Pakistan Strategy: Mixed reaction on rate hike; more stabilization measures seen
- We acknowledge latest 50bps hike in policy rate to 6.5% in the May’18 monetary policy as a step in the right direction. The decision is in line with our expectations vis a vis a divided market opinion.
- While clearly sounding more alarmed on its macro indicators assessment, SBP cited further deterioration in twin deficits and sharp rise in core inflation as key reasons for the move.
- We maintain our view of another 25bps hike in rate this year. Upside risk could emanate from further cost and supply pressure on CPI and less than anticipated inflows.
- We expect more stabilization measures by the central bank (possibility of deval by 3Q), while some relief may be expected on fiscal side as interim govt. steps in.
- From equity market perspective, we eye a mixed reaction to policy rate hike. Banks may draw positive response (MCB, ABL among big banks and BAFL, BAHL,FABL among small names) while negative for cements, autos and consumer durables.
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.