Pakistan Strategy : FY18E CPI cut to 4%; 25bps rate hike likely in next three MPS
- The latest CPI reading of 3.8% for Feb’18 comes in below our (3.9%) and street estimates (4.04%). On a MoM basis, CPI is down 0.3% primarily driven by 1.3% MoM decline in food price.
- Core inflation remained steady at 5.2% in Feb’18, though we expect uptick in Mar’18 with likely increase in transport fares, given POL prices are up 23% since Jul’17.
- We revise our FY18 CPI estimate down to 4.0% from earlier 4.2%. This is lower than SBP’s estimate of 4.5-5.5%. The revision is on account of softer than expected food prices in this season (Dec’17-Feb’18) and no material indirect impact on CPI visible so far from higher oil prices/deval.
- Our estimate builds in; (i) current oil prices, (ii) another 5% deval expectations, and (iii) food prices seasonality seen pre-and-post the month of Ramadan (May-Jun’18).
- We continue to expect 75bps increase in policy rate to 6.75% in CY18 (earlier 75bps hike upto Jun’18) but now believe it will likely be more spaced out with 25bps hike in next three MPS.
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.