Haq's Musings

Riaz Haq writes this data-driven blog to provide information, express his opinions and make comments on many topics. Subjects include personal activities, education, South Asia, South Asian community, regional and international affairs and US politics to financial markets. For investors interested in South Asia, Riaz has another blog called South Asia Investor at http://www.southasiainvestor.com and a YouTube video channel https://www.youtube.com/channel/UCkrIDyFbC9N9evXYb9cA_gQ

Thursday, September 26, 2024

Investors Celebrate Pakistan's Continuing Economic Recovery

Pakistan's benchmark KSE-100 index hit an all-time high after the announcement of the $7 billion IMF bailout deal today. Economic indicators such as inflation, exports and remittances are also showing significant improvement as well. Speaking to reporters after the IMF deal, the Fund Managing Director Kristalina Georgieva acknowledged progress made by Pakistan. She said "The economy is on the sound path. Growth is up and inflation is down". The KSE-100 index rose in early trade to a record high of 82,905.73 points, before giving up those gains later in the day to close 0.7% down at 81,657. It still represents an annual gain of nearly 100%.

Pakistani Stock Market Outperforms Asian Peers. Source: Bloomberg

Pakistan rupee has remained essentially stable at around Rs. 277 to a US dollar over the last year. Inflation has come down from 37% last year to less than 10% this year. Exports have climbed 10.54% ($2.921 billion) to $30.645 billion during the fiscal year 2023-24 compared to $27.724 billion in the corresponding period of 2022-23. Overseas workers' remittances have surged 44% to $5.94 billion in the first two months (July-August) of the current fiscal year 2024-25, compared to the same period last year. Current account deficit has declined to $681 million in FY24 from $3.275 billion in FY23. The budget deficit for the 2023–2024 fiscal year has been reduced to 6.8% of GDP from 7.7% in the previous year.

The stock market gains are driven primarily by the increasing profitability of the firms making up the index, in addition to improvement in macroeconomic indicators. The companies listed on Pakistan’s KSE-100 Index have reported their highest-ever earnings of Rs1.7 trillion in FY24, marking a 25% year-on-year increase from Rs1.3 trillion in FY23. In US dollar terms, profits after tax (PAT) rose 10% to $5.8 billion during the same period, according to data compiled by brokerage firm Topline Securities. Dividend payouts soared 30% as banking, fertilizer, and cement sectors led growth, according to media reports.

Pakistan has a long tough road ahead to carry out the reforms promised to the IMF in the latest bailout deal. Renegotiating unsustainable IPP (Independent Power Producers) contracts and carrying out long-delayed privatization of state-owned enterprises to reduce major drain on the taxpayers will not be easy, Boosting tax collection is not easy either. Offering incentives for savings, investments and exports while reducing budget deficits is a difficult feat. It will take a lot of fortitude, finesse and political will to get the results to improve the economy. Pakistani leaders' biggest challenge is to find a way to grow the economy to create enough jobs for the country's growing working age population. Failure to do so could cause major social unrest in the nuclear-armed country of 240 million people.

Friday, September 20, 2024

Powerful Hindutva Lobby Flexes its Muscle in California

Last year, California lawmakers voted 31-5 to approve the first state-wide bill (SB 403) explicitly banning caste discrimination. The bill, enjoying broad support among California voters, was sponsored by Senator Aisha Wahab. It was vetoed by Governor Gavin Newsom under pressure from wealthy political donors belonging to the Hindutva lobby.

Senator Aisha Wahab with Supporters of California Law to Ban Caste Discrimination

Hindutva Lobby:

The Hindutva lobby's opposition to the California anti-caste discrimination bill was spearheaded by Ramesh Kapur, a wealthy Massachusetts entrepreneur. “If you want to be our next president, veto the bill”, Kapur told the governor in no uncertain terms, according to a recent investigative piece written by British journalist Andrew Cockburn and published in the Harper magazine. Here's an excerpt from the article:

"The ultimatum was decisive. Kapur said that Newsom emailed him three hours before going public: “I’m going to veto it.” Newsom’s move dashed the hopes of all who had fought for the bill, but it seems likely to reap him rich rewards. “Now that he has made that decision, he has become the champion of the Hindu cause,” Kapur told me over the phone from California, where he was busy organizing the first in a series of fundraisers for the governor in Silicon Valley, Chicago, and New Jersey. “Newsom is hot in the Indian-American community!”"

In recent years, Hindu Americans have become the highest-income group in the United States. Most of them support Hindu Nationalist Prime Minister Narendra Modi's BJP party. There are many billionaires among them, and they are willing to use their wealth to influence the US political process. They see AIPAC, the Israel lobby, as their inspiration.

California AB 3027:

California bill (AB 3027) banning transnational repression was introduced in response to the attempted assassination of an American Sikh leader. The US government believes that the assassination was plotted by agents of the Indian government. This bill is strongly opposed by the Hindutva lobby which calls it "Hinduphobic". It is supported by law enforcement agencies in the state. The bill would provide an improved sense of personal security to many Indian Americans who are facing threats for opposing the Modi government in India. It is currently stalled in California Senate committees. Hindutva supporters see Zionists as useful allies in their effort to draw parallels between antisemitism and “Hinduphobia.”

California Hindutva Group Marches with Zionists in Support of Israel's Gaza Genocide

Donor Power:

Gavin Newsom's veto of the bill to ban caste discrimination illustrates the power of the donors crushing popular will, making a mockery of democracy. The power of the Israel lobby (AIPAC) backed by rich Jewish-American donors is the most egregious example of this, as is the power of the gun lobby (NRA).

Polls consistently show that the majority of Americans oppose US shipment of weapons to Israel while it slaughters tens of thousands of innocent Palestinian civilians, mainly children and women. But the Biden administration continues to send arms, ammunition and explosives to the Israeli government. Both Biden and Harris pay lip service to the need for an immediate ceasefire but refuse to stop giving Netanyahu the bombs that he is using to sustain the Gaza genocide.

Similarly, the majority of Americans want laws to restrict gun ownership in the country. Polls after each mass shooting confirm broad support for gun control laws. But the US politicians refuse to pass such laws because of the power of the US gun lobby.

American Muslim Vote:

There are enough Muslim voters in battleground states, particularly Michigan, where their vote can make a difference to the outcome of this year's presidential contest between Vice President Kamala Harris and former President Donald Trump. But there is little difference between their positions on Gaza. Both have expressed strong support for Israel, thanks to the power of AIPAC and its wealthy billionaire donors. Nonetheless, it is interesting to look at the numbers. Here is an excerpt from the Harper piece on this:

"Since October 7—coincidentally the same day that Newsom announced his veto—the ongoing slaughter in Gaza has brought electoral peril for the Democrats. Polls report withering support across important components of the coalition that brought Biden to victory in 2020, especially among the Muslim community, which gave him up to 85 percent of its votes in that election, according to some polls. Although Hindus were less supportive of Biden than Muslims were in 2020 (25 percent went for Donald Trump, according to certain estimates, a slight uptick from 2016), some see their votes as the perfect replacement for the Democrats’ faltering Muslim coalition. “We can make the difference!” Kapur exclaimed, brandishing a state-by-state breakdown of Hindu and Muslim populations to show that his fellow Hindus could deliver votes as well as money. Muslims outnumber Hindus in America, 3.5 million to 2.5 million. But in key swing states, the numbers Kapur presented to me, drawn mostly from 2014 data, almost balance out: Pennsylvania is home to 130,000 Hindus and 150,000 Muslims. In Georgia, the state’s 172,000 Hindus outnumber its 123,000 Muslims, while the 110,000 Hindus in Michigan provide some counterweight, Kapur implied, to the quarter million Muslims, many of whom are outraged by the Biden Administration’s support for Israel. In Nevada, Hindus outnumber Muslims by almost three to one, while in Virginia, Hindus have an edge of 200,000 to just under 170,000. During the 2021 Virginia governor’s race, both the Democratic candidate, Terry McAuliffe, and the Republican, Glenn Youngkin, paid attention to this voter pool and dutifully visited Hindu temples, but Youngkin reportedly made the stronger impression—he “listened deeply” to their concerns, as American Hindu Coalition chairman Shekhar Tiwari put it, especially their complaints about local schools’ efforts to promote diversity by modifying admissions policies at their expense. And Youngkin was not the first Republican to cultivate and enjoy Hindu support. In 2015, the Chicago billionaire industrialist Shalabh Kumar set up the Republican Hindu Coalition, which describes itself as “modeled after the highly successful Republican Jewish Coalition”; Steve Bannon was an honorary co-chair of the group. Kumar and his wife poured money into Trump’s 2016 election campaign, which was making major media buys in swing states. Trump even recorded a message in Hindi".

Saturday, September 14, 2024

ITU Cybersecurity Index 2024: Pakistan Ranked Among Top Tier Countries

International Telecommunications Union (ITU) has ranked Pakistan (score 96.69/100) among top tier countries for cybersecurity in 2024. Out of a maximum score of 20, Pakistan received 20 for legal measures, 18.21 for technical measures, 20 for organization measures, 20 for capacity development and 18.48 for cooperative measures, according to the Global Cybersecurity Index 2024 report released by the ITU.

Pakistan Cybersecurity Scores 2024. Source: ITU

Pakistan's tier one cybersecurity ranking is a big improvement from its 79th rank (score 64.88 from 100) it got in the cybersecurity ranking by the ITU in 2020. Four years ago, Pakistan scored 15.97 on legal measures, 12.26 on technical measures, 11.01 on organizational measures, 17.25 on capacity development and 8.38 on cooperative measures.

Increasing penetration and rapid growth of the Internet user base in Pakistan has brought in a lot of user complaints of bullying and fraud, necessitating government action, including new legislation and capacity building to fight cyber crimes.

Pakistan Telecom Indicators as of July 2024. Source: PTA

Back in 2018, Pakistan launched its National Center for Cyber Security (NCCS) as a joint project of Higher Education Commission (HEC) and the Federal Planning Commission. The Center includes several Research and Development (R&D) Labs at Pakistani universities. These universities have been given the mandate to establish NCCS affiliated Labs in different specialties of cybersecurity under the Center's secretariat. Earlier this year, Pakistan's economic coordination committee (ECC), a ministerial level body, allocated $36 million for work on cybersecurity measures.

Like many other nations, the cybersecurity threats in Pakistan include hacking, identity theft, cyber-bullying, cyberstalking, spoofing, financial frauds, digital piracy, viruses and worms, malicious software, money laundering, denial of service attacks, electronic terrorism, vandalism, and pornography.

Pakistan has passed a cybercrime bill and established a National Response Center for Cyber Crime (NR3C). NR3C has expertise in Digital Forensics, Technical Investigation, Information System Security Audits, Penetration Testing and Training. Since its inception, it has been involved in capacity building in various departments including Police, Intelligence, Judiciary and Prosecutors. Cyber Scouts is the latest initiative of NR3C, in which, selected students of different private/public schools are trained to deal with computer emergencies and increasing awareness of cyber threats amongst their fellow students, teachers and parents.

Friday, September 6, 2024

Shifting Monsoon Pattern: Is Arid Pakistan Turning Wet?

Semi-arid Pakistan, with its farmlands predominantly irrigated by the world's largest contiguous canal system, has experienced an increasing amount of annual rains and floods for several years. Even the desert regions of the country, like the vast Thar desert straddling India-Pakistan border, have recently been turning green. Now a study has found that "the mean rainfall over the semi-arid northwest parts of India and Pakistan has increased by 10%–50% during 1901–2015 and is expected to increase by 50%–200%" by the end of the current century. The authors of this study published by Advanced Earth and Space Science conclude as follows: "While an adaptation strategy to increased hydrological disasters is a must, harnessing the augmented rainfall would lead to a substantial boost in food productivity, bringing transformative changes in the socio-economic condition of people in the region".

Annual Summer Monsoon Rainfall in Millimeters For 1979-2015. Source: AGU

Already, the satellite images shared by the US National Aeronautics and Space Administration (NASA) show that greenery in Pakistan has been growing at double digit rates over the last few decades. All of this rapid greening of the country is the result of intensive agriculture in Punjab and Sindh provinces.

Greening Trends in Asia. Source: NASA Earth Observatory

Recent economic data from Pakistan lends credence to the findings of the latest study that the region will see "substantial boost in food productivity, bringing transformative changes in the socio-economic condition of people". Pakistan's agriculture sector grew 6.3% in 2023-24, far outpacing the overall economy that grew just 2.38%, according to the Economic Survey of Pakistan 2023-24. Pakistan’s agricultural exports reached a record $8 billion in FY 2023-24. This is good news for about 40% of the country's population working in the agriculture sector. By contrast, India's agriculture growth slowed to 1.2% in recent quarters. Studies have shown that strong growth in agriculture helps reduce poverty in developing nations like India and Pakistan.

Projected Percentage Change in South Asia Rainfall By End of 21st Century. Source: AGU

The study highlights shifting monsoon patterns bringing more rainfall in northwestern India and Pakistan which is explained as follows: "The warming of the western Indian Ocean and Arabian Sea strengthens winds that cross the equator, which increases evaporation and the amount of moisture carried from the ocean to the land. This leads to increased monsoon rainfall." "On the other hand, the oceanic rain belt between the equator and 10°S shows weakening, with a decrease in mean rainfall from the eastern IO (Indian Ocean) extending up to the maritime continent", it adds.

A major downside of the increased rainfall from shifting monsoon patterns is frequent flooding in both rural and urban Pakistan. The country experienced the worst floods in its history in 2022. Over a thousand Pakistanis died. About 33 million people in two southern provinces became homeless. Sindh was inundated with 784% of normal rainfall. Balochistan saw 522% of average rainfall. Both provinces suffered their worst ever heatwave prior to this unprecedented deluge. Nearly a million livestock were lost, over two million acres of farmland went underwater and 90% of the crops in Sindh and Balochistan were damaged. It was a massive humanitarian crisis.

Such extreme weather events like the floods of 2022 are likely to recur and cause widespread devastation unless measures are taken to build back better. Part of the new infrastructure needed to deal with it includes better rainwater harvesting and improved drainage systems. This is what the authors of the study refer to when they say that "harnessing the augmented rainfall would lead to a substantial boost in food productivity, bringing transformative changes in the socio-economic condition of people in the region".