Friday, December 31, 2010

Pakistan Shares Exceed BRIC Gains in 2010

Pakistan's main stock market ended 2010 with a 28 percent annual gain, driven by foreign buying mainly in the energy sector, despite concerns about the country's macroeconomic indicators after summer floods, according to Reuters. Although it was less than half of the 63% gain recorded in 2009, it is still an impressive rise in KSE-100 index when compared favorably with the performance of Mumbai(+17%) and Shanghai(-14.3%) key indexes. Among other BRICs, Brazil is up just 1% for the year, and the dollar-traded Russian RTS index rose 22% in the year, reaching a 16-month closing high of 1,769.57 on Tuesday, while the rouble-based MICEX is also up 22%.


Pakistan's key share index KSE-100 was just over 1000 points at the end of 1999, and it closed at 12022.46 on Dec 31, 2010, significantly outperforming BRIC markets for the decade. Pakistan rupee remained quite stable at 60 rupees to a US dollar until 2008, slipping only recently to a range of 80-85 rupees to a dollar. In spite of the currency decline, Pakistan's KSE-100 stock index surged 55% in 2009 in US dollar terms and 65% in rupee terms. During the same period of 1999-2009, Mumbai Sensex index moved from just over 5000 points to close at 17,464.81.

If you had invested $100 in KSE-100 stocks on Dec. 31, 1999, you'd have over $1000 today, while $100 invested in Mumbai's Sensex stocks would be worth about $400. Investment of $100 in emerging-market stocks in general on Dec. 31, 1999 would get you about $300 today, while $100 invested in the S&P500 would be essentially flat at $100 today.

The US Federal Reserve's current easy money policy, euphemistically called "quantitative easing", sent a torrent of US dollars flooding into the US, European and emerging markets around the world. All three major US stock indices rose in 2010. The Dow was up 1,149.46, or 11 percent. The S&P gained 142.54, or 12.8 percent. The Nasdaq ended higher by 383.72, or 16.9 percent.

Some of the US stimulus money found its way into India and Pakistan as well. The 28% gain in KSE-100 is driven in part by net foreign capital inflows of Rs. 43 billion ($515 million US dollars) in 2010. Similarly, global funds bought a net 6.05 billion rupees ($135 million) of Indian equities on Dec. 29, taking this year’s record flows into equities to 1.31 trillion rupees ($27 billion US dollars), according to data on the Securities and Exchange Board of India website. India's FII inflows surged 61 percent in 2010, making the gauge the most expensive in Asia and among the BRIC markets.

While China's situation is superior among the emerging markets, including BRICs, because it enjoys significant current account surpluses and has strong capital flow controls, it is also seeing its economy overheat along with India's economy. Joseph Stiglitz, a Nobel Laureate Columbia University economist, has argued that India is more vulnerable to an asset bubble than China, saying that “strong economies that don’t yet have capital control become the focal point” for the liquidity injected by the US Federal Reserve. Stiglitz thinks that India, more than China or Brazil, should watch out for the tidal wave of money made available from the Fed’s quantitative easing. Mike Shedlock, an American investment advisor, believes that "India and China are going to overheat and crash, or their economic growth is going to slow dramatically, quite possibly both".

Although the hot money does help to partially fund the growing current account deficits in both India and Pakistan, the net inflow of $515 million of FII in Pakistan is relatively small at 0.3% of its GDP, and it is less likely to impact the economy even if all of it goes away in 2011. In India's case, however, the $27 billion in FII represents a little over 2% of its GDP and its sudden flight out of India is a substantial risk for Indian economy.

In my opinion, the uncertain US and European economic recoveries and future monetary policy of the US Federal Reserve in 2011 and beyond represent the greatest source of instability for capital markets in the emerging nations such as India and Pakistan, which impose relatively lax controls on short-term capital flows.

Related Links:

Haq's Musings

Trade and Economy Indicators of 231 Countries

JS Global on Pakistani Stocks in 2010

Indian Economy's Hard Landing in 2011?

High Cost of Failure to Aid Flood Victims

Karachi Tops Mumbai in Stock Performance

India and Pakistan Contrasted in 2010

Pakistan's Decade 1999-2009

Musharraf's Economic Legacy

China's Trade and Investment in South Asia

India's Twin Deficits

Pakistan's Economy 2008-2010

Inflation Hits India

Goldman Sachs India Warning on Twin Deficits

India's Nov 2010 Imports, Exports

72 comments:

Riaz Haq said...

I wish a very happy new year and best wishes for 2011 to all my readers around the globe.

gunam said...

@riaz

Happy new year

gunam said...

@riaz

It is nice to know the performance of pak index. Probably you must circulate this note for the reference of the FII so that it can create inflow of foregin exchange which will benefit pakistan.

Riaz Haq said...

gunam:

I sincerely wish a very happy, prosperous and peaceful 2011 to you and all my readers.

As to the situation in Pakistan, the people of the South Asian nation have continued to demonstrate great courage and remarkable resilience in the face of multiple serious crises bedeviling them. I wish them the very best for 2011.

In addition to blossoming of arts and literature, Pakistan's main stock market ended 2010 with a 28 percent annual gain, easily surpassing Mumbai Sensex's 17 perecent gain for 2010.


If you had invested $100 in KSE-100 stocks on Dec. 31, 1999, you'd have over $1000 today, while $100 invested in the Mumbai's Sensex stocks would be worth about $400. Investment of $100 in emerging-market stocks in general on Dec. 31, 1999 would get you about $300 today, while $100 invested in the S&P500 would be essentially flat at $100 today.

gunam said...

This article could be one of the pointers.

This is an article from Epaper The Hindu appeared on Jan 1, 2011 in page 19.

Click the following link to read : http://epaper.thehindu.com/svww_showarticle.php?art=20110101A_019101019

gunam said...

@riaz

Index is indicative. There are scrips which has given more than 30% yield yoy for example hdfcbank, icicibank etc..

In fact in these company foreign investment has reached the limit allowed.

Anonymous said...

New Year comes every year but 2011 is a special year
which will happen once in a life time.
It will start with a combo:-
1st of 1/1/11
After 10 days 11/1/11
After 10 months 1/11/11
Then, After 10 days it will be 11/11/11.
Isn’t that fantastic!!!
I wish YOU a wonderful, happy and
Healthy new year .

Khalid said...

Riaz Bhai:
Thanks a lot for showing me other parts and view points of my beloved Pakistan. May Allah protect it from evil eyes, and shower his blessings on my country during this new year and ever onward. Ameen
HAPPY NEW YEAR TO YOU AND ALL OF US

Riaz Haq said...

There is no question that the Indian economy is doing much better than Pakistani economy as Pakistan fnds itself mired in som serious crises.

BUt there is a patterns of some western magazines, probably inspired by their Indian staffers, that exaggerate India's accomplishments, while making Pakistan look worse than the reality warrants.

The latest example is data published by The Economist on India and Pakistan in its current issue.

It says the following about India:

GDP growth: 8.2%
GDP: $1,832bn (PPP: $4,508bn)
Inflation: 5.8%
Population: 1,202.1m
GDP per head: $1,520 (PPP: $3,750)

And Pakistan:

GDP growth: 3.2%
GDP: $188bn (PPP: $487bn)
Inflation: 9.9%
Population: 189.6m
GDP per head: $992 (PPP: $2,570)

Here are the problems with the above:

1. Pakitan's population is about 180 million, not 190 million as stated by the Economist. This distortion causes Pakistan's GDP to look smaller than it is.

2. India's GDP is not $1.8 trillion. The highest figure I have seen is $1.5 trillion. This exaggeration makes India's per capita GDP higher than reality.

3. The magazine puts India's inflation rate at 5.8%...the actual inflation rate in India is in double digits....wth the latest figures closer to 15%.

The fact is that, using credible data from multiple souces, the real per capita GDP of both India and Pakistan hovers a little over $1000 in nominal terms.

Isn't it shoddy journalism by the Economist?

What happened to fact-checking at the Economist magazine?

Aren't these figments of The Economist's Indian staffers' imagination?

Anonymous said...

^^
Riaz jee those figures are from the Economist 'The World in 2011':

Those figures are PREDICTIONS of where every major economy is likely to be at the END OF 2011.

The don't represent the current situation.

HAPPY NEW YEAR :)

Riaz Haq said...

Anon: "Those figures are PREDICTIONS of where every major economy is likely to be at the END OF 2011."

That doesn't make sense. Even if India grows by 10% in 2011 which is unlikely, the Indian GDP will still be less than $1.8 trillion.

Anonymous said...

^^
Rupee and other currencies likely to appreciate owing to possible QE in the US by printing money....

Australia per capita income is now around USD 70,000 up from $40,000 a couple of years ago for similar reasons...

Zen, Munich, Germany said...

5.2% inflation in India? I cannot believe. Or do they ignore food and fuel prices as in USA and calculate only "core inflation"? If you just take the price of cars and washing machine, how can we get the real impact of inflation in a country like India?

Core inflation in USA itself has become a joke.

Barron's magazine states

"The annual tab for homeowners' insurance is up some 108% since the turn of the century. During this period, yearly taxes on real estate have climbed 77%. A gallon of heating oil costs a whopping 150% more. The average electricity bill is 50% higher. And filling up your rig at the friendly neighborhood service station is more that twice as much per gallon. Monthly Medicare Part B premiums have climbed 143%. A humble potato goes for 67% more than it did 10 years ago, an equally humble egg 93% more, and the price of a loaf of plain old white bread is up a decidedly unappetizing 50%. "

The reason to ignore food and fuel prices in calculation of inflation in many western countries is purely political. So people's wages are adjusted based on core inflation so that corporates can squeeze costs.

About suicides in Andhra pradesh. The issue is by and large given less coverage by Indian media

http://www.bloomberg.com/news/2010-12-28/suicides-among-borrowers-in-india-show-how-men-made-a-mess-of-microcredit.html

Riaz Haq said...

There is no question that the Indian economy is doing much better than Pakistani economy as Pakistan finds itself mired in some serious crises.

But there is a pattern of some western magazines, probably inspired by their Indian staffers, that exaggerates India's accomplishments, while making Pakistan look worse than the reality warrants.

The latest example is data published by The Economist on India and Pakistan in its current issue.

It says the following about India:

GDP growth: 8.2%
GDP: $1,832bn (PPP: $4,508bn)
Inflation: 5.8%
Population: 1,202.1m
GDP per head: $1,520 (PPP: $3,750)

And Pakistan:

GDP growth: 3.2%
GDP: $188bn (PPP: $487bn)
Inflation: 9.9%
Population: 189.6m
GDP per head: $992 (PPP: $2,570)

Here are the problems with the above:

1. Pakistan's population is about 180 million, not 190 million as stated by the Economist. This distortion causes Pakistan's per capita GDP to look smaller than it is.

2. India's GDP is not $1.832 trillion. The highest figure I have seen is $1.5 trillion. This exaggeration makes India's per capita GDP higher than reality, or any credible forecasts for 2011.

3. The magazine puts India's inflation rate at 5.8%...the actual inflation rate in India is in double digits....wth the latest figures closer to 15%.

4. Even if one assumes that the Economist figures are a 2011 forecast, it still makes no sense. Even if India grows by 10% in 2011 which is unlikely, the Indian GDP will still be less than $1.8 trillion.

The fact is that, using credible data from multiple souces, the real per capita GDP of both India and Pakistan hovers just a little over $1000 in nominal terms.

Why does Economist magazine hide the names of its staffers? Why does it not print by-lines identifying the authors of articles, other than surveys and special "by invitation" contributions?

Canadian author John Ralston Saul describes The Economist as a "magazine which hides the names of the journalists who write its articles in order to create the illusion that they dispense disinterested truth rather than opinion. This sales technique, reminiscent of pre-Reformation Catholicism, is not surprising in a publication named after the social science most given to wild guesses and imaginary facts presented in the guise of inevitability and exactitude. That it is the Bible of the corporate executive indicates to what extent received wisdom is the daily bread of a managerial civilization".

Isn't it shoddy journalism by the Economist?

What happened to fact-checking at the Economist magazine?

Read more at:

http://www.riazhaq.com

http://www.riazhaq.com/2010/01/india-and-pakistan-contrasted-in-2010.html

Anonymous said...

^^
the gdp growth rate mentioned is real gdp growth rate which is caluculated in a different way than nominal gdp growth rate
Real GDP growth rate for year n = [(Real GDP in year n) - (Real GDP in year n - 1)]/ (Real GDP in year n - 1)


Real GDP is gross domestic product in constant dollars. In other words, real GDP is a nation's total output of goods and services, adjusted for price changes. Real GDP can be compared to nominal GDP, which is GDP in current dollars,

gunam said...

@riaz

https://www.cia.gov/library/publications/the-world-factbook/geos/pk.html

yr pak india

GDP - per capita (PPP):
2009 $2,400 3200
2008 $2,300 3000
2007 $2,300 2800

ranking 178 165

GDP - (PPP):
2009 0.432 3.68
2008 0.415 3.42
2007 0.400 3.19

GDP - DOLLAR

2009 0.162 1.23

Per capita takes into account the population and the growth. India has grown by 12% between 2007 to 2009 whereas pakistan has grown by 4%

Probably india has to go a long way to catch up with the developed economies but it far ahead of pakistan in development.

gunam said...

@riaz

Interesting is the public data of google. Actually in 1960, the gdp of pakistan was almost equal to india and gap increase in 2000 to 2010 in a great manner.

http://www.google.com/publicdata/explore?ds=d5bncppjof8f9_&ctype=l&strail=false&nselm=h&met_y=ny_gdp_mktp_cd&hl=sv&dl=sv#ctype=l&strail=false&nselm=h&met_y=ny_gdp_mktp_cd&scale_y=lin&ind_y=false&rdim=country&idim=country:IND:PAK&hl=sv&dl=sv

gunam said...

@riaz

Thank google data, the interesting fact is that the pakistan per capita income was higher than india from 1960 to 2000 consistently but for 1974. However from 2002, india has overtaken pakistan and moved further.

Riaz Haq said...

Gunan: "pakistan per capita income was higher than india from 1960 to 2000 consistently but for 1974. However from 2002, india has overtaken pakistan and moved further."

PPP figures reported by CIA are based on faulty calculations.

In nominal US dollar terms, per capita incomes of India and Pakistan are the same. The PPP calc methods are not reliable.

Pakistanis have higher per capita incomes than India on the PPP basis, as calculated by the ADB's ICP program. The fact is that Pakistanis' real per capita incomes are much higher than reported by various agencies. The most recent real per capita income data was calculated and reported by Asian Development Bank based on a detailed study of a list of around 800 household and nonhousehold products in 2005 and early 2006 to compare real purchasing power for ADB's trans-national income comparison program (ICP). The ICP concluded that Pakistan had the highest per capita income at HK$ 13,528 among the largest nations in South Asia. It reported India’s per capita as HK $12,090.

http://www.adb.org/Documents/Reports/ICP-Purchasing-Power-Expenditures/Highlights.pdf

Anonymous said...

riaz jee
governor of punjab gunned down by own security guard...

Guard opposed his commnent on repealing blasphemy laws..

Riaz Haq said...

Anon: "governor of punjab gunned down by own security guard..."

I am really shocked and deeply saddened by the assasination of Salman Taseer. I think this is very sad day for all Pakistanis who care for basic tolerance and civility.

I, too, oppose the blasphemy law as written, applied and abused in Pakistan. Laws such as Pakistan's blasphemy law should be repealed.

Zen, Munich, Germany said...

@Riaz

"I am really shocked and deeply saddened by the assasination of Salman Taseer. I think this is very sad day for all Pakistanis who care for basic tolerance and civility.

I, too, oppose the blasphemy law as written, applied and abused in Pakistan. Laws such as Pakistan's blasphemy law should be repealed."

In India also, there are rascals - but the country is not completely taken over by them. The tendency among non Muslims would be to blame Muslims, but you dont see this much lawlessness in other Asian Muslim countries.
I do not see any end to current lawlessness in Pakistan - it has something to do with the psychology of the people and it cannot be changed easily. Pakistanis bar a few well educated secular elites want Saudi style laws - but West, secular parties etc. are trying to impose Western style laws there..

Riaz Haq said...

Zen: "Pakistanis bar a few well educated secular elites want Saudi style laws - but West, secular parties etc. are trying to impose Western style laws there.."

you are a misreading the murder.

While the right-wing religious parties are a powerful pressure group, the fact is they do not win any elections in Pakistan.

In elections after elections since 1947, people have rejected them, prefering to send members of mainstream PPP and PML parties to the parliament.

Anonymous said...

While the right-wing religious parties are a powerful pressure group, the fact is they do not win any elections in Pakistan.


That's because in most pakistani constituencies the local feudal and henchnment force the serf to vote for his party...

Religious types don't own that much land so win proportionally less...

Most Pakistanis want sharia law in the country.Of course what interpretation is debatable but most don't want secular law with equal laws...

The situation is so bad for the besieged elites that even the pak ambassador yesterday made an ass of himself saying blasphemy laws are 'man made' and not 'divine laws'...

Implying the Pakistani state in the 21st century still believes in divine revelation while considering repealing laws!

Riaz Haq said...

Anon: "That's because in most pakistani constituencies the local feudal and henchnment force the serf to vote for his party..."

That's only true of the rural folks who are about 60% of the population.

And that is also changing as the country urbanizes at a fast pace.

Here are a few excerpts from a New York Times report filed Sabrina Tavernise on Pakistan:

In Mr. Dasti’s area, one of the hardest hit by the recent flooding, the state has all but disappeared. Not that it was ever very present. In the British colonial era, before Pakistan became a separate country, the state would show up a few times a month in the form of a representative from the Raj dispensing justice.

Later, the local landowner took over. For years, feudal lords reigned supreme, serving as the police, the judge and the political leader. Plantations had jails, and political seats were practically owned by families.

Instead of midwifing democracy, these aristocrats obstructed it, ignoring the needs of rural Pakistanis, half of whom are still landless and desperately poor more than 60 years after Pakistan became a state.

But changes began to erode the aristocrats’ power. Cities sprouted, with jobs in construction and industry. Large-scale farms eclipsed old-fashioned plantations. Vast hereditary lands splintered among generations of sons, and many aristocratic families left the country for cities, living beyond their means off sales of their remaining lands. Mobile labor has also reduced dependence on aristocratic families.

In Punjab, the country’s most populous province, and its most economically advanced, the number of national lawmakers from feudal families shrank to 25 percent in 2008 from 42 percent in 1970, according to a count conducted by Mubashir Hassan, a former finance minister, and The New York Times.

“Feudals are a dying breed,” said S. Akbar Zaidi, a Karachi-based fellow with the Carnegie Foundation. “They have no power outside the walls of their castles.”

Mr. Dasti, a young, impulsive man with a troubled past, is much like the new Pakistan he represents. He is one of seven siblings born to illiterate parents. Despite his claims of finishing college, he never earned a degree, something his political opponents used against him in court this spring. One of the 35 criminal cases against him is for murder, a charge he said was leveled by his political opponents. Detractors accuse him of blackmailing rich people in a job at a newspaper. He said he was writing exposés.

“I have more enemies than numbers of hairs in my head,” he said, bouncing down a road in a borrowed truck. “They don’t like my style, and I don’t like theirs.”

Anonymous said...

pak urban population is 30% and rural pakistan has well over 80% of seats and 90%+ of the voter turn out...

Riaz Haq said...

Anon: "pak urban population is 30%"

Pakistan's urban population is now 40%, and the only major politcal party with mainly rural base is the PPP. And PPP is now a minority government, requiring support of urnan middle class parties like MQM. The Opposition PML is dominant mainly in Punjab's urban middle class.

Pakistan has and continues to urbanize at a faster pace than India. From 1975-1995, Pakistan grew 10% from 25% to 35% urbanized, while India grew 6% from 20% to 26%. From 1995-2025, the UN forecast says Pakistan urbanizing from 35% to 60%, while India's forecast is 26% to 45%. For this year, a little over 40% of Pakistan's population lives in the cities.

2008 report by UN Population Fund says the share of the urban population in Pakistan almost doubled from 17.4 percent in 1951 to 32.5 percent in 1998. The estimated data for 2005 shows the level of urbanization as 35 per cent, and CIA Factbook puts it at 36% in 2008, and it is increasing with 3% of the nation's population migrating to cities every year. With over 5 million rural migrants each year, the population of Pakistani cities in exploding, and Karachi has now become the world's largest city, according to Citymayors.com.

http://www.riazhaq.com/2009/09/urbanization-in-pakistan-highest-in.html

Vicks said...

"The estimated data for 2005 shows the level of urbanization as 35 per cent, and CIA Factbook puts it at 36% in 2008, and it is increasing with 3% of the nation's population migrating to cities every year. With over 5 million rural migrants each year, the population of Pakistani cities in exploding, and Karachi has now become the world's largest city, according to Citymayors.com. "
The world over, countries are trying to reduce the flow of rural migrants to cities; life in the cities in developing countries is already a nightmare due to vast populations and grossly inadequate infrastructure. Why are you going about tom tomming the fact that Pakistani cities are exploding in population? Surely that's not something to be crowing about

Riaz Haq said...

Vicks: "
life in the cities in developing countries is already a nightmare due to vast populations and grossly inadequate infrastructure."

Cities do offer hope to the migrants for better life than rural poverty they escape.

When visitors see a squatter city in India or Pakistan or Bangladesh, they observe overwhelming desperation: rickety shelters, little kids working or begging, absence of sanitation, filthy water and air. However, there are many benefits of rural to urban migration for migrants' lives, including reduction in abject poverty, empowerment of women, increased access to healthcare and education and other services. Historically, cities have been driving forces in economic and social development. As centers of industry and commerce, cities have long been centers of wealth and power. They also account for a disproportionate share of national income. The World Bank estimates that in the developing world, as much as 80 percent of future economic growth will occur in towns and cities. Nor are the benefits of urbanization solely economic. Urbanization is associated with higher incomes, improved health, higher literacy, and improved quality of life. Other benefits of urban life are less tangible but no less real: access to information, diversity, creativity, and innovation.

Anonymous said...

riaz jee:
plz read:
http://www.economist.com/blogs/newsbook/2011/01/pakistan

Riaz Haq said...

Failed state of Pakistan feeding "Shining India"?

Here's a BBC story on India urging Pakistan to resume onion exports:

India is trying to persuade Pakistan to resume exporting onions overland to curb soaring prices.

The matter has been taken up with the government of Pakistan, External Affairs Minister SM Krishna said.

Pakistan banned overland exports of onions to India on Tuesday with traders saying they feared shortages at home.

Last month, India abolished import taxes on onions after prices nearly tripled in a month.

"We have initiated talks and before not too long, we are hopeful we will find a solution to this, easing pressure within our country for onions," Mr Krishna told a press conference in Delhi.

Pakistan banned exports to India through the land route via the Attari-Wagah border crossing, although the sea route is still open.

Much of the trade, however, is by road and rail which are cheaper and quicker.

India's food inflation has risen for the fifth straight week this week to 18.32% - the highest in more than a year.

The price of onions, a key food staple for Indian families used in almost all dishes, has risen dramatically over the past month.

A kilogram which usually costs 20 rupees went up to 85 rupees ($1.87; £1.20) last month. At present, it is 65 to 70 rupees a kilo.

The rise has been blamed on unusually heavy rains in the bulk-producing western states of Maharashtra and Gujarat and in southern states, as well as on hoarders and speculators.

Discontent over food inflation has been a major headache for the government.

High prices of essential commodities such as onions have previously sparked unrest and helped bring down the national government in 2004.

Riaz Haq said...

Here's The Express Tribune piece on "changing face of retail" driven by the growth of middle class and FMCG sector in Pakistan:

The retail sector in Pakistan, long dominated by thousands of small corner shops, is about to go through a dramatic facelift as consumers become more discerning and demand greater choice.

The advent of hypermarkets and wholesalers such as Carrefour, Metro Cash & Carry and Makro has given Pakistanis a taste for a consumer choice driven shopping experience which is likely to deepen the market for consumer goods throughout the country and alleviate what has hitherto been the central problem in developing that sector: logistics.

A fragmented market

According to the Small & Medium Enterprise Development Authority, there are over 125,000 retail outlets all across Pakistan. Approximately 94 per cent of these are miniscule corner shops and small retail outlets in cities and villages. Perhaps most critically, there is no nationwide chain of retail or even wholesale outlets.

This poses a significant challenge for most businesses looking to enter the food and agribusiness sector. Despite the fact that Pakistanis spend close to $36 billion a year on food and other retail shopping, businesses find it very difficult to reach the mass market of Pakistani consumers simply because it is not a single marketplace but tens of thousands of little shops.
---
What it all means

The existence of these chains means that Pakistanis are about to be inundated with outlets that seek to create a better shopping experience and offer consumers more choice. The larger these chains become, the more those choices they offer will be produced locally.

If food production companies can have lower distribution costs and easier access to a wider swathe of the consumer market, they are more likely to expand existing lines of business and introduce newer markets. In other words, food producers will go from selling raw commodities to selling higher value goods which will not only expand consumer choice but will also increase the productivity of the Pakistani workforce and thus their incomes.

Riaz Haq said...

Here's "The Other Story" on Salman Taseer seen through thye eyes of Shirin Sadeghi as published in The Huffington Post:

Albert Camus's famous novel, The Stranger, was the story of a man who was killed not because of a crime he had committed but because of a steady rise in publicity about his character faults. Little things bothered people about the Stranger -- he didn't cry at his mother's funeral, he had a steady girlfriend he didn't plan to marry. When he became implicated in a crime, the trial became a showcase of all the tiny things he did in his private life that the public didn't approve of or simply didn't understand -- though none of these things were exactly wrong or immoral, in sum and in public, they cost him his life.

Salman Taseer was a Stranger in Pakistan. His millions of dollars, British mother, private relationships, and extravagant Western lifestyle -- though not in themselves crimes nor even shortcomings in character, could not possibly have been more in contrast with the very poor and increasingly religiously extreme population of Pakistan.

In the last few years, more and more of the private details of his life were leaked into the public consciousness, private photos were obtained and published, personal habits were recounted. Here in the U.S., a large number of tributes to him have framed him as a crusader of human rights who died for good but the fact is -- and most Pakistanis will tell you, if they are not in the habit of pandering to Western imagery, that what really killed Salman Taseer was anything but an isolated -- though brave -- act of heroism.

The ugly truth of Pakistan today is not about a battle between do-gooders and those who oppose them. What killed Salman Taseer was the primary and overwhelming disparity in Pakistan -- the one that has steadily fundamentalized that country since the days of the U.S.-imposed religious dictator Zia ul-Haq, through the first Afghan war and now the new Afghan war that is also blatantly being fought in Pakistan. That disparity is one of wealth, of have-nothings and have-everythings.

The great anger in Pakistan against the current President Zardari, his slain wife and their family has very clearly been against the extravagance of their elite Western lives -- the wealth and abundance, their obvious dismissal of not only the tragic and obvious poverty of the country they rule down on, but the values and traditions of its people which they may never have even learned, or simply choose not to respect.

Salman Taseer was also a multimillionaire -- though many people agree he came upon most of his wealth through industry rather than other means. But in a country as poor as Pakistan whose public has for a generation now increasingly embraced religion as the singular means of acquiring any authority or voice against the feudal lords and wealthy elite who are granted government positions from their friends to rule over people, apart from extreme and flamboyant wealth, the other major crime against decency is being out of touch with the public's values.

Those values include religion, and Taseer, a man who reportedly carried a tiny Koran around his neck, nonetheless did not understand that he had no authority to impinge on religious matters. Strangers cannot afford to be activists, even if it is just once.

Anonymous said...

riaz sir Indian exports up 36% this december...
Looks like the wise men at RBI read your blog:)

http://www.business-standard.com/india/news/exports-set-to-improve-current-account-gap/121635/on

Riaz Haq said...

Here's Ethan Casey comparing Gov Taseer murder with attempted asasination of Congresswoman Gifford:

SEATTLE, JANUARY 8 – Those of us who are concerned about the fate of Pakistan were still reeling from the January 4 assassination of Punjab governor and liberal newspaper publisher Salmaan Taseer in Islamabad, when we heard about the shooting of U.S. Congresswoman Gabrielle Giffords in Tucson. What does one have to do with the other? All too much.

On Friday I responded to a query from a Times of India reporter by calling the Taseer killing “extremely ominous.” I followed that statement of the obvious with this sentence: “An aggressive, self-righteous and over-confident radical element, a feckless and compromised central government, and a brave but besieged liberal class add up to a country in severe crisis.” That’s accurate enough as a description of Pakistan, but Americans who can dish out this sort of thing need to be able to take it too (and I’m not sure I’m so generous as to call my own country’s liberal class “brave”). What kind of society are we willing to allow ourselves to live in? At the very least, it’s high time we Americans knocked off the self-righteousness that permits us to judge Pakistan and took a long, hard look in the mirror.

----

Those of us who would speak for the real America need to bear in mind, though, that this isn’t cold war-era armchair politics anymore. Are we prepared to show as much physical, moral and political courage as Gabrielle Giffords and Salmaan Taseer did? And the next time we go to Safeway to buy groceries, will we remember to feel compassion for the millions of innocent Pakistanis who put themselves in harm’s way from suicide bombers every time they do the same?

Riaz Haq said...

Here's Pakistan's latest economic news in brief supplied by Foundation Securities Research:

The Ministry of Finance has agreed with the proposal of the Tax Reform Co-ordination Group (TRCG) to create a Fiscal Policy Board to be headed by the Finance Minister under the reform plan to exclusively deal with the fiscal policy and taxation issues under the umbrella of the proposed fiscal board. (BR)
The country's trade deficit soared to $8.149 billion in July-December 2010, 18.20 percent up over $6.89 billion for the same period of last year, according to the Federal Bureau of Statistics (FBS). Official trade figures released by the FBS here on Tuesday showed an increase in exports of 20.63 percent for the same period which analysts say could be largely because of per unit price increase instead of increase in the quantity. (BR)
Remittances sent home by overseas Pakistanis continued to show rising trend as $5,291.41 million was received in the first half of the current fiscal year 2010-11(July-December), showing an increase of $761.23 million, or 16.80 percent, when compared with $4,530.18 million received during the same period of last fiscal year. (BR)
The CPI inflation soared by 15.68 percent in December 2010 over the same period of last year with phenomenal increase in perishable food items, showing a strong trend of increase in prices of food items which may push more people below the poverty line. (BR)
Japan has queued up to help Pakistan to plug in widening budgetary gap by granting it $60 million soft loan in response to Islamabad's call to the friendly countries for financial support to keep current budget deficit at some reasonable level. (BR)
Another round of speculations came to an end on Tuesday when President Asif Ali Zardari issued a notification appointing a PPP stalwart and former Attorney General Sardar Latif Khan Khosa as Governor of Punjab. (BR)
The monthly Consumer Price Index (CPI) during the month of December registered a decrease of 0.31 per cent as compared to previous month of current financial year. (DAWN)
The government has decided to put a freeze on electricity tariff for the remaining period of the current fiscal year owing to its inflationary impact on economy and unending loadshedding, according to a senior official. (DAWN)
The Secretary Cabinet Division, Abdur Rauf Chaudhry on Tuesday said 3G services would hopefully be available to the Pakistani mobile users by the end of 2011 — while it was expected that the policy for auction of 3G services licenses would soon be presented to the government and Economic Coordination Committee (ECC) for discussion and approval. (DT)
The FBR has started to evaluate alternative proposals to replace the controversial RGST in case the government failed to get it approved from the parliament. (TN)
Despite receiving orders from the Ministry of Petroleum, OGDCL has not replaced one of its directors on board, who also works for a partner company. (TN)
NCCPL shows a net inflow of USD2.18 million.
Crude oil is trading at USD91.1 per barrel.

anoop said...

http://tribune.com.pk/story/103725/pakistans-july-dec-foreign-investment-falls-15-4/

Sad news is genetic to Pakistan one doesn't hope.

Compare this with Gujrat, a state in India, which must be 1/7th the size of Pakistan,in a recent Investor Conference, raised a staggering $370 Billion in Investment compared to a measly $1-1.5 Billion for the whole country of Pakistan.

Really shows in which way the 2 countries are headed.

http://www.vibrantgujarat.com/

http://online.wsj.com/article/SB10001424052748704307404576079311964292334.html

Riaz Haq said...

anoop: "Compare this with Gujrat, a state in India, which must be 1/7th the size of Pakistan,in a recent Investor Conference, raised a staggering $370 Billion in Investment compared to a measly $1-1.5 Billion for the whole country of Pakistan."

First, I know Gujarat is a darling of right-wing Hindu radicals in India, and therefore it receives a lot of hype from Hindutva sympatizers and their friends in the West.

Second, I think $370 billion is a highly exaggerated figure. In fact the highest FDI all of India has ever received is in the range of $25-30 billion a year.

Third, Gujarat is just as bad or worse than India in terms of basic human needs like food.

The first India State Hunger Index (Ishi) report in 2008 found that Madhya Pradesh had the most severe level of hunger in India, comparable to Chad and Ethiopia. Four states — Punjab, Kerala, Haryana and Assam — fell in the 'serious' category. Gujarat, 13th on the Indian list is below Haiti, ranked 69 (vs Pakistan well ahead at 58). The authors said India's poor performance was primarily due to its relatively high levels of child malnutrition and under-nourishment resulting from calorie deficient diets.

Riaz Haq said...

Forensic evidence against Hindutva terror groups in India is mounting, according to Tehelka.com:

Not unexpectedly, the Bharatiya Janata Party and the Rashtriya Swayamsevak Sangh have alleged that Asimananda’s confession was made under coercion and thus rubbished the ongoing probe into Hindutva terror.

But the fact remains that Asimananda had made the confession in the closed chamber of a Delhi Metropolitan Magistrate with no one else being around and after spending two days in judicial custody contemplating possible repercussions. Again, what is being completely overlooked in this politically charged debate is a whole body of evidence — both material and circumstantial — which has been pieced together by different agencies over the past four years. Asimananda’s confession only confirms and adds to the existing pool of evidence.
-----------

Curiously, the 6.53 volt battery found in the unexploded IED at Mecca Masjid was exactly the same as the batteries used to power the IEDs planted on the Samjhauta Express. Besides, the metallic shells used to stuff explosives in the Mecca Masjid bombs were similar to the iron shells which were part of the IEDs planted on the Samjhauta Express.

Similar shells were recovered from the house of a Hindu radical in Nanded, Maharashtra, in April 2006 when an RSS member and a Bajrang Dal activist had died while assembling a bomb. During the investigation it had emerged that the Hindu extremists had exploded similar shell bombs outside a few mosques in Jalna and Parbhani in 2003 and 2004.

Also in December 2002, more than half-a-dozen live pipe or shell bombs were recovered from an ijtema, a large religious gathering of Muslims, held near the Bhopal railway station.

The design of the shells used in bombs in Nanded, Jalna, Parbhani, Bhopal, Samjhauta and Mecca Masjid was similar and thus hinted towards the involvement of one terror group behind all these cases.

Interestingly, between 2005 and 2008, in the terror strikes targeted at Hindu neighbourhoods and temples — like the 2005 Delhi Diwali blasts, 2006 Sankatmochan Mandir blasts and 2007 Hyderabad twin blasts — the design of bombs was strikingly different from these bombs which were aimed at Muslims.

----
As opaque and extrapolated intelligence inputs — Lashkar-e-Toiba (LeT) being behind the Samjhauta blasts and the Harkat-ul-Jihad-al-Islami (HUJI) behind the Mecca Masjid attack — continued to pour in, the CBI investigation pursued the forensic trail.

THE MECCA Masjid IED consisted of two pairs of metallic shells with their ends sealed, save for a small hole at one end to stuff the explosives. In the case of Mecca Masjid the explosive used was a lethal mix of high-intensity RDX and Trinitrotoluene (TNT) — both these explosives are only available with the army and paramilitary forces. Electrical detonators connected a 6.53 volt battery to the explosives through the hole at an end of each pair of the cast iron shells. The battery in turn was connected to an electrical circuit which in turn was connected to a Nokia 6030 cell phone with a SIM card. An alarm for 1.22 pm was set on the phone. Thus the cell phone served both as a timer and also the power source to trigger the circuit that would then result in the explosion of the IED. Each IED was neatly placed in a black iron box which in turn was placed in a rexine bag.
-----------
The Maharashtra ATS under its then chief Hemant Karkare carried out an excellent forensic investigation and retrieved the chassis number of the motorcycle used in the Malegaon blast. The motorcycle belonged to self-styled Hindu leader Sadhvi Pragya Singh Thakur. Her arrest led to a series of other arrests including serving Lt Col Purohit and a Hindu religious leader Dayanand Pandey.
.

Anonymous said...

First, I know Gujarat is a darling of right-wing Hindu radicals in India, and therefore it receives a lot of hype from Hindutva sympatizers and their friends in the West.

You are right riaz its all hype,conspiracy,misinformation by the hindu right and their Jewish allies in the west!

FACT!!
Gujaraj State GDP growth rate=14% per annum
1/5 of indian investment is in Gujarat.
$250 billion worth of INVESTMENTS(mostly INDIAN) announced in Gujarat @ Vibrant Gujarat2011 even this week.{translates to around $100 billion per annum)
Remember India is investing 40% of GDP=500 billion USD EVERY YEAR around 20% of this is in Gujarat itself.

Just back from Gujarat this week gleaming highways,no power cuts efficient bureaucracy,systems work!
safe streets..women can walk alone at night wearing jeans/skirts nothing ever happens.

Anonymous said...

Second, I think $370 billion is a highly exaggerated figure. In fact the highest FDI all of India has ever received is in the range of $25-30 billion a year.


He said investment not only foreign direct investment India invests $500 billion + every year.
$370bill MOU at around 70% conversion rate=$250billion spread over 3-5 years+ backlog of past MOUs being executed which translates into $ 200 billion investment(MORE than Pakistan GDP)EVERY YEAR in Gujarat.

Riaz Haq said...

Anon:"past MOUs being executed which translates into $ 200 billion investment(MORE than Pakistan GDP)EVERY YEAR in Gujarat."

Why you are ignoring the following part of my comment as you continue to hype mass murderer Modi's "achievements"?

Third, Gujarat is just as bad or worse than India in terms of basic human needs like food.

The first India State Hunger Index (Ishi) report in 2008 found that Madhya Pradesh had the most severe level of hunger in India, comparable to Chad and Ethiopia. Four states — Punjab, Kerala, Haryana and Assam — fell in the 'serious' category. Gujarat, 13th on the Indian list is below Haiti, ranked 69 (vs Pakistan well ahead at 58). The authors said India's poor performance was primarily due to its relatively high levels of child malnutrition and under-nourishment resulting from calorie deficient diets.

anoop said...

Riaz,

"I know Gujarat is a darling of right-wing Hindu radicals in India, and therefore it receives a lot of hype from Hindutva sympatizers and their friends in the West. "

--> I didnt know Wall Street Journal, which carried the story belongs to the Right Wing in India.

It had this to say,"The year before(Modi became CM), Gujarat's economic output shrank by almost 5%."

Now, its the fastest growing State in India, has been the fastest for many years now.

"I think $370 billion is a highly exaggerated figure. In fact the highest FDI all of India has ever received is in the range of $25-30 billion a year. "

--> Can you prove that it is exaggerated?

China's few billion dollar investment in Pakistan is not exaggerated but it is when it comes to Gujrat, India, from all over the World.

This is a classic case of sour grapes.

Gujrat is the place to be for World's investors. World's cheapest car plant is in Gujrat, so is the manufacturing center for the famed Metro Rail in Delhi(See WSJ link).

22% of exports from India is from Gujrat.

With all this in mind how can you deny that the State has the ability to attract massive Investment?

Gujrat and Bihar are prime example of smart and honest leadership. Consequently both are the fastest growing States in India.

Maybe in a few years even Bihar,the most backward state in India, will receive more Investment than the entire country of Pakistan. Knowing Pakistan's turbulent history and its habit of shooting itself in the foot, this can really happen.

Riaz Haq said...

anoop: "Can you prove that it ($377 billion FDI in Gujarat alone) is exaggerated?

The cumulative stock of all FDI received by India in the entire decade of 2000-2010 is $180 billion. And the last time I checked Gujarat was not an independent Hindu Kingdlom ruled by King Modi the killer...it was a part of Republic of India.

Anonymous said...

anoop: "Can you prove that it ($377 billion FDI in Gujarat alone) is exaggerated?

Annop yaar that is total investment not FDI.India like Japan and South Korea before it DOES NOT have a policy to attract massive amounts of FDI which is why something like 70% of the economic sectors have stringent caps on FDI be in retail,banking,insurance,ports etc etc.

The idea is to encourage local industry not see it crowded out by large amounts of foreign firms.What ultimately matters is investment(foreign or domestic)/GDP India is currently at 40% so you may very much take 9% economic growth for granted....

Riaz Haq said...

Anon: "What ultimately matters is investment(foreign or domestic)/GDP India is currently at 40% so you may very much take 9% economic growth for granted.... "

Not really true in India's case. India runs huge current account deficits of about 3.7% of its GDP and heavily relies on foreign capital (FDI and FII) flows to fund these deficits.

Anonymous said...

Not really true in India's case. India runs huge current account deficits of about 3.7% of its GDP and heavily relies on foreign capital (FDI and FII) flows to fund these deficits.


But it has FX reserves of around 25% GDP to cover the 3.7% and DECLINING(plz check OND 2011 export figures) CAD so I share the optimism of the previous poster.

Riaz Haq said...

Anon: "But it has FX reserves of around 25% GDP to cover the 3.7% and DECLINING(plz check OND 2011 export figures) CAD so I share the optimism of the previous poster. "

First, India's reserves themselves rely on FDI and FII.

Second, India's FDI is declining, and the increasing CAD is being funded more and more by FII, a dangerous practice given the volatilty of such hot money.

Finally, confidence is a fragile thing. If India's FX reseves start to deplete, the investor confidence in Indian economy will drop with the decline....causing the situation to deteriorate.

Anonymous said...

First, India's reserves themselves rely on FDI and FII.

How? The current pile is property of RBI.$300 billion is OWNED by the Indian state.It is the result of FDI/Remittances/loans/aid being converted to indian rupees but it is now property of the indian state.

Second, India's FDI is declining,

WAS declining is rising again...check OND 2011 figures please..

Finally, confidence is a fragile thing. If India's FX reseves start to deplete, the investor confidence in Indian economy will drop with the decline

No proof of that happening FX reserves fell in 2008 FIIs didn't run away,the economy didn't stall and FDI didn't decline appreciably..

25% of GDP is LIQUID FX reserves is a lot of cushion...

anoop said...

Riaz,

"And the last time I checked Gujarat was not an independent Hindu Kingdlom ruled by King Modi the killer...it was a part of Republic of India."

--> Investment is not just FDI. Most of the people who signed MOUs with the Government of Gujrat are from within India. Tata which has set up a factory for the world renowned NANO, is from within India. I doubt if the foreign companies have the capacity to invest in any country in such large amounts.

This is about Wealth Creation. Gujrat currently is creating a LOT of wealth, and most of it is driven by domestic demand.

Comparably, can Pakistan claim any one company which is on the same level as the Tata Group, or the Bajaj group or an Infosys or a Wipro(headed by the richest Indian Muslim)?

http://timesofindia.indiatimes.com/business/india-business/Vibrant-Gujarat-scores-for-Modi-Over-Rs15L-crore-committed-for-investment/articleshow/7269429.cms

There were 15 Lakh Crore worth of investment made in Gujrat in this one summit. That translates to around $320 Billion!!!!!

Pretty good I'd say.

Its way better than complaining that your ally hasn't given the money that he promised as Aid(Pakistan to US).

Your Sour grapes syndrome are preventing you from seeing the big picture that International Media like WSJ can see.

Riaz Haq said...

Anon: "How? The current pile is property of RBI.$300 billion is OWNED by the Indian state.It is the result of FDI/Remittances/loans/aid being converted to indian rupees but it is now property of the indian state."

No, they are there only as long as the foreign investors choose to re-invest rather than repatriate their assets converted to US dollars.

Anon: "WAS declining is rising again...check OND 2011 figures please.."

A quarter does not make a trend. There has been a 33% decline yoy in FDI inflows India.

Anon: "No proof of that happening FX reserves fell in 2008 FIIs didn't run away,the economy didn't stall and FDI didn't decline appreciably.."

As we saw in the Asian financial crisis of 1997, the FII can be very destabilizing.

It'll be too late by the time you have solid proof of FII flight. The fact is that the US Fed will stop the torrent of money created by its QE2 (Quantitative Easing Round 2) evenentually, and that will significantly reduce the FII in all emerging markets, including India.

Anonymous said...

No, they are there only as long as the foreign investors choose to re-invest rather than repatriate their assets converted to US dollars.

Indian FX reserves is 50% larger than the ENTIRE FII investment in India...

A quarter does not make a trend.

Sure earlier a month didn't make a trend now a quarter doesn't perhaps a year won't either...

As we saw in the Asian financial crisis of 1997, the FII can be very destabilizing.

Riaz jee then why don't 'wise' countries outright ban FIIs if they are so destablizing?

They are destablizing only if they are unregulated RBI has some of the toughest regulations on FII on the planet.Besides FX reserves as a percentage of India is 4 times higer than in ASEAN circa 1997 AND Rupee IS NOT capital account convertible meaning there is no way there can be a run on the rupee with ordinary people converting rupees to USD in panic as we saw in the financial crisis in 1997.

Btw Riaz I haven't seen you post anything on PAkistan's economy for a while.How is it doing?

Riaz Haq said...

Anon: "RBI has some of the toughest regulations on FII on the planet.."

Nobel Laureate economist Joe Stiglitz dusagrees, according to the Wall Street Journal:

India, more than China or Brazil, should watch out for the tidal wave of money made available from the Fed’s quantitative easing, according to Nobel prize-winning economist Joseph Stiglitz.

China and Brazil have recently further restricted the ability of investors to move money in and out of those countries in recent weeks. India also has such regulations, known as capital controls. But it hasn’t been tightening them lately and hasn’t been intervening much in currency markets, allowing the rupee to rise about 5% this year against the dollar. Mr. Stiglitz thinks those factors will make India a target for investors looking for a quick buck.

“I do worry about countries like India where they are debating how much intervention in the market they should have,” he said Thursday in Hong Kong. “The free capital can go to fewer and fewer places, and India’s one of those,” he said.

Speaking more generally, he said: “Strong economies that don’t yet have those capital controls become the focal point for all this loose money and they will be the countries under a lot of stress.”

The trouble of course with such “hot money” is that it leaves the country just as quickly as it came in, whipsawing financial markets and destabilizing businesses, as in the Asian financial crisis of the late 1990s.

Mr. Stiglitz was speaking at the Mipim Asia real estate conference.

Anonymous said...

Rural income of Pakistani farmers are on rise for last three years.
Pakistani farmers now has disposable income to play with.
I asked an acquaitance of mine where sugar mill's profit is going. His answer was to the bank.
He said that farmers are rich and cash loaded in Pakistan. They have money now to buy consumer goods.
Consumer goods maker are having good days as higher price for freezers, air cons, tractors, tiles, wood and steel.manufactured goods are in great demand in the rural towns. farmers making more money in cotton crop due to BT cotton seeds. They are also looking toward winter cotton crop as weather is mild in Pakistan. My stocks going up and up. Fertilizer companies will be announding annual profit next week. I am in for good dividends, perhaps increase in dividend by fifty paisa to one ruppee. lets hope so.
Hey, that disposible income is going some where.

Riaz Haq said...

Anon: "Rural income of Pakistani farmers are on rise for last three years."

I am not surprised...higher food and clothing prices are naturally transfering income from urban to rural folks in the form of higher farm incomes which are not taxed.

It's also probably contributing to lower revenue receipts by the government.

Riaz Haq said...

As food prices and farm incomes rise, Pakistan is seeing record tractor sales in rural areas, according to The Nation newspaper:

LAHORE - Millat Tractors Limited set a new record of highest ever sales of 41,500 tractors in the calendar year 2010, improving upon its previous year sales of 37,537 tractors.
Out of these 41500 tractors, a record 5000 tractors have been produced and sold in the month of Dec, 2010.
This has been outcome of Company’s commitment to provide maximum number of tractors to increase farm productivity and accelerate the pace of farm mechanization in the country, according to a Press release.
Millat Tractors has further taken steps to increase productivity and quality of tractors in order to provide timely delivery to its customer in future.


Here's another report from Dawn on increasing rural sales of bikes:

Motorcycle and car sales enjoy over 50 per cent and 40-45 per cent market share in rural areas as country’s 60-65 per population lives in the rural areas.

After witnessing decline in August, many car and bike makers had registered recovery in sales in September.

Total car sales in July-September 2010 (including Suzuki Bolan) rose by 12 per cent to 30,030 units as compared to 26,812 units in the same period of 2009.

In the category of 1,300cc and above, Honda Civic and City sales in September 2010 rose to 548 and 832 units as compared to
492 and 688 units in August 2010. However, sale of these cars had plunged in August 2010 as compared to July 2010.

In July-September 2010, sales of Civic and City had risen to 1,558 and 2,274 units from 1,308 and 1,955 units in the same period of 2009.

Toyota Corolla sales slightly went up to 3,070 units in September 2010 as compared to 2,901 units in August 2010 while its July 2010 sales were 4,400 units.Overall Toyota sales in July-September 2010 increased to 10,371 units as compared to 8,951 units. Suzuki Swift sales rose to 252 units in September 2010 as compared to 226 units in August 2010.

In 1,000cc segment, a total of 1,106 units of Suzuki Cultus were sold in September 2010 as compared to 1,050 units in August 2010 while Alto sales slightly fell to 1,047 in September 2010 from 1,141 units in August 2010. The overall sales of Cultus and Alto in July-September swelled to 2,860 and 2,819 units from 2,852 and 2,365 units in the corresponding period of 2009...

Riaz Haq said...

Here are excerpts from a piece by Christine Fair on "What Pakistan Did Right" in 2010 floods:

Arguably, the Pakistan Meteorological Department (PMD) is one of the most important reasons why the floods claimed relatively fewer lives than may have been expected, given the scale of the event. In January, I met with the Director General Arif Mahmood and his team in Islamabad. They walked me through, in painstakingly scientific detail, how their organization saved lives in 2010, as they had done before and as they will continue to do in the future.
-----------
Some six months have passed since the onset of the floods. Surprisingly, many of the predicted disasters did not happen. Pakistan did not have the predicted second wave of deaths in the camps for the millions of internally displaced persons. Astonishingly, none of the predicted epidemics (such as cholera) took place. Pakistan has even managed to stave off the expected food insecurity.
-----------------
Pakistan's National Disaster Management Agency (NDMA), headed by Major General (Ret.) Nadeem Ahmed is part of the reason these catastrophes were prevented. The NDMA, along with the four Provincial Disaster Management Agencies, coordinated the massive effort to rescue flood victims, establish camps for internally displaced people, provide the victims with shelter, water and sanitation facilities, food and other logistical requirements. The NDMA coordinates with international donors and maintains a situation room where staff track calls and resolve problems. In a country that routinely sustains criticism for organizations that that underperform, NDMA excels.

Some of the worst fears about lost crops have not materialized. While many of Pakistan's fields have not been properly prepared for planting this year, NDMA working with its domestic and international partners was able to provide seeds to many cultivators. In many cases, they simply flung the seed into the land once the water receded. Many of these efforts are resulting in bumper crops. This was not expected in September of 2010. To be sure, this is only the beginning and much more needs to be done. But measures of this type helped stave off some of the gravest outcomes expected.
----------------
There are still challenges. Complaints persist about corruption with the pre-paid ATM cards (Watan cards) distributed to IDPs. In Sindh, serious charges of corruption persist regarding the purchase of tents, blankets, medicines and food for the flood-affected people. Reports continue that food supplies are languishing in depots while IDPs go without in Sindh. Indeed, the IDP camp I visited in near the office of the District Coordination Officer for Dadu, was saddening. The residents and the camp administrator claimed that there had been no food distributed in a month.
-----------
Nonetheless, half a year after the floods devastated the country and after most of the media has left the story behind, 20 million Pakistanis still need help -- and they need help now. While Pakistan must expand its own tax net to contribute to the long-term costs of rebuilding its infrastructure and preparing for future disasters, the international community should also continue to support immediate needs such as winterization, food support and rehabilitation of the flood victims.

Riaz Haq said...

Here's an interesting assessment of "Why Foreigners Are Buying" by a Pakistani poster on Pakinvestorguide.com:

The aftermaths of the 2008 debacle had been; depleting
foreign reserves caused by a higher twin deficit and in turn,
higher inflation leading to substantial Rupee depreciation.
Relatively speaking, in the present, Pakistan’s reserves are
strengthening; the current account is under control led by
commodity price pass through and a stable real effective
exchange rate, and the global economic outlook is recovering
from its worst. This is also reflected from the recent growing
foreign interest in the local equity bourse, where foreigners
have invested around US$566mn in FY10, highest since the
record US$978mn worth of funds flowed into the KSE in
FY07.

Why are foreigners buying?
As stated in our research report- Foreigners regaining
position at the KSE; dated: 20 Sep 2010 - foreigners own
one-third of Pakistan’s equity free float and accounted for
32.86% of the total traded value at the bourse. The all time
high level of foreign ownership witnessed last was 28.22% in
November 2007. To us, the reasons behind the foreign
interest in 2007 and 2010 are entirely opposite:

2007: The economy was overheating, liquidity was abundant,
reserves were stabilizing and the global funds were in search
of better yields. Hence the preferred sector at that time was
Banking.
Sector of main interest: The banking scrips comprised over
31% of the KSE’s market pie.

2010: Stagflation is over and the economy is in recovery
mode, external discipline has been revived, food and fuel
subsides have been withdrawn, an economic reformation
process backed by the IMF is in place and more importantly,
the US has emerged as the strong ally. The higher external
support is a prime source of comfort for the foreigners this
time around.
Sector of main interest: Oil and Gas share has grown to 36%
of the KSE’s total market capitalization.

FY10 and FY07 comparison
(US$bn) FY10 FY07
Foreign inflows 0 .6 1.0
Inflation 11.7% 7.8%
GDP growth 4.1% 6.8%
Fiscal Deficit 6.3% 4.3%
C/A Deficit 3 .5 6.9
Reserves 16.8 15.6
Exchange Rate 85.5 60.4
Discount Rate 12.5% 9.5%
P/E (X) 8.5 13.2
Market Cap 3 2.0 66.5
Banking sector weight 23.0% 31.0%
Oil & Gas sector weight 36.0% 24.0%
Source: Economic Survey of Pakistan, SBP & JS Research

Why locals are sellers?
The lack of liquidity, non-availability of financing options, the
banks’ risk-averse attitude towards stock investors and
imposition of capital gain tax have been deterring local
participation. Add to that, the federal decision of keeping the
SBP Governor’s position vacant for 3 months, non
appointment of the SECP chairman and having had four
different finance ministers within a short span of 30 months.
And if that were not enough, the recent wide scale floods,
increasing price pressures and the persisting inter-corporate
debt have heavily weighed in on the minds of the locals
encouraging their selling spree.

Riaz Haq said...

Templeton Asset Management Ltd. is buying shares in Pakistan, the worst-performing stock market globally this month (August 2010), after the nation’s worst-ever floods prompted a sell-off, investor Mark Mobius told Businessweek:

About 1,600 people have been killed and 20 million lost homes, farms and livelihoods as heavy monsoon rains sent flood waters across the South Asian nation. The disaster may cut Pakistan’s economic growth in half, Finance Secretary Salman Siddique said Aug. 13, with expansion falling as much as 2.5 percentage points short of a 4.5 percent target.

“There will be an impact on growth but company valuations are very, very attractive now and therefore we continue to invest in Pakistan despite all the negatives,” Mobius said in an interview in Singapore yesterday. “The bottom line is that Pakistan is not going to go away. We want to buy stocks that look cheap as prices come down as a result of the flood.”

The Karachi Stock Exchange 100 Index has dropped 8.7 percent this month, the most among 93 benchmark indexes tracked by Bloomberg globally. The gauge is valued at 7.1 times this year’s estimated earnings, making it cheaper than any other Asian or emerging-market benchmark index tracked by Bloomberg.

The Karachi index climbed as much as 1.2 percent, the most in a month, and traded 0.7 percent higher to 9,604.65 as of 11:37 a.m. local time on speculation that recent losses were excessive. The gauge plunged 2.9 percent yesterday, the most in more than two months.

‘Oversold’

“The market was oversold from yesterday and news of Mark Mobius’s plans to buy Pakistani Stocks because of their attractive valuations supported overall market sentiments,” said Khurram Schehzad, head of research at Invest Capital & Securities Ltd., in Karachi. “Local investors are encouraged and realize the prospect of future gains.”

The World Bank yesterday pledged $900 million in financial support to Pakistan, joining the United Nations, the U.S. and other countries in providing aid.

Mobius, who oversees about $34 billion in developing-nation assets as executive chairman of Templeton’s emerging markets group, said the investment company favors banks and energy companies within Pakistan. He didn’t identify any companies.

Templeton owned more than 5 percent of MCB Bank Ltd., the nation’s biggest lender by market value, as of June 30, according to data compiled by Bloomberg.

MCB gained 1.7 percent to 185.50 rupees today, trimming losses for the year to 7.1 percent. Oil & Gas Development Co., Pakistan’s biggest energy explorer, rose 1.3 percent, extending its 2010 gains to 23 percent.

Riaz Haq said...

Here's a Tribune Express report on Karachi shares 2010 performance:

KARACHI: The Karachi Stock Exchange (KSE) witnessed the traditional year-end rally to give a cheerful farewell to 2010. Despite late selling on the last trading day of the year, KSE-100 index registered an increase of 1.4 per cent to end the outgoing year at 12,022 points – its highest since July 2008.

Overall, the benchmark index provided returns of about 28 per cent year-on-year.

Foreign inflows for the week clocked in at higher levels with the net amount standing at $12.2 million, compared with just $5.5 million in the preceding week. The net inflow of foreign investments for the year tallied at an impressive $526 million.

United Bank Limited (UBL) and Fauji Fertiliser Company (FFC) dominated discussions at the bourse during the week. Bestway Group’s acquisition of an additional 20 per cent stake in the bank encouraged positivity amongst investors, as did the disbursement of $633 million to the country as part of the Coalition Support Fund from the United States.

FFC’s stock ticker continued to rise despite an explanation call issued by the government to fertiliser companies over the increase in the price of fertiliser.

Although the market did not immediately respond positively to the International Monetary Fund’s nine-month extension for meeting conditions attached to the standby arrangement, the decision eased uncertainty on the political front to some extent.

Market activity during the week was heavily concentrated in blue-chip stocks, particularly from the energy sector as investors took cue from rising international oil prices. “Despite political noise, the oil and gas sector along with the banking sector stole the show at the bourse during the week,” read a KASB research report.

While the index ended the year at its highest level since July 2008, market volumes told a different tale. Average daily volumes were down 30 per cent compared with 2009, standing at a meagre average of 121 million shares.

What to expect this year?

InvestCap analyst Imran Safdar termed the immediate outlook for equity prices ‘neutral’, citing the tug of war on the political front, coupled with the silver lining of earnings growth and economic recovery.

“With the election of new directors at the exchange, a new round of negotiations on the leverage product may start and any positive outcomes should drive the index up,” stressed analyst Imtiaz Gadar in a research report. The report also termed the commencement of trial operations at Engro’s new urea plant positive for future trade sessions at the bourse.

After a difficult year, analysts maintain a positive view on the market on the back of foreign inflows, strong growth in earnings, potential introduction of a leverage product and post-flood reconstruction activities.

Nonetheless, it is important to note that higher-than-anticipated commodity prices and discontinuation of the IMF programme remain key risks.

Riaz Haq said...

Karachi stocks rose 777 points on hopes of launch of margin trading system, according to Daily Times:

KARACHI: The Karachi stock market observed a bullish trading week as the expectations of launch of Margin Trading System boosted investors' confidence, analysts said on Saturday.

Analysts said investors went for buying activity as political uncertainty waned out after local petroleum prices were rationalized, while rise in global commodity prices, Brent crude oil above $115 and renewed foreign interest in blue chips also contributed to the bullish trend.

The Karachi Stock Exchange (KSE) 100-share index gained 777 points or 6.9 percent to close at 12,000 points as compared to 11,223.52 points of the previous trading week.

"The expected launch of MTS elevated investor sentiment in the outgoing week as the 100-share index registered a massive gain," said JS Research analyst Rabia Tariq. "Volumes too gathered pace."

The corporate result season nears its conclusion with NBP, BAFL, NCL and PSMC being major scrips announcing their earnings. Moreover, SBP released the fiscal account details, with the deficit widening to 2.9 percent of the gross domestic product in the first half of FY11.

NBP astonished investors by announcing a higher-than-expected cash payout of Rs 7.5 per share and a stock dividend of 25 percent, along with earnings of Rs 17.6 billion (earning per share Rs 13.05) in 2010, flat on yearly basis. Resultantly, the stock rose 20 percent during the week.

Moreover, banking spreads data revealed average industry spreads rising by 32 basis points on yearly basis to 7.57 percent, keeping the sector in limelight as it outperformed the index by 5.0 percent.

NCL too announced its 1H FY11 profit after tax of Rs 518.9 million (EPS Rs 3.21), up 270 percent owing to hefty margins in the spinning segment. Going forward, due to favourable earnings outlook for the company, investors continued to exhibit keen interest in the scrip, reflected by a 16.5 percent rise on weekly basis.

Pakistan's fiscal deficit climbed to 2.9 percent of the GDP during 1H FY11, up from 2.7 percent of the GDP in the corresponding period last year.

Keeping in mind the recent spike in international oil prices and government of Pakistan reversing its decision on POL prices by half, the deficit may be burdened further. Also, International Monetary Fund and the government talks relating to the pending 5th review restarted this week, and are likely to gather momentum in the coming days.

Foreigners concluded to be net buyers of worth $2.9 million.

The market turnover went up by 19.54 percent trading 187.49 million shares as against 156.83 million shares of the previous week.

"Bullish activity was witnessed in scrips across-the-board ahead of the launch of MTS on Saturday by the finance minister," said Arif Habib Investment Ltd Director Ahsan Mehanti.

Riaz Haq said...

Here's Maplecroft risk warning for investing in India, according to Times of India:

LONDON: The United Kingdom-based Global Risks Atlas 2011 on Friday described India as the 16th riskiest country to invest in for the security hazards it poses and rather embarrassingly clubs it with Niger, Bangladesh and Mali. The Atlas is published by Maplecroft, a consultancy founded by Alyson Warhurst, chair of strategy and international development at Warwick Business School.

The evaluation is structured on seven key global risks including macroeconomic risk and threats around security, governance, resource security, climate change, social resilience and illicit economies.

Maplecroft assessed India faces simultaneous threats of terrorist attacks from Islamists and Maoists. It also points at India's lack of social resilience despite a robust economic growth and cites its poor human rights record. It says large sections of the population lack access to basic services such as education, healthcare and sanitation, and highlights its less productive workforce, greater susceptibility to pandemics and susceptible to social unrest.


A press release by Maplecroft lumps Pakistan with Russia on investment risk:

Dynamic political risks constitute immediate threats to business and Maplecroft rates 11 countries as ‘extreme risk.’ Most significantly, the emerging economy of Russia has moved up five places from 15th to enter the top ten for the first time, whilst Pakistan has also moved two places up the ranking to 9th.

The ‘extreme risk’ countries now include: Somalia (1), DR Congo (2), Sudan (3), Myanmar (4), Afghanistan (5), Iraq (6), Zimbabwe (7), North Korea (8), Pakistan (9), Russia (10) and Central African Republic (11).

Russia’s increased risk profile reflects both the heightened activity of militant Islamist separatists in the Northern Caucasus and their ambition to strike targets elsewhere in the country. Russia has suffered a number of devastating terrorist attacks during 2010, including the March 2010 Moscow Metro bombing, which killed 40 people. Such attacks have raised Russia’s risk profile in the Terrorism Risk Index and Conflict and Political Violence Index. The country’s poor performance is compounded by its ‘extreme risk’ ratings for its business environment, corporate governance and the endemic nature of corruption, which is prevalent throughout all tiers of government.
-----
Jim O’Neil, Chairman of Goldman Sachs Asset Management, states: "Growth is happening where political risk is most challenging. So, meticulous monitoring and mitigation now will enable business to flourish and benefit from the opportunities presented by the future growth economies of the BRICs and Next 11".

Looking to the longer term, the BRICs countries are witnessing increasingly worse structural political risk trends for 2011. China (25), India (32) and Russia (51), rated ‘high risk’ and Brazil (97) medium risk, have all seen risks increase compared to scores from last year’s Atlas.

Riaz Haq said...

The killing of Osama bin Laden is a positive event for Pakistan's economy and stock market, according to an Asia based equity strategist's interview with CNBC.

Mark Matthews, equity strategist at Macquarie, said the positive comments from top U.S. officials including Secretary of State Hillary Clinton on Pakistan's role against terrorism would eventually lead to the release of much-delayed financial aid for the country. That, in turn, would help the government lower its fiscal deficit and boost the economy.

"For about 5-6 months now, the American's and coalition money have not been released into Pakistan. And Pakistan has a very wide fiscal deficit. It's 6.1 percent of GDP and it is the major issue overhanging their stock market," Matthews added.

The aid package worth $7.5 billion over 5 years has been promoted by Democrat Senator John Kerry and Republican Senator Dick Lugar. But it's been in limbo because of U.S. concerns about corruption in Pakistan.

Once, that's resolved, Matthews expects the stock market to benefit. "There are lots of gems in that country. There are probably more gems there, stock-wise, than any other country in Asia," Matthews told CNBC's Bernie Lo.

The Karachi stock index rallied late last year along with other emerging markets, but so far this year it has dropped 6 percent because of rising fuel prices and a growing budget deficit. According to Macquarie, Karachi's stock index not only offers value, but also many well-run companies.

For investors looking for stocks with volume, Matthews suggests looking at Pakistan Oilfields [PKOL.KA 328.05 -0.47 (-0.14%) ]. He likes this company as it has a daily turnover of $5 million and trades on about 5x earnings, with a 9.5 percent dividend yield.

And for investors who can stomach the illiquidity in the small-cap space, he recommends Askari Bank [ASBK.KA 11.53 0.14 (+1.23%) ].

"If you annualize that (the bank's first-quarter results), that is on 4x PE and their asset quality has held up remarkably well, NPLs are very low and its at a 40 percent discount to book," noted Matthews.

Riaz Haq said...

Here are some excerpts from an Indian Financial Express story headlined "More FII money to Pak than to India":

Mumbai: Whether Dalal Street likes it or not, India is now the worst-performing market in the world as dark clouds have started cluttering the economic, investment and political horizons. Worried foreign institutional investors (FIIs), who came to India in droves last year, have been pulling out funds with such alacrity this year that even a much smaller — and significantly more volatile and unstable — market like Pakistan has got more foreign inflows in the last six months.
----
As per figures of the Securities and Exchange Board of India, FIIs have already pulled out $497 million (including GDRs, primary market, stock markets etc) from India from January to June 22 this year. This has come as a big blow to the market which witnessed an inflow of $29.36 billion in the whole of calendar 2010. FIIs took out Rs 14,387 crore (around $3.2 billion) from the secondary market in 2011, bringing the Sensex down from 21,108 on November 5, 2010 to 17,727.49 on June 23, 2011.

Across the border, Pakistan received a portfolio investment of around $230 million in the last six months. That, too, when the Karachi Stock Exchange, its largest, has a market cap of only $35 billion whereas the Bombay Stock Exchange has a market cap of $1,500 billion.
----------
The latest worry of FIIs is the possibility of tightening in rules governing the tax treaty with Mauritius. If both the governments tighten the regulations governing the treaty, the fund flow through this route will come down drastically. “Funds using this route will go elsewhere. India has got minuscule funds FIIs this year,” said a fund manager with a foreign investment firm.

A large chunk of FII investment in the stock market comes through Mauritius as companies registered there are exempted from tax in India under the treaty. The government had recently indicated about reviewing this tax treaty to tighten registration norms and making the fund flows more transparent.


http://www.financialexpress.com/news/more-fii-money-to-pak-than-to-india/807995/0

Riaz Haq said...

As of July 14, 2011, Karachi stocks are up 2% and Indian stocks are down 9.2% for 2011, according to The Economist market review.

http://www.economist.com/node/18959320?story_id=18959320

Riaz Haq said...

Here's a commentary on KSE vs BSE by Ali Wahab published in The Express Tribune:

With fiscal year 2011 ending, Pakistan’s main stock index, the KSE-100 Index showed impressive growth of 28.91%, closing at 12,532.28 points. The other component of capital markets, the debt side, saw Engro Corporation breaking barriers and coming up with a Corporate Bond for retail investors. Buoyed by raising Rs4 billion at 14.5% for a period of three years, Engro again came to the market in the first week of June 2011, targeting another Rs3 billion on the same terms. With the debt market largely run on over the counter trades between financial institutions, the equity markets act as a barometer for any economy.

Whenever I hear fund managers or country pitches from India, Sri Lanka, Malaysia or any other emerging market, a key component remains the performance of the equity markets. To substantiate 9% GDP growth of India, Sensex’ growth and its attraction for foreign investors is touted. Just for the record, Sensex has grown by 5.61% in period of July 2010 to June 2011. This is not to say Pakistan is better than India or the other way round, the fact remains each and every market has its own dynamics which allow it to be attractive to investors. If India’s stock market is quite liquid with an average daily volume of 357.98 million shares, our volumes were dismally low at 94.55 million shares per day in the just concluded fiscal. On the other hand the top traded share in Pakistan during the last year has been a company whose share price has ranged between Rs. 8 and 16 (Lotte PTA, whose shares traded 11.06 million per day)! One can imagine the value of trades in Pakistan. The 94.55 million shares per day in FY2011 were 41.16% lower than FY2010. Low volumes entail a risk for investors meaning liquidation of investments may potentially be an issue....

Riaz Haq said...

Pakistan Attractive as Growth Outweighs Violence, Atlas tells Bloomberg:

---“I really don’t spend any time worrying about law and order,” said Muhammad Abdul Samad, 40, who oversees $77 million in Pakistani stocks and bonds as chief investment officer at Atlas Asset in Karachi. “If you want to make returns, you have to look at the positives: we have a huge market of 180 million people and the economy is still growing.”

Gains in National Refinery Ltd. (NRL), the second-biggest oil processor, and Attock Petroleum Ltd. (APL), a fuel retailer, boosted Atlas’s top fund in the year ended June, Samad said. For the fiscal year starting July, it’s seeking investments in banks, oil and gas, and fertilizer industries, he said.

Pakistan’s benchmark stock index, which trades at 6.4 times estimated earnings, the lowest in Asia, has fallen 9 percent since the end of June as escalating violence hurt business confidence. Prime Minister Yousuf Raza Gilani’s government aims to boost economic growth to 4.2 percent in the year to June 30, 2012, from 2.4 percent in the previous 12 months.
--------
“Selling from foreign portfolio investors is affecting the local market,” Samad said.

Last year, global funds bought $344 million worth of Pakistani stocks compared with net sales of $65 million, according to central bank data. More than 35,000 Pakistanis have been killed in terrorist attacks since 2006 as Taliban militants retaliate against military offensives in the northwest, according to the government.

Samad’s 650 million rupee ($7.5 million) Atlas Stock Market Fund outperformed all Pakistan’s 30 equity funds, according to Invest Capital Markets Ltd. The fund returned 40 percent in the 12 months ended June 30 and beat the 29 percent return of the benchmark Karachi Stock Exchange 100 Index.

His top five holdings as of June 30 were Nishat Mills Ltd., MCB Bank Ltd., Pakistan Oilfields Ltd., United Bank Ltd. and Allied Bank Ltd.

“Banks are going to post attractive earnings because if interest rates come down, they will lend more to the private sector and if they don’t, they will invest in high-yielding government securities,” said Samad, adding that the three banks are among his top picks this fiscal year. “Banks are in a comfortable position either way.”

Pakistan’s central bank unexpectedly cut the benchmark interest rate to 13.5 percent on July 30, after holding it at 14 percent, one of the world’s highest, for four straight reviews.

In the oil and gas sector, Samad likes Pakistan Oilfields, Pakistan Petroleum Ltd., and Attock Petroleum. Pakistan, which imports 80 percent of its fuel needs, is increasing production to reduce reliance on shipments from overseas. He also favors Fauji Fertilizer Ltd., the biggest urea maker, and Fauji Fertilizer Bin Qasim Ltd. (FFBL), a fertilizer producer.
-------
“Active fund management, timely investment and divestment, as well as the performance of some stocks like Attock Petroleum were main reasons for Atlas’s outperformance,” said Mazhar Sabir, an analyst at Invest Capital Markets in Karachi.

Samad said Atlas may introduce a government bond fund this year targeting investments of three to five years and is considering a dividend-yield equity fund and a sector-specific stock fund next year.

“In the short run, law and order problems definitely hurt investors,” Samad said. “But in the long run, there’s no impact. And we’re here for the long run.”

Riaz Haq said...

The Indian stock market today lost its trillion-dollar status, as a decline in the rupee and share valuations led to its size slipping below this mark to $994.97 billion, according to India's Economic Times:

India had managed to hold onto the select league of the countries with a trillion-dollar stock market by a whisker for past few days, but finally gave in today after the market barometer Sensex fell to a fresh 28-month low and the rupee lost further value against the US dollar.

At the end of today's trade, the total size of the Indian market, measured in terms of cumulative valuation of all listed stocks, stood at Rs 52,60,440.78 crore.

As the rupee ended the day at Rs 52.87 level, the stock market's size in the American currency was USD 994.97 billion -- just a shade below the trillion-dollar mark.

The Indian market had a size of USD 1.0116 trillion (Rs 53,48,352.02 crore) at the end of yesterday's trade.

A total of 13 countries are now estimated to be left in the trillion-dollar stock market club, including the US, the UK, Canada, Brazil, Australia, Hong Kong, South Korea, China, Japan, Spain, Germany, Switzerland and France.

The Indian market had first achieved a trillion-dollar size about four and half years ago on May 28, 2007, but moved out of this coveted league about a year later on July 1, 2008.

India again joined this elite club of markets with trillion-dollar valuation about a year later on June 3, 2009.

The Indian market was, in fact, seen inching towards the two-trillion dollar mark at least twice in the past -- first in early 2008 and then at the beginning of 2011 with a size as high as USD 1.9 trillion.

A sharp plunge in the market this year has led to the Indian market valuation falling by close to Rs 20 lakh crore (over USD 500 billion), from about Rs 73 lakh crore (USD 1.7 trillion) at the beginning of 2011.

The rupee has been a declining trend for many months now and had hit its record low level below Rs 54-level last week, but the fall was somewhat arrested since then on the back of an intervention by the Reserve Bank.

The market size has been hovering above the trillion- dollar mark for last few days and an eminent miss was averted on Thursday last week, when the RBI managed to reverse the downfall of rupee after a record fall to Rs 54.30 level.

On Friday, the market size stood at Rs 54,11,301 crore or USD 1.026 trillion, based on that day's currency rate of Rs 52.30, as the market tanked sharply. The trillion-dollar tag had been lost that day itself, if the rupee had managed to hold onto its record high levels.

In terms of individual exchanges, the total size of stocks listed on the NSE yesterday itself slipped below trillion-dollar mark to USD 989 billion (Rs 52,30,333 crore).

At the end of today's trade, NSE-listed market valuation stood at Rs 51,42,566 crore (USD 972.68 billion).

However, the market valuation of NSE-listed companies is not considered as the country's stock market size, as not all the companies are listed on this exchange.

Indian stocks are mainly listed on two national bourses, the BSE and the NSE, but the numbers of listed companies on the two stock exchanges differ sharply.

While about 1,600 stocks are actively traded on the NSE, the number is almost double at over 2,900 at the BSE.

Almost all the stocks listed on the NSE are also listed on the BSE and therefore the cumulative valuation of companies listed on the BSE is treated as the total market size.

http://economictimes.indiatimes.com/markets/analysis/india-moves-out-of-trillion-dollar-stock-market-club/articleshow/11181756.cms

Riaz Haq said...

Here are some excerpts of The Australian story on the eve of BRICS summit:

INDIA is routinely touted as a big emerging market and a rising global player. Tomorrow New Delhi will host the fourth BRICS summit of the non-Western powerhouses Brazil, Russia, India, China, and South Africa.
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Most major global corporations have a presence there, with substantial expansion plans. Many Indian corporations are expanding their footprints abroad, including in Australia, through investment, mergers and acquisitions. India's growing economic weight has translated into increased political clout.
----------
And yet India has the world's biggest pool of poor, sick, starving and illiterate. It ranks 134 on ease of doing business indicators, 119 on human development, 122 on gender equality, and 87 on corruption. On average, more than 16,500 farmers have committed suicide every year for 13 years running. The annual road death toll is around 150,000, thrice as many as the US or, on a per vehicle basis, almost 20 times the US. Most of those killed in India's traffic accidents are pedestrians, cyclists, motorcyclists and pillion riders - those from the poorer end of society.

Even this single statistic is a proxy for several ailments, including inadequate infrastructure that adds to road risks and public corruption that ensures weak compliance with driving skills and safety regulations.

A report published in January by the Hong Kong-based Political and Risk Consultancy rated India's bureaucrats the most inefficient in Asia with a score of 9.21 out of 10, below China (7.11), The Philippines (7.57), Indonesia (8.37) and Vietnam (8.54). Singapore was judged the best (2.25) followed by Hong Kong (3.53). The report was based on a survey of business executives. Respondents also highlighted onerous and complex tax, environmental and other regulations and a time-consuming, costly and unpredictable court system.

Also in January, the Program for International Student Assessment published its findings of comparative national academic performance of 15-year-old school students in maths, science and English. In the 73 countries tested, India came second last, ahead only of Kyrgyzstan. An eighth-grade Indian student fared the same as a South Korean grade three or a Shanghai grade two student.

Yet another study, also published in January, based on a survey of height and weight of more than 100,000 children in six states, found that 42 per cent of India's children were moderately-severely underweight, and 59 per cent suffered from moderate-severe stunting. Prime Minister Manmohan Singh described the results as a "national shame".

The following month a government committee concluded that Indian railways have been responsible for thousands of deaths. Some 15,000 people are killed every year trying to cross unfenced railway tracks, half of them in Mumbai alone.

The report called for urgent investment, but when the Railway Minister announced a fare increase to raise the revenue base to invest back in railways for modernisation and upgrade of services and safety, he was forced to resign by his own party, which is in the coalition government.

We read last year how India has more mobile phones than toilets. Some years ago, I had organised an international workshop in a resort along a beautiful stretch of India's eastern coast.

A European participant decided to go for a pre-breakfast run along the beach. I well remember his look of utter disgust and horror as he told us how he had to thread his way through the folks of the village squatting along the beach, defecating. According to a UNICEF survey last year, 58 per cent of the world's population practising open defecation lives in India....


http://www.theaustralian.com.au/news/world/india-rises-to-reveal-shameful-stench/story-e6frg6ux-1226311694875

Riaz Haq said...

Here's a Daily Times report on IFI holdings of Pakistani shares:

Foreigners remained aggressive in Pakistan’s oil and gas sector as they continued to own more than 500 million shares ($950 million) in Oil and Gas Development Company (OGDC) and approximately 120 million shares ($250 million) of Pakistan Petroleum Ltd (PPL), which represent 83 percent and 45 percent of free float of OGDC and PPL, respectively. This is primarily due to higher oil prices and decent volumetric growth. Similarly, their shareholding in Pakistan State Oil (PSO) and Pakistan Oilfields (POL) is expected to remain almost the same. Thus out of $2.7 billion worth of stocks that foreigners hold (as of March to December 2011), approximately 50 percent of the foreign shareholding is only concentrated in oil sector, including which OGDC alone contributes 35 percent.
Interestingly, foreigners which own every third Pakistani share of free-float, have been net buyers of $11 million so far in CY2012 primarily due to record inflows in regional markets amid improved risk appetite and better global economic data. Last year due to depressed global markets, foreign participants offloaded their positions in Pakistan liquidating $123 million net in 2011 contrary to net buying of $526 million in 2010. However, thanks to continued interest in Pakistan market, foreigners now hold shares valuing $2.7 billion as of March 30, 2012 (28 percent of free float). Their peak holding was $5.1 billion (27 percent of free float) in April 2008 and lowest was $1 billion (17 percent of free float) in March 2009.
Estimated holdings of foreigners in Pakistan key stocks are OGDC $950 million, MCB $250 million, PPL $250 million, UBL $135 million, Lucky Cement $135 million, FFC $125 million, Unilever $100 million, POL $75 million, Hubco $65 million, NBP $50 million, Engro $35 million, Nestle $35 million, PSO $25 million and DGK Cement $20 million.


http://www.dailytimes.com.pk/default.asp?page=2012\04\14\story_14-4-2012_pg5_17

Riaz Haq said...

Here's a NY Times on soaring stock market in Karachi, Pakistan:

If the best time to buy, as the old business adage says, is when there is blood on the streets, then Pakistan’s commercial capital, Karachi, offers the ideal investment opportunity.

For more than a decade, the sprawling seaport megalopolis of about 20 million people has been racked by political, militant and criminal violence that has taken thousands of lives. Yet, over the same period, the city stock market, which is also Pakistan’s main exchange, has posted spectacular results.

Over the past 12 months alone, the Karachi Stock Exchange has surged more than 44 percent, placing it among the world’s top-performing stock markets in dollar terms this year, according to Bloomberg.

That follows a decade of growth in which one dollar invested in an index fund of Pakistani stocks 10 years ago would have earned, on average, 26 percent every year, analysts say, in a period otherwise notable mostly for bad news. As the stock market rose, the Pakistani military leader Gen. Pervez Musharraf fell, Osama bin Laden was captured and Taliban violence spread from the northwest to cities across the country, including Karachi.

Just as surprising, perhaps, Wall Street firms are driving the latest phase of the stock boom. Bad news can make for a good bargain, they say.

“What you see in the popular press is just one part of the picture,” said Mark Mobius, a fund manager at Franklin Templeton Investments, which has more than $1 billion invested in Pakistan stocks, mostly in the energy sector. “There’s another side to these countries, where life goes on. And that’s what we focus on.”

The gloomy image of Pakistan obscures positive aspects of its economy that, investors say, make some companies an attractive bet. Beyond the headline news, much of the country is getting on with normal life. And with a population estimated at nearly 200 million people — a high proportion of them young — Pakistan offers a large, lucrative market for consumer goods, construction and financial services firms, which constitute the bulk of the Karachi stock market.

The biggest publicly listed companies — like the multinational NestlĂ©, the Oil and Gas Development Company and Fauji Fertilizer, a military-run conglomerate — pay handsome dividends, which makes them attractive to foreign investors.

And the recent election victory of Prime Minister Nawaz Sharif, a business tycoon, has injected confidence into the financial community, which had been wary of the previous government.

For a time, Pakistani stocks were undervalued by as much as 50 percent to account for risk, compared with a regional discount of about 20 percent, said Taha Javed, a financial analyst in Karachi. Now, as foreign investors pile in, he said, “we are catching up.”...


http://www.nytimes.com/2013/10/04/world/asia/amid-bloodshed-in-pakistan-a-stock-exchange-soars.html

Riaz Haq said...

Why #Pakistan's Stock Market Beats #China's And #India's via @forbes

http://www.forbes.com/sites/panosmourdoukoutas/2016/09/14/why-pakistans-market-beats-chinas-and-indias/#1a3ab86b269f

Pakistan’s equity market has been outperforming China’s and India’s markets by a big margin in recent years. In the last twelve months, Global X MSCI MSCI +% Pakistan ETF was up 20%, beating India’s and China’s comparable ETF’s by almost two to one – see table.

That may come as a big surprise to some. Pakistan has been suffering all sorts of terrorist attacks, which makes it a very unstable country to put your money in. And it has been lagging behind both India and China in key macroeconomic metrics like GDP growth rates and unemployment—see table.

Index/Fund 12-month Performance 5-year Performance
Global X MSCI Pakistan (NYSE:PAK) 20% 400%*
IShares China (NYSE:FXI) 9.80% 16.00%
iShares S&P India 50 (NASDAQ:INDY) 12.77 % 33.0%
iShares MSCI Emerging Markets (NYSE:EEM) 5.38% 1.52%
*In local currency.

Source: Yahoo YHOO +0.98%. Finance and Karachi Exchange 9/5/2016

Pakistan’s, India’s and China’s Key Metrics

Country China India Pakistan
GDP $10866 billion 2074 billion $270 billion
GDP Growth yoy 6.7% 7.1% 4.24%
Unemployment 4.05% 4.9% 5.9%
Inflation Rate 1.3% 5.05% 3.56%
Capital flows -594 HML -$300 million -$1882 million
Government Debt to GDP 43.9% 67.2% 64.8%
What does the collective wisdom of markets see in Pakistan’s markets that others are missing?

A few things. First, terrorist attacks don’t usually affect financial markets, unless they are disruptive to trade, which hasn’t been the case in Pakistan. Second, Pakistan is a frontier rather than an emerging market, and therefore, favored by the numbers game. Third, its market reform efforts have been getting a couple of votes of confidence from overseas like $1 billion in support from the World Bank – and a couple of domestic acquisitions from foreign suitors like the acquisition of Karachi’s K-Karachi by Shanghai Electric Power Co. This has all been music to the ears of foreign investors.