Pakistan Equity Market: Weekly Review - Index Heavyweights Dragged Down Market
- KSE100 Index remained under pressure declining by 813pts WoW (1.8%WoW) to 45,259pts due to rout in Banks, Cements, and Oil Exploration & Production companies (E&Ps). Trading activity remained dull where average traded volumes and average traded value fell by 37%WoW and 19%WoW to 155mn shares and USD65mn.
- Banking sector declined by 1.9% during the week, partly due to the a Circular issued by the State Bank of Pakistan (SBP), mandating strategically important banks to maintain Higher Loss Absorbency (HLA) Capital Surcharge in the form of additional Common Equity Tier 1 (CET 1). Based on our understanding, we expect Habib Bank (HBL), United Bank (UBL), Meezan Bank (MEBL) and National Bank (NBP) to be classified under Bucket C, requiring them to increase their Capital Adequacy Ratio (CAR) by 2% (over and above the current requirement) by the end of 2018. Select mid-tier banks are likely to be categorized under Bucket A and B – requiring additional CAR of 1-1.5%. While we believe Tier-1 perpetual debt issuance can help buffer up the banks’ CAR, the new regulatory requirement has raised risks on dividend payout sustainability for select banks.
- UBL and HBL were down 4.3%WoW and 5.2%WoW owing to 1) reported foreign selling and 2) former’s dismal 1Q2018 financial result which was marred by high provisioning and one-off pension expense.
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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