reports
- Team AKD Research
Federal Budget'23 Enough to placate the IMF, (AKD Research, Jun 12, 20...
AKD Federal Budget FY23 Federal Budget’23 Enough to placate the IMF? Budget’23 – Be ready for mini budgets: Ambitious in targets but lacking in substance – that’s the way to define Budget’22. In its current shape, stipulated macro targets are unlikely to be achieved. While GDP growth (5%) and fiscal deficit (4.9%) will likely miss marks, it is tax collection at PkR7.0tn that is concerning, particularly in the context of IMF where induced economic slowdown with emphasis on import slowdown may l...
- Team AKD Research
Pakistan Budget_Initial Impressions - Not the dreaded serpent, (AKD Re...
AKD Federal Budget FY23 Pakistan Budget: Initial Impressions – Not the dreaded serpent! In sharp contrast to recent history, Finance Minister Miftah Ismail presented Budget’23 to a rather well behaved audience, targeting higher collection from corporates, as well as measures to increase tax net, particularly on the real estate and retail side. Budget’23 envisages a total budgetary outlay of PkR9,502bn compared to PkR8,487bn in Budget’22, up 12%YoY. Net revenue receipts have been projecte...
Pakistan Economy_Economic survey FY22_High growth but challenges ahead...
AKD Daily Pakistan Economy: Economic survey FY22 - High growth but challenges ahead On the eve of Federal Budget FY23, Ministry of Finance (MoF) released its yearly economic survey for FY22 which shed light on key economic indicators. The economy recovered from the pandemic induced slowdown (-ve 94% in FY20) and posted V-Shaped recovery where real GDP growth clocked in at 5.97 percent in FY22. The growth momentum was observed on account of broad-based expansion in large-scale manufacturi...
Pakistan Strategy_May’22 Market Review & Outlook, (AKD Daily, Jun 01, ...
May’22 Market Review & OutlookMay’22 proved to be a tough year for the local equity investors where the index returned–4.8%MoM on closing basis. This was the worst monthly index performance since Sept’21when the index returned –5.3%MoM on the closing basis. Also with PkR depreciating byover 6%MoM, the USD adjusted return during the month stands around –11%MoM. The average daily trading volume shrunk to 252.2mn shares during the month as opposedto 289.5mn during the last month. The lackluster ma...
- Team AKD Research
Pakistan Strategy_The road back to IMF, (AKD Daily, May 27, 2022)
AKD Daily Pakistan Strategy: The road back to IMF Week long parleys between IMF and Pakistani authorities concluded on a positive note and the two parties have seemingly worked out the modalities regarding the release of the next ~US$900mn tranche which will not only help instill the confidence in the market but also support the dwindling FX reserves. The talks in Doha concluded this past Wednesday with Pakistan authorities mandated to roll back the subsidies provided on the consumption o...
Pakistan Economy_The perfect storm, (AKD Daily, May 24, 2022)
The perfect storm The country finds itself on the cusp of yet another economic crisis. Soaring trade deficit amid commodity super cycle, poor policy management and huge external debt repay-ments have put significant pressure on the currency which has been exacerbated by strong USD amid course correction by the US FED, as the world’s largest economy itself faces a battle against inflation. The economic crisis gets further compounded by the political strife between the govern-ment and the opposi...
- Team AKD Research
Pakistan Economy_Import bans_A band aid instead of surgery!, (AKD Dail...
Import bans: A band aid instead of surgery! Yesterday, the federal government announced the of banning various luxury import items such as mobile phones, cars, home appliances and various other food and daily use items, in order to contain the import bill, however, no decision has yet been taken to roll back subsidy program on the consumption of fuel.As per our estimates, only about 4 - 5% of import bill (based on FY21 trade numbers) will be affected by these duties and the underlying issues in...
Pakistan Economy_MPS_Expect a 150bps hike
MPS: Expect a 150bps hike SBP announced its half-yearly schedule of Monetary Policy Committee (MPC) meetings where the next meeting is scheduled on May 23rd, 2022. We expect the central bank to increase the benchmark interest rates by another 150bps to 13.75%, the highest it has been in over a decade. Owing to the current commodity super cycle and questionable resource management, the country is experiencing soaring trade deficit which is depleting the import cover and thus putting pressure on...
Pakistan Economy_Inflation to touch 13.0% in Apr'22, (AKD Daily, Apr 2...
AKD Daily Pakistan Economy: Inflation to touch 13.0% in Apr'22 Inflation for the month of Apr’22 is likely to stand at 13.0%YoY — highest level since Jan’20 — compared to 12.7%YoY in Mar’22. On a monthly basis, inflation is expected to be recorded at 1.3%MoM, highest monthly accretion since Nov’21, potentially due to Ramadan effect. Pakistan is set to restart IMF program which would provide much needed clarity on Pakistan’s macros particularly the external side which should bring stability ...
- Team AKD Research
Pakistan Economy_Tax and SBP Amendments to pave way for IMF, (AKD Dail...
AKD Daily Pakistan Economy: Tax and SBP Amendments to pave way for IMF , in the middle of protests by opposition, successfully tabled two crucial bills for the resumption of IMF program namely, Finance (Supplementary) Act 2021 and State Bank of Pakistan (Amendment) Act 2021. The former clearly reflects authorities’ determination to clamp down imports and promote local manufacturers, targeting to raise PkR343bn in the meantime to minimize deviation from IMF mandated primary deficit target...
- Hamza Kamal
Pakistan Economy_Inflation for Dec'21 to stand at 12.9%YoY, (AKD Daily...
AKD Daily Pakistan Economy: Inflation for Dec’21 to stand at 12.9%YoY Inflation for the month of Dec’21 is likely to stand at 12.9% vs. 11.5% in the previous month — the fifth consecutive month of continuous increase in curve, bringing CY21 to close at 9.5%, on a similar scale to last year. On a sequential basis, inflation is likely to trend at 0.5% in Dec’21 compared to 3.0% in Nov’21. In our base case, we expect inflation for FY22 at 11.3% with the authorities likely recording double d...
- Hamza Kamal
Pakistan Banks_Monetary settings beginning to reflect in spreads (AKD ...
AKD Daily Pakistan Banks: Monetary settings beginning to reflect in spreads Banking sector spread for Nov’21 stood at 4.2%, marking the sixth consecutive month of diminishing spread. Although, fresh spreads — being reflective of recent monetary settings – have begun to inch up with Nov’21 spread standing at 4.83%, +88bps MoM. Fresh lending yields incurred negative credit spread during the month of –ve 16bps vs. 33bps in Oct’21 where one plausible explanation is preponing of loan require...
- Hamza Kamal
Pakistan Economy_MPC - Positive message delivered! (AKD Daily, Dec 15,...
AKD Daily Pakistan Economy: MPC - Positive message delivered! The Monetary Policy Committee (MPC) of the SBP, yesterday delivered another 100bps hike, taking policy rate to 9.75% but more importantly, communicating to “pause” monetary settings in the near term, believing the recent monetary policy actions are sufficient to meet SBP’s broader goals of sustainable growth and mildly positive real interest rates. SBP also acknowledged monthly external deficit being stronger in the near term ...
- Team AKD Research
Pakistan Banks_Higher yields - a double edged sword! (AKD Daily, Dec 0...
AKD Daily Pakistan Banks: Higher yields - a double edged sword! Amid rising inflation, higher CAD and building expectations of further rate hikes in the coming months (150bps hike already in the bag), the secondary market yields have increased by 185bps—335bps during 4QCY22. While the higher yields are expected to finally be picked in the banking sector NIMs for 4QCY21—thereby increasing the funded income of the banks—this will also trim the book value of the investments owing to mark-to-m...
- Hamza Kamal
Pakistan Strategy_Nov'21 market review and outlook, (AKD Daily, Dec 01...
AKD Daily Pakistan Strategy_Nov’21 market review and outlook Drawing curtains to MSCI EM, KSE-100 closed Nov’21 at 45,072.4pts denoting a –ve 2.5% performance during the month while marking the highest volatility CYTD. Avg. volume for the month stood at 316.1mn shares compared to 279.7mn shares in Oct’21 with activity largely tilted towards mainboards (KSE/KSE-ALL volume at 29.1% vs. 26.7% FYTD). Factors at play were, i) Central Bank mounting on aggressive monetary tightening (150bps hike i...
- Team AKD Research
Pakistan Economy_Rate hike paves way for Staff Level Agreement, (AKD D...
AKD Daily Pakistan Economy: Rate hike paves way for Staff Level Agreement · In a move that surprised the market’s expectations on the higher side, SBP raised the benchmark interest rates by 150bps. The move marks a structural shift in central bank’s policy from stimulating growth to now targeting stabilization amid rising risks emanating on the external account. · The rate hike brings real interest rates closer to ZERO, having stayed well below -2% mark during the pandemic as SBP strived to prot...
- Team AKD Research
Pakistan Economy_Package announced to contain food inflation, (AKD Dai...
AKD Daily Pakistan Economy: Package announced to contain food inflation In a bid to contain food inflation and to give relief to masses, honorable Prime Minister announced a relief package of PkR120bn under the flagship “Ehsaas Program” with execution being handled by NBP. The said subsidy is over and above the already budgeted amount of PkR260bn and would be targeting certain segments of the country. 20mn families are expected to benefit from the subsidy program. The Prime Minister also a...
- Hamza Kamal
Pakistan Strategy_FATF Review - a non event for the market, (AKD Daily...
AKD Daily Pakistan Strategy: FATF Review - a nonevent for the market FATF in an unsurprising move has retained Pakistan amongst Jurisdictions under Increased Monitoring, commonly known as the “Grey List”. The message was similar to previous ones of encouragement on reforms undertaken by the authorities while calling the Govt. to meet extended requirements. At present, Pakistan is compliant on 26 out of 27 counts on the initial action plan set in Jun’18, while in an unparalleled swiftness h...
- Hamza Kamal
Pakistan Strategy_Sep'21- Uncertainty kept PSX under pressure, (AKD Da...
AKD Daily Pakistan Strategy: Sep’21 - Uncertainty kept PSX under pressure KSE-100 index remained under pressure during Sep’21 on the back of i) setbacks on the foreign policy front, ii) ensuing weakness in macro indicators and iii) tightened price controls by the authorities, resulting in a decline of 5.3%MoM to close at 44,899pts - the largest monthly decline since Mar’20. With FYTD return standing at –ve 5.2%, CYTD return for the KSE-100 now stands at a paltry 2.6%. Flow wise, Foreigners...
- Hamza Kamal
Pakistan bank_Sector exhibiting robust asset quality, (AKD Daily, Sep ...
AKD Daily Pakistan bank: Sector exhibiting robust asset quality, Banks under our coverage — representing 60.8% of industry advances — have witnessed significant contraction in NPLs buildup with infection ratio spiraling down to 5.3% in Jun’21 compared to 5.9% at the start of the year. In absolute terms, NPLs stand at PkR292.0bn, down 3.0% since the beginning of the year whereas normalizing for currency appreciation transpired in 1HCY21, NPLs have remained flat. A closer look featured offse...
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