AKD Securities Limited Equity Research – Daily Report

Karachi, January 01, 2019 (PPI-OT): Pakistan Strategy: 2018 is ‘over and out’

Extending its turbulent ride from CY17 (-ve return of 15.3%) into CY18 (-ve return of 8.4%), the KSE-100 index reflected a left-tail outcome (consecutive 2yrs of closing in the red) since CY94-95, closing at 36,802pts. Avg. volumes stood at 184.0mn shares (down 28%YoY), the lowest since CY12.

In terms of investor participation by class, FPI outflows singularly sapped a cumulative US$537.08mn during CY18 where 4QCY18 outflows totaled US$214.7mn. On the other hand, Insurance sector absorbed US$313.3mn in selling activity, rising 64%YoY, while individuals remained net buyers.

We expect similar pre-occupations in CY19 (political uncertainty and macro vulnerability) with IMF entry and possible adjustments under the program being key variables driving market direction for the year.

We advise investors to build staggered positions (buy on dips) in thematic investment cases (interest rates, FX fragility, pricing power, CAPEX viability), balancing returns with risks (averaging buying rates over the period), rather than timing the market (holding off buying in expectation of weakness).