Pakistan Economy: Gradual rate hike likely in FY18 as Mar’18 CPI to take a dip
- Weekly SPI trends point to steep drop in CPI inflation reading for Mar’18 to an expected 3.1% from 3.8% in Feb’18. On a MoM basis, we expect CPI to increase by only 0.2% in Mar’18.
- In the upcoming Mar’18 MPS, we maintain our view of gradual 25bps rate hike to 6.0%, given protracted rise in CPI expected during Mar-Jun’18 .
- The case for rate hike remains intact in our view, given; (i) oil price is back to same level as Jan’18, (ii) another 5% devaluation in Mar’18, and (iii) recent Fed rate hike of 25bps narrowing the interest rate differential further.
- Market appears to have already priced in a 25bps hike (secondary market yields for long-term bonds are up 20-45bps since 30th-Jan’18). We flag below-expected CPI reading in Jan’18 and expected benign inflationary reading in Mar’18 should water down possibility of steeper hike in Mar’18.
- We reiterate our call of potential 25bps hike in each of the next three, bi-monthly monetary policy reviews, though we highlight possibility of steeper hike in May/July’18 as MPC stresses the need to be more pro-active.
BMA is amongst the leading financial groups in Pakistan. BMA Capital’s core areas of business include Capital Markets, Corporate Finance & Advisory, Asset Management, and Financial Products Distribution. BMA Capital is the leader in privatisation advisory in Pakistan, having successfully advised on over 50% of all privatisations in Pakistan, by value, in transactions valued in excess of US$4 billion. Recent transactions include joint lead managing the $813 million GDR Offering of 10% of OGDCL on the London Stock Exchange in 2006-07, and advising Etisalat on their successful acquisition of a 26% strategic stake in Pakistan Telecommunications Company Limited (PTCL) for US$2.6 billion, the largest M&A transaction and foreign direct investment in Pakistan’s history. The firm is among the top brokers in the Pakistan equity and treasury markets, and is among a handful of firms that comprehensively cover all segments of the capital markets. This is supported by a very strong and independent research capability, which is quoted regularly in both local and international media. BMA Capital’s retail brokerage brand, BMA Trade, has launched a nationwide network of branches as well as a comprehensive online trading platform, enabling investors across Pakistan to take part in the capital markets.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.