December 2011. Lahore Stock Exchange (LSE ) “Continuous Professional Development”. Pakistan’s Capital Markets: Current Challenges. Presentation by : Muhammad Farid Alam, FCA Chief Executive Officer AKD Securities Limited. Contents. AKD Securities Limited.
Lahore Stock Exchange (LSE)
“Continuous Professional Development”
Pakistan’s Capital Markets:
Presentation by : Muhammad Farid Alam, FCA
Chief Executive Officer
AKD Securities Limited
AKD Securities Limited is a proud recipient of “The Best Equity Brokerage House”Award for the years 2005-06 and 2006–07, awarded by the ‘CFA Association of Pakistan’.
The globally recognized business journal ‘Asia Money’ conducted a survey, focused on the quality of brokerage firms, with renowned international portfolio fund managers and ranked AKD Securities Limited as the 2nd Best Local Brokerage, 2nd Best Overall Country Research, and 3rd Best Overall Sales Services.
We believe that with our in-depth understanding of Pakistan’s capital markets, qualified management, and prior experience, we are best positioned to provide our clients the level of services required for making every transaction a resounding success.
Note: FY12B is GoP estimates. FY12AKD is AKD Research Estimates
Growth is expected to come out of the Emerging Markets because all variables i.e. – consumption, savings etc. are at the lower side.
On the other hand the same variables have reached saturation amongst the Developed Markets.
Source: EIU; April 2010
Debt % of GDP
Debt % of GDP
29 DEC 2000 – 31 DEC 2009
'01 '02 '03 '04 '05 '06 '07 '08 '09
- Developed Markets : G7. Emerging Markets : 87 non-OECD Countries
- Total domestic, external and IMF government debt, as a % of nominal GDP
- Usually but not exclusively central government
Source: Factset; EIU; April 2010
Over the past decade total market capitalization’s input in GDP increased phenomenally from 8% in FY01 and kept on growing with its peak during the golden years of 2006 and 2007
KSE Performance (2001 – 2011)
During the 90s market movement was sideways ranging between the levels of 1,000 to 2,000
The Decade That Was:
The first decade of 21st century was eventful and saw de-regulation opening up the markets, consolidation, privatization, divestments by GoP worth USD 6.7bn that provided for currency stabilization (MCB – GDR) and later by the cursed domestic and international financial crisis
PER vs. EPS Growth (%)
ROE (%) vs. PBVS (x)
2012 Dividend Yield (%)
Companies become SICK but Sponsors get HEALTHIER!!!
Market likely to focus on:
Key drivers to include:
KEY MACRO RISKS
Is it Bulls or Bears in Pakistan’s Equity Market?
The classical theory of positive RIR is now a myth!
Capital markets move with overall economy - rather more sensitive
“People of accomplishment rarely sat back and let things happen to them. They went out and happened to things.”
- Leonardo Da Vinci
Overall Effect = Lowest Ever Volumes
Comparison of Products ( South Asia vs UK)
Realization and efforts by all stakeholders to give depth to the market
It is vital for local companies to get listed in the equity markets of our country not only for the enhancement and growth of the markets but also to gain access to a more convenient & robust form of capital raising
KSE-100 Index + Volume
ACCOUNTING PROFITSREAL PROFITS
Corporate Profitability – Is it intact?
Numerous profit generating corporate entities in Pakistan are facing liquidity dry-outs recently, mainly due to the energy crisis and mounting circular debt
Growth in Earnings is essential but Dividends must increase in the same proportion as well
I feel that the failure of Common-Wealth Games and success of China Olympics shows that Democracy may not be the solution to all the ills!
The brokerage community in Pakistan was content with plain-vanilla trading services dealing primarily in the Ready Marketwhich led to overdependence on market volumes and vulnerability in the earnings stream.
*Excluding certain possible expenses