tag:blogger.com,1999:blog-5848640164815342479.post4318567399983288269..comments2024-03-18T16:01:13.871-07:00Comments on Haq's Musings: Pakistan Shares Exceed BRIC Gains in 2010Riaz Haqhttp://www.blogger.com/profile/00522781692886598586noreply@blogger.comBlogger66125tag:blogger.com,1999:blog-5848640164815342479.post-56298875280925927562016-09-14T19:15:28.343-07:002016-09-14T19:15:28.343-07:00Why #Pakistan's Stock Market Beats #China'...Why #Pakistan's Stock Market Beats #China's And #India's via @forbes<br /><br />http://www.forbes.com/sites/panosmourdoukoutas/2016/09/14/why-pakistans-market-beats-chinas-and-indias/#1a3ab86b269f<br /><br />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.<br /><br />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.<br /><br />Index/Fund 12-month Performance 5-year Performance<br />Global X MSCI Pakistan (NYSE:PAK) 20% 400%*<br />IShares China (NYSE:FXI) 9.80% 16.00%<br />iShares S&P India 50 (NASDAQ:INDY) 12.77 % 33.0%<br />iShares MSCI Emerging Markets (NYSE:EEM) 5.38% 1.52%<br />*In local currency.<br /><br />Source: Yahoo YHOO +0.98%. Finance and Karachi Exchange 9/5/2016<br /><br />Pakistan’s, India’s and China’s Key Metrics<br /><br />Country China India Pakistan<br />GDP $10866 billion 2074 billion $270 billion<br />GDP Growth yoy 6.7% 7.1% 4.24%<br />Unemployment 4.05% 4.9% 5.9%<br />Inflation Rate 1.3% 5.05% 3.56%<br />Capital flows -594 HML -$300 million -$1882 million<br />Government Debt to GDP 43.9% 67.2% 64.8%<br />What does the collective wisdom of markets see in Pakistan’s markets that others are missing? <br /><br />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.<br /><br />Riaz Haqhttps://www.blogger.com/profile/00522781692886598586noreply@blogger.comtag:blogger.com,1999:blog-5848640164815342479.post-25975698137922283232012-03-27T21:34:34.615-07:002012-03-27T21:34:34.615-07:00Here are some excerpts of The Australian story on ...Here are some excerpts of <a href="http://www.theaustralian.com.au/news/world/india-rises-to-reveal-shameful-stench/story-e6frg6ux-1226311694875" rel="nofollow">The Australian</a> story on the eve of BRICS summit:<br /><br /><i>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.<br />----------<br />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.<br />----------<br />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.<br /><br />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.<br /><br />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.<br /><br />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.<br /><br />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".<br /><br />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.<br /><br />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.<br /><br />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.<br /><br />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....</i><br /><br />http://www.theaustralian.com.au/news/world/india-rises-to-reveal-shameful-stench/story-e6frg6ux-1226311694875Riaz Haqhttps://www.blogger.com/profile/00522781692886598586noreply@blogger.comtag:blogger.com,1999:blog-5848640164815342479.post-57041401557394892602011-12-20T17:09:36.960-08:002011-12-20T17:09:36.960-08:00The Indian stock market today lost its trillion-do...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 <a href="http://economictimes.indiatimes.com/markets/analysis/india-moves-out-of-trillion-dollar-stock-market-club/articleshow/11181756.cms" rel="nofollow">Economic Times</a>: <br /><br />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.<br /><br />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.<br /><br />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.<br /><br />The Indian market had a size of USD 1.0116 trillion (Rs 53,48,352.02 crore) at the end of yesterday's trade.<br /><br />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.<br /><br />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.<br /><br />India again joined this elite club of markets with trillion-dollar valuation about a year later on June 3, 2009.<br /><br />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.<br /><br />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.<br /><br />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.<br /><br />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.<br /><br />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.<br /><br />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).<br /><br />At the end of today's trade, NSE-listed market valuation stood at Rs 51,42,566 crore (USD 972.68 billion).<br /><br />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.<br /><br />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.<br /><br />While about 1,600 stocks are actively traded on the NSE, the number is almost double at over 2,900 at the BSE.<br /><br />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. <br /><br />http://economictimes.indiatimes.com/markets/analysis/india-moves-out-of-trillion-dollar-stock-market-club/articleshow/11181756.cmsRiaz Haqhttps://www.blogger.com/profile/00522781692886598586noreply@blogger.comtag:blogger.com,1999:blog-5848640164815342479.post-9572255065062402552011-08-07T16:44:01.672-07:002011-08-07T16:44:01.672-07:00Pakistan Attractive as Growth Outweighs Violence, ...Pakistan Attractive as Growth Outweighs Violence, Atlas tells <a href="http://www.bloomberg.com/news/2011-08-07/pakistan-attractive-as-growth-outweighs-violence-atlas-says.html" rel="nofollow">Bloomberg</a>:<br /><br /><i>---“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.”<br /><br />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.<br /><br />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.<br />--------<br />“Selling from foreign portfolio investors is affecting the local market,” Samad said.<br /><br />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.<br /><br />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.<br /><br />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. <br /><br />“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.”<br /><br />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.<br /><br />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. <br />-------<br />“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.<br /><br />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.<br /><br />“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.” </i>Riaz Haqhttps://www.blogger.com/profile/00522781692886598586noreply@blogger.comtag:blogger.com,1999:blog-5848640164815342479.post-76815890611279146202011-07-17T21:32:08.731-07:002011-07-17T21:32:08.731-07:00Here's a commentary on KSE vs BSE by Ali Wahab...Here's a commentary on KSE vs BSE by Ali Wahab published in <a href="http://tribune.com.pk/story/201972/kse-not-as-impressive-as-it-looks-numbers-dont-lie-or-do-they/" rel="nofollow">The Express Tribune</a>:<br /><br /><i>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.<br /><br />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....</i>Riaz Haqhttps://www.blogger.com/profile/00522781692886598586noreply@blogger.comtag:blogger.com,1999:blog-5848640164815342479.post-38537596203402833192011-07-13T17:08:55.995-07:002011-07-13T17:08:55.995-07:00Here are some excerpts from an Indian Financial Ex...Here are some excerpts from an Indian <a href="http://www.financialexpress.com/news/more-fii-money-to-pak-than-to-india/807995/0" rel="nofollow">Financial Express</a> story headlined "More FII money to Pak than to India":<br /><br /><i>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. <br />----<br />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.<br /><br />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.<br />----------<br />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.<br /><br />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. </i> <br /><br />http://www.financialexpress.com/news/more-fii-money-to-pak-than-to-india/807995/0Riaz Haqhttps://www.blogger.com/profile/00522781692886598586noreply@blogger.comtag:blogger.com,1999:blog-5848640164815342479.post-42234180955199138712011-05-11T18:38:58.035-07:002011-05-11T18:38:58.035-07:00The killing of Osama bin Laden is a positive event...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 <a href="http://www.cnbc.com/id/42873041/Bin_Laden_s_Death_to_Boost_Pakistan_Economy_Stocks_Strategist" rel="nofollow">interview with CNBC</a>. <br /><br /><i>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.<br /><br />"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.<br /><br />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.<br /><br />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.<br /><br />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.<br /><br />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.<br /><br />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%) ].<br /><br />"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.</i>Riaz Haqhttps://www.blogger.com/profile/00522781692886598586noreply@blogger.comtag:blogger.com,1999:blog-5848640164815342479.post-55164710139913034752011-03-27T18:07:51.848-07:002011-03-27T18:07:51.848-07:00Here's Maplecroft risk warning for investing i...Here's Maplecroft risk warning for investing in India, according to <a href="http://economictimes.indiatimes.com/news/economy/indicators/india-16th-most-risky-place-to-invest/articleshow/7793694.cms" rel="nofollow">Times of India</a>:<br /><br /><i>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.<br /><br />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.<br /><br />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.</i><br /><br />A press release by <a href="http://www.maplecroft.com/about/news/pra_2011.html" rel="nofollow">Maplecroft</a> lumps Pakistan with Russia on investment risk:<br /><br /><i>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.<br /><br />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).<br /><br />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.<br />-----<br />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".<br /><br />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.</i>Riaz Haqhttps://www.blogger.com/profile/00522781692886598586noreply@blogger.comtag:blogger.com,1999:blog-5848640164815342479.post-15163558063784660022011-03-05T17:38:22.046-08:002011-03-05T17:38:22.046-08:00Karachi stocks rose 777 points on hopes of launch ...Karachi stocks rose 777 points on hopes of launch of margin trading system, according to <a href="http://www.dailytimes.com.pk/default.asp?page=2011%5C03%5C06%5Cstory_6-3-2011_pg5_19" rel="nofollow">Daily Times</a>:<br /><br /><i>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.<br /><br />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.<br /><br />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.<br /><br />"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."<br /><br />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.<br /><br />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.<br /><br />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.<br /><br />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.<br /><br />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.<br /><br />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.<br /><br />Foreigners concluded to be net buyers of worth $2.9 million.<br /><br />The market turnover went up by 19.54 percent trading 187.49 million shares as against 156.83 million shares of the previous week.<br /><br />"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.</i>Riaz Haqhttps://www.blogger.com/profile/00522781692886598586noreply@blogger.comtag:blogger.com,1999:blog-5848640164815342479.post-63935437465142663912011-01-27T11:46:15.734-08:002011-01-27T11:46:15.734-08:00Here's an interesting assessment of "Why ...Here's an interesting assessment of "Why Foreigners Are Buying" by a Pakistani poster on <a href="http://pakinvestorsguide.com/index.php?topic=550.4860" rel="nofollow">Pakinvestorguide.com</a>:<br /><br /><i>The aftermaths of the 2008 debacle had been; depleting<br />foreign reserves caused by a higher twin deficit and in turn,<br />higher inflation leading to substantial Rupee depreciation.<br />Relatively speaking, in the present, Pakistan’s reserves are<br />strengthening; the current account is under control led by<br />commodity price pass through and a stable real effective<br />exchange rate, and the global economic outlook is recovering<br />from its worst. This is also reflected from the recent growing<br />foreign interest in the local equity bourse, where foreigners<br />have invested around US$566mn in FY10, highest since the<br />record US$978mn worth of funds flowed into the KSE in<br />FY07.<br /><br />Why are foreigners buying?<br />As stated in our research report- Foreigners regaining<br />position at the KSE; dated: 20 Sep 2010 - foreigners own<br />one-third of Pakistan’s equity free float and accounted for<br />32.86% of the total traded value at the bourse. The all time<br />high level of foreign ownership witnessed last was 28.22% in<br />November 2007. To us, the reasons behind the foreign<br />interest in 2007 and 2010 are entirely opposite:<br /><br />2007: The economy was overheating, liquidity was abundant,<br />reserves were stabilizing and the global funds were in search<br />of better yields. Hence the preferred sector at that time was<br />Banking.<br />Sector of main interest: The banking scrips comprised over<br />31% of the KSE’s market pie.<br /><br />2010: Stagflation is over and the economy is in recovery<br />mode, external discipline has been revived, food and fuel<br />subsides have been withdrawn, an economic reformation<br />process backed by the IMF is in place and more importantly,<br />the US has emerged as the strong ally. The higher external<br />support is a prime source of comfort for the foreigners this<br />time around.<br />Sector of main interest: Oil and Gas share has grown to 36%<br />of the KSE’s total market capitalization.<br /><br />FY10 and FY07 comparison<br />(US$bn) FY10 FY07<br />Foreign inflows 0 .6 1.0<br />Inflation 11.7% 7.8%<br />GDP growth 4.1% 6.8%<br />Fiscal Deficit 6.3% 4.3%<br />C/A Deficit 3 .5 6.9<br />Reserves 16.8 15.6<br />Exchange Rate 85.5 60.4<br />Discount Rate 12.5% 9.5%<br />P/E (X) 8.5 13.2<br />Market Cap 3 2.0 66.5<br />Banking sector weight 23.0% 31.0%<br />Oil & Gas sector weight 36.0% 24.0%<br />Source: Economic Survey of Pakistan, SBP & JS Research<br /><br />Why locals are sellers?<br />The lack of liquidity, non-availability of financing options, the<br />banks’ risk-averse attitude towards stock investors and<br />imposition of capital gain tax have been deterring local<br />participation. Add to that, the federal decision of keeping the<br />SBP Governor’s position vacant for 3 months, non<br />appointment of the SECP chairman and having had four<br />different finance ministers within a short span of 30 months.<br />And if that were not enough, the recent wide scale floods,<br />increasing price pressures and the persisting inter-corporate<br />debt have heavily weighed in on the minds of the locals<br />encouraging their selling spree.</i>Riaz Haqhttps://www.blogger.com/profile/00522781692886598586noreply@blogger.comtag:blogger.com,1999:blog-5848640164815342479.post-83014946402707425432011-01-22T18:04:29.015-08:002011-01-22T18:04:29.015-08:00As food prices and farm incomes rise, Pakistan is ...As food prices and farm incomes rise, Pakistan is seeing record tractor sales in rural areas, according to The <a href="http://www.nation.com.pk/pakistan-news-newspaper-daily-english-online/Business/07-Jan-2011/Record-sales-of-41500-tractors" rel="nofollow">Nation newspaper</a>:<br /><br /><i>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. <br />Out of these 41500 tractors, a record 5000 tractors have been produced and sold in the month of Dec, 2010. <br />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.<br />Millat Tractors has further taken steps to increase productivity and quality of tractors in order to provide timely delivery to its customer in future.</i><br /><br />Here's another report from <a href="http://www.dawn.com/2010/10/13/tractors-cars-bikes-sales-up-despite-floods.html" rel="nofollow">Dawn</a> on increasing rural sales of bikes:<br /><br /><i>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.<br /><br />After witnessing decline in August, many car and bike makers had registered recovery in sales in September.<br /><br />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.<br /><br />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<br />492 and 688 units in August 2010. However, sale of these cars had plunged in August 2010 as compared to July 2010.<br /><br />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.<br /><br />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.<br /><br />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...</i>Riaz Haqhttps://www.blogger.com/profile/00522781692886598586noreply@blogger.comtag:blogger.com,1999:blog-5848640164815342479.post-48308589999196259322011-01-22T13:15:17.597-08:002011-01-22T13:15:17.597-08:00Anon: "Rural income of Pakistani farmers are ...Anon: "Rural income of Pakistani farmers are on rise for last three years."<br /><br />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.<br /><br />It's also probably contributing to lower revenue receipts by the government.Riaz Haqhttps://www.blogger.com/profile/00522781692886598586noreply@blogger.comtag:blogger.com,1999:blog-5848640164815342479.post-80794066239458621192011-01-22T13:05:45.549-08:002011-01-22T13:05:45.549-08:00Rural income of Pakistani farmers are on rise for ...Rural income of Pakistani farmers are on rise for last three years.<br />Pakistani farmers now has disposable income to play with.<br />I asked an acquaitance of mine where sugar mill's profit is going. His answer was to the bank.<br />He said that farmers are rich and cash loaded in Pakistan. They have money now to buy consumer goods.<br />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. <br />Hey, that disposible income is going some where.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-5848640164815342479.post-62605740157848143892011-01-17T22:00:20.190-08:002011-01-17T22:00:20.190-08:00Anon: "RBI has some of the toughest regulatio...Anon: "RBI has some of the toughest regulations on FII on the planet.."<br /><br />Nobel Laureate economist Joe Stiglitz dusagrees, according to the <a href="http://blogs.wsj.com/indiarealtime/2010/11/11/stiglitz-india-could-lose-in-capital-controls-race/" rel="nofollow">Wall Street Journal</a>:<br /><br /><i>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.<br /><br />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.<br /><br />“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.<br /><br />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.”<br /><br />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.<br /><br />Mr. Stiglitz was speaking at the Mipim Asia real estate conference.</i>Riaz Haqhttps://www.blogger.com/profile/00522781692886598586noreply@blogger.comtag:blogger.com,1999:blog-5848640164815342479.post-78195820057747496452011-01-17T10:03:44.788-08:002011-01-17T10:03:44.788-08:00No, they are there only as long as the foreign inv...No, they are there only as long as the foreign investors choose to re-invest rather than repatriate their assets converted to US dollars. <br /><br />Indian FX reserves is 50% larger than the ENTIRE FII investment in India...<br /><br />A quarter does not make a trend.<br /><br />Sure earlier a month didn't make a trend now a quarter doesn't perhaps a year won't either...<br /><br />As we saw in the Asian financial crisis of 1997, the FII can be very destabilizing. <br /><br />Riaz jee then why don't 'wise' countries outright ban FIIs if they are so destablizing?<br /><br />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.<br /><br />Btw Riaz I haven't seen you post anything on PAkistan's economy for a while.How is it doing?Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-5848640164815342479.post-82066098628648975742011-01-17T09:48:02.979-08:002011-01-17T09:48:02.979-08:00Anon: "How? The current pile is property of R...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."<br /><br />No, they are there only as long as the foreign investors choose to re-invest rather than repatriate their assets converted to US dollars. <br /><br />Anon: "WAS declining is rising again...check OND 2011 figures please.."<br /><br />A quarter does not make a trend. There has been a <a href="http://dipp.nic.in/fdi_statistics/india_FDI_October2010.pdf" rel="nofollow">33% decline yoy in FDI inflows India</a>. <br /><br />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.."<br /><br />As we saw in the Asian financial crisis of 1997, the FII can be very destabilizing. <br /><br />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.Riaz Haqhttps://www.blogger.com/profile/00522781692886598586noreply@blogger.comtag:blogger.com,1999:blog-5848640164815342479.post-15109307839486882072011-01-17T07:08:25.080-08:002011-01-17T07:08:25.080-08:00Riaz,
"And the last time I checked Gujarat w...Riaz,<br /><br />"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."<br /><br />--> 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. <br /><br />This is about Wealth Creation. Gujrat currently is creating a LOT of wealth, and most of it is driven by domestic demand. <br /><br />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)?<br /><br />http://timesofindia.indiatimes.com/business/india-business/Vibrant-Gujarat-scores-for-Modi-Over-Rs15L-crore-committed-for-investment/articleshow/7269429.cms<br /><br />There were 15 Lakh Crore worth of investment made in Gujrat in this one summit. That translates to around $320 Billion!!!!! <br /><br />Pretty good I'd say.<br /><br />Its way better than complaining that your ally hasn't given the money that he promised as Aid(Pakistan to US).<br /><br />Your Sour grapes syndrome are preventing you from seeing the big picture that International Media like WSJ can see.anoophttps://www.blogger.com/profile/03953390714660751518noreply@blogger.comtag:blogger.com,1999:blog-5848640164815342479.post-71356687454641091662011-01-17T00:13:10.443-08:002011-01-17T00:13:10.443-08:00First, India's reserves themselves rely on FDI...First, India's reserves themselves rely on FDI and FII. <br /><br />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.<br /><br />Second, India's FDI is declining,<br /><br />WAS declining is rising again...check OND 2011 figures please..<br /><br />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<br /><br />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..<br /><br />25% of GDP is LIQUID FX reserves is a lot of cushion...Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-5848640164815342479.post-37237997540153001132011-01-16T23:12:36.018-08:002011-01-16T23:12:36.018-08:00Anon: "But it has FX reserves of around 25% G...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. "<br /><br />First, India's reserves themselves rely on FDI and FII. <br /><br />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. <br /><br />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.Riaz Haqhttps://www.blogger.com/profile/00522781692886598586noreply@blogger.comtag:blogger.com,1999:blog-5848640164815342479.post-45646348286933794552011-01-16T23:05:19.244-08:002011-01-16T23:05:19.244-08:00Not really true in India's case. India runs hu...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.<br /><br /><br />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.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-5848640164815342479.post-58112924361240397412011-01-16T19:58:36.179-08:002011-01-16T19:58:36.179-08:00Anon: "What ultimately matters is investment(...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.... "<br /><br />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.Riaz Haqhttps://www.blogger.com/profile/00522781692886598586noreply@blogger.comtag:blogger.com,1999:blog-5848640164815342479.post-38967535608700241252011-01-16T19:27:47.948-08:002011-01-16T19:27:47.948-08:00anoop: "Can you prove that it ($377 billion F...anoop: "Can you prove that it ($377 billion FDI in Gujarat alone) is exaggerated? <br /><br />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.<br /><br />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....Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-5848640164815342479.post-86688282279190902392011-01-16T12:10:11.204-08:002011-01-16T12:10:11.204-08:00anoop: "Can you prove that it ($377 billion F...anoop: "Can you prove that it ($377 billion FDI in Gujarat alone) is exaggerated? <br /><br />The cumulative stock of all <a href="http://dipp.nic.in/fdi_statistics/india_FDI_October2010.pdf" rel="nofollow">FDI received by India in the entire decade of 2000-2010</a> 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.Riaz Haqhttps://www.blogger.com/profile/00522781692886598586noreply@blogger.comtag:blogger.com,1999:blog-5848640164815342479.post-90567458621981384462011-01-16T11:14:11.080-08:002011-01-16T11:14:11.080-08:00Riaz,
"I know Gujarat is a darling of right-...Riaz,<br /><br />"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. "<br /><br />--> I didnt know Wall Street Journal, which carried the story belongs to the Right Wing in India.<br /><br />It had this to say,"The year before(Modi became CM), Gujarat's economic output shrank by almost 5%."<br /><br />Now, its the fastest growing State in India, has been the fastest for many years now.<br /><br />"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. "<br /><br />--> Can you prove that it is exaggerated? <br /><br />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. <br /><br />This is a classic case of sour grapes.<br /><br />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). <br /><br />22% of exports from India is from Gujrat. <br /><br />With all this in mind how can you deny that the State has the ability to attract massive Investment?<br /><br />Gujrat and Bihar are prime example of smart and honest leadership. Consequently both are the fastest growing States in India.<br /><br /><b>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.</b>anoophttps://www.blogger.com/profile/03953390714660751518noreply@blogger.comtag:blogger.com,1999:blog-5848640164815342479.post-39176821458763633132011-01-16T08:18:07.740-08:002011-01-16T08:18:07.740-08:00Anon:"past MOUs being executed which translat...Anon:"past MOUs being executed which translates into $ 200 billion investment(MORE than Pakistan GDP)EVERY YEAR in Gujarat."<br /><br />Why you are ignoring the following part of my comment as you continue to hype mass murderer Modi's "achievements"?<br /><br />Third, Gujarat is just as bad or worse than India in terms of basic human needs like food. <br /><br />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 Haqhttps://www.blogger.com/profile/00522781692886598586noreply@blogger.com