PAK - Eyeing Interest Rate Direction For Pakistan's Equities
As was largely being expected, Pakistan’s central bank announced to raise its target policy rate by 100bps to 13.25% on July 16, 2019. Following the monetary policy announcement, the question arises if further rate hikes are on the cards. Further monetary tightening in Pakistan will put pressure on Pakistan’s equities and consequently on the Global X MSCI Pakistan ETF (PAK). We believe that the central bank may need to slightly increase rates again because its current inflation expectation appears optimistic. Signals from Pakistan’s money market suggest that participants are foreseeing a peaking of