiles.
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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