Pakistan Economy - External Risks to Keep Monetary Policy Hawkish
- SBP raised PR/DR consecutively by 100bps to 8.50%/9.00%. The hike was within the range of market’s mixed expectations of 50-100bps as reflected by secondary market yields. The decision was based on 1) sticky CAD as rising international oil prices masked decline in ex-petroleum imports, 2) rising inflation projections, 3) lower real interest rates, and 4) lower financial inflows.
- GDP growth projection was revised down to 5%YoY in FY19 down from 5.5%YoY in previous MPS, owing to expected decline in agriculture output, decline in LSM and resulting impact on services sector. We, on the other hand, expect Monetary and Fsical tightening to reduce GDP growth to 4.5% in FY19 (down from our earlier projection of 5%)
- We have revised up our average inflation projections by 9bps/40bps for FY18F/FY19F owing to higher international oil prices. In light of SBP’s focus on addressing external account and higher inflationary expectations, we have raised our interest rate projections where we expect PR/DR to reach 9.5%/10% by the end of FY19 (compared with earlier projections of 8%/9%).
Elixir Securities Pakistan is a Corporate Member of the Pakistan Stock Exchange & Pakistan Mercantile Exchange and is one of the leading securities brokerage & investment banking firms in Pakistan, established since 1994. Our principal business activities include all aspects of Pakistan’s Capital Markets covering Securities Brokerage (Equities, Fixed Income and Commodities), Corporate Finance & Capital Markets Advisory (M&A, ECM, DCM) and Investment Research (Economics & Securities). We are one of the most active & aggressive Broker-Dealers in Pakistan executing trades for most of the Top 20 Global Brokers with unmatched corporate access credentials and have successfully advised and closed on some landmark ECM transactions in the history of Pakistan including the largest deal in frontier Asia (USD 1.02 billion). Our Clients include foreign and domestic financial institutions (Banks, Asset Managers, Insurance Companies, Pension Funds) corporates, HNWI’s and retail investors. This is supported by a very strong and independent research capability, which is quoted regularly in both local and international media.
Elixir Securities Pakistan is the proud recipient of many awards & recognitions including AsiaMoney’s Brokers Poll 2017, FinanceAsia’s Pakistan Best Investment Bank and Best Broker 2017, The Asset’s Best Brokerage House in Pakistan 2016, Asiamoney’s “Best Domestic Equity House 2015 in Pakistan”, The Asset Triple A Country Awards 2015 - Pakistan “Deal of the Year” and “Deal of the Year-Highly Commended”, CFA Society of Pakistan Awards for Year 2015 “Best Research Analyst (1st Rank), CFA Society of Pakistan Awards for Year 2014 “Best Research Analyst (1st Rank)”, “Best Trader” 2nd Runner-up (3rd Rank), The Asset Triple A Country Awards 2014’s “Best Deal in Pakistan” and Capital Finance International’s nomination for “Best Equity Research in Pakistan 2010”.
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