During the first week of December 2020, Topline Securities, a brokerage house in Pakistan conducted a survey of over 50 top fund managers and companies, asking a number of questions about their aspirations for the economy and the stock market for the coming year.
The fund managers constituted about 65 percent of the surveyed population, while the remaining participants belonged to the private sector. This second group was made up of members from the banking, oil and gas, cement, steel, and automotive industries.
The common belief that the political setup in Pakistan would not experience any changes in the next year was one of the important observations to have come out of this survey. Approximately 96 percent of participants surveyed anticipate no improvement in the country’s political environment throughout 2021. Topline Securities itself also agreed with this expectation and confirmed that after the Senate elections, they also expect the existing political noise to fizzle out somewhat. That is also likely to help Pakistan re-enter the suspended IMF scheme.
GDP growth is projected to remain between 1.1 percent and 2 percent for the year, which is also consistent with recent reports released by international organizations such as the World Bank.
The results of the survey showed that the Pakistan Rupee (PKR) exchange rate to the US Dollar (USD) is likely to remain between Rs. 160 to Rs. 165 until December next year. Money exchangers and foreign exchange analysts also maintained that the PKR-USD is likely to hover about Rs. 159 to Rs. 160. over the next few weeks at least.
During FY2021, the survey showed, inflation is projected to average between 8.5 and 9.0 percent. This is coupled with the industry’s expectations that monetary tightening is likely to start in May 2021, with the policy rate projected to rise by 75-100 bps in 2021.
With regard to the stock market, the population surveyed was of the opinion that the KSE-100 index is projected to close between 45,000 and 50,000 by December 2021.
Around 36% of the participants in the survey assume that by Dec-2021, the KSE-100 index is likely to close between 45000-50000, while 29% expect the index to close between 50000-55000. Topline forecasts that by Dec-2021, the KSE-100 index will close at 52.5k.
It is likely that net international corporate sales will continue, while the cement industry and banks are likely to outperform in 2021. The E&P companies and the automotive sector are however, likely to be underperforming in the coming year.
