Goldman Sachs' Jim O'Neill Long Term Bullish on Pakistan

In his recently published book "The Growth Map", Goldman Sachs' Jim O'Neill of BRIC fame has reiterated Pakistan's long term growth prospects as part of the Next 11 (N-11) group of nations which includes Bangladesh, Egypt, Indonesia, Iran, Mexico, Nigeria, Pakistan, Philippines, Turkey, South Korea, and Vietnam.



Goldman Sachs has recently launched an N-11 equity fund (GSYAX) to enable investors to take advantage of growth in the Next-11 group of nations.

Answering a reporter's question about the growth prospects of GCC (oil-rich nations of Gulf Cooperation Council) at a recent investment conference in Dubai, he said: "Some GCC countries are well placed to be hubs for the BRIC and N-11-influenced world. I often think of Dubai as a kind of N-11 center, even the capital of the N-11 world, given its business adjacency to Egypt, Pakistan, Iran, Turkey, and, of course, India and Russia."

While the primary criterion used by Goldman Sachs for membership of a developing nation in BRIC and N-11 is the size of its population, the firm also considers what it calls Growth Environment Score (GES) of each nation. The 13 variables which make up growth environment score are inflation, fiscal deficit, external debt, investment rate, openness of the economy, penetration of phones, penetration of personal computers, penetration of internet, average years of secondary education, life expectancy, political stability, rule of law and corruption.

Goldman Sachs has given Pakistan a low GES score which puts the country among the bottom third of Next-11 nations. However, this score is rising, and Goldman forecasts that Pakistan will be among the top 20 world economies by 2025.



It seems to me that Goldman Sachs' assessment of Pakistan's growth prospects are too heavily influenced by the current crises the country faces. It is too conservative and does not fully reflect its future potential based on the nation's economic history over the last 64 years. For example, Goldman assumes a future growth rate that is less than the average of over 5% a year which Pakistan has seen over the last 64 years.



My view is that Goldman Sachs' forecast should fully reflect the fact that Pakistan's per capita GDP increased by 60% to $3,000 in the last decade. Even if it is assumed that there is no demographic dividend and the country's gdp growth rate will not accelerate, its per-capita income should still rise to nearly $20,000 by 2050, well above the Goldman Sachs' forecast of $15,066.00.

It is unrealistic to assume that Pakistan's economy will not benefit from its very young population. With half of its population below 20 years and 60 per cent below 30 years, Pakistan is well-positioned to reap huge demographic dividend, with its workforce growing at a faster rate than total population. This trend is estimated to accelerate over several decades. The average Pakistanis are now taking education more seriously than ever. Youth literacy is about 70% and growing, and young people are spending more time in schools and colleges to graduate at higher rates than their Indian counterparts in 15+ age group, according to a report on educational achievement by Harvard University researchers Robert Barro and Jong-Wha Lee. Vocational training is also getting increased focus since 2006 under National Vocational Training Commission (NAVTEC) with help from Germany, Japan, South Korea and the Netherlands.

The fact is that equity markets in Pakistan have already produced much higher returns than BRICs' markets have over the last decade.

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 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 ruble-based MICEX is also up 22%.

Pakistan's key share index KSE-100 dropped about 5% in 2011, significantly less than most the emerging markets around the world. Mumbai's Sensex, by contrast, lost about 25% of its value, putting it among the worst performing markets in the world.

Given the historical economic data I have shared in this post, I remain optimistic that Pakistan can and will easily beat Jim O'Neill's current forecast in the coming decades.

Related Links:

Haq's Musings

Pakistan's 64 Years of Independence

Goldman Sachs & Franlin-Templeton Bullish on Pakistan

Emerging Market Expert Investing in Pakistan

Pakistan's Demographic Dividend

Genomics & Biotech Advances in Pakistan

The Growth Map by Jim O'Neill

Pakistan Rolls Out 50Mbps Broadband Service

More Pakistan Students Studying Abroad

Inquiry Based Learning in Pakistan

Mobile Internet in South Asia

Online Courses at Top International Universities

Comments

Riaz Haq said…
Here's an excerpt on Pakistan from a recent Worth magazine piece posted on Goldman Sachs website:

THE MENTION OF PAKISTAN
PROMPTS MEMORIES OF OSAMA BIN LADEN and worries about current instability more readily than it does investment opportunity. “But a large portion of Pakistan is relatively stable, and it’s a country that’s growing rapidly almost in spite of itself,” says Paul Herber, portfolio manager of the Forward Frontier Strategy Fund.
Pakistan’s local oil and gas companies are a promising investment play. Unlike other N11 nations, where these resource companies are government-owned and give investors little access, “a lot of Pakistan’s oil and gas companies are public,” Herber says. The country is by no means a big global oil producer, but with 170 million people—more than Russia— growth in domestic demand is likely to boost the domestic industry, Herber says.


http://www.goldmansachs.com/gsam/pdfs/USTPD/education/092911_WO13_Goldman_Sachs_PDF.pdf
Riaz Haq said…
Here's a Korea Times report on investment opportunities in Pakistan:

Located in the heart of Asia, Pakistan is the gateway to the financially liquid Gulf States and the economically advanced Far Eastern tigers. This strategic advantage alone makes Pakistan a marketplace teeming with possibilities, but there are many more reasons.

A large part of the workforce is proficient in English, hardworking and intelligent. Pakistan possesses a large pool of trained and experienced engineers, bankers, lawyers and other professionals with many having substantial international experience and who are available on cost effective terms.

Current investment policies have been tailor-made to suit investor needs. Pakistan’s policy trends have been consistent, with liberalization, de-regulation, privatization and facilitation being its foremost cornerstones.

The capital markets are being modernized, and reforms have resulted in the development of an improved infrastructure in the stock exchanges of the country. The Securities and Exchange Commission of Pakistan has improved the regulatory environment of the stock exchanges, corporate bond market and the leasing sector. Whilst the federal Board of Revenue has facilitated structural reform in tax and tariffs, the State Bank of Pakistan has invigorated the banking sector into seeking high returns on investment.

Pakistan’s coal resource potential is estimated to be around 186 billion tons. Of these resources about 175 billion tons are located in Sindh Province at Thar, one of the single largest coal deposits in the world.

Thar coal resources have an estimated potential of generating 100,000 megawatts of electricity over a period of more than 100 years. Thus, this resource provides a wonderful opportunity for large scale mining and power generation over long period of time. Besides, Thar coal fields are located 296 km from Karachi port in the south eastern arid zone region of Pakistan which is one of the most peaceful and harmonious area of the country.
----------
There are many potential investment options in Thar, including coal mining where investors interested only in mining may apply for a mine lease; an integrated coal and power generation project for which investors may also opt for investing in an integrated coal mining and power generation project; mine mouth power project, where the Thar coalfields present the best opportunity for mine mouth power projects in view of the great demand for energy in the country.


http://www.koreatimes.co.kr/www/news/special/2012/03/211_107553.html
Riaz Haq said…
Here's a News Op Ed by Dr. Ashfaque H. Khan, Dean of NUST Business School:

...The government’s economic team would have us believe that the economy is moving in the right direction. According to the team, exports have touched an all time high at $25 billion and foreign exchange reserves have risen to $18 billion, they further contend that the tax collection has doubled, the current account shows a surplus, and economic growth is on a path of recovery. In addition, the new NFC Award is hailed as a great success.

On the other hand, four reports that appeared in the last two months on Pakistan’s economy have painted a rather dismal picture of the economy. These reports include the IMF Report under Article IV Consultation (February 2012), Moody’s and Standard and Poor’s (the two international rating agencies) reports (March 2012) and the Second Quarter Report of State Bank of Pakistan.
----
The economic performance of any country is often assessed by the degree to which national outputs are growing. Economic growth is therefore the most critical indicator of any country’s economic performance. Higher economic growth on a sustained basis can bring the country in the limelight of the comity of nation. India is a classic example. India has maintained its economic growth in the range of 7-10 percent per annum since the mid 1990s and has drawn the attention of global investors and leaders which finally helped the country to join the league of the ‘rich man’ club – the G-20.

Pakistan sustained an average economic growth of 7.0 percent per annum for five years in a row (2002/03-2006/07) and drew the attention of global investors and Goldman Sach which included Pakistan in the ‘Next-Eleven’ club. Whenever a country is consistently growing in the range of 2.5-3.5 percent per annum, it loses the interest of global investors and prestige in the comity of nation.

Pakistan’s economy has been growing at an average rate of 2.9 percent per annum since 2007-08. It needs to grow by 7.0 percent annually to absorb two million new entrants in the job market. A growth of less than three percent in four years in a row cannot have created enough jobs for the new entrants, hence giving rise to unemployment and poverty. Pakistan’s growth performance would remain disappointing as long as fiscal indiscipline persists.------------

Moody’s report has linked the high debt burden with “low” government financial strength. A highly indebted country would see the persistence of macroeconomic instability, low economic growth, rising unemployment and poverty, low prestige in the comity of nations, and hence risk being overlooked by global investors and “friends”.

All the reports have termed financial indiscipline as the ‘mother’ of economic crisis. Persistence of large fiscal deficit is one of the critical sources of high and rising debt burden. Reducing fiscal deficit is central to addressing debt burden, safeguarding macroeconomic stability and laying the foundation for higher economic growth. A substantial increase in revenue is necessary to reduce fiscal deficit for which the implementation of RGST, improvement in withholding tax regime, bringing income originating from agriculture and services under a direct tax net, and improvement in tax administration and tax compliance are absolute necessary.

On the expenditure side, the resolution of the power sector ‘subsidy’ and rotten PSEs are a must to remove large drains of budgetary resources. Improvement in current NFC Award is sine quo non for a meaningful fiscal policy.....


http://www.thenews.com.pk/TodaysPrintDetail.aspx?ID=99759&Cat=9
Riaz Haq said…
Here are excerpts of former PM Shaukat Aziz's recent interview with Fortune magazine:

Q. It's been more than six years since Goldman Sachs (GS) recognized Pakistan among the Next Eleven newly industrialized countries -- inflation is up, investment is at a 40-year low, and infrastructure is deteriorating, particularly in the power sector. By just about any measure things are not particularly good, so what is the source of your optimism about the Pakistani economy?

A. The problems of the world economy have obviously leaked to Pakistan. Yes, investment is down, trade also, but in Pakistan's case a lot of this is due to the security situation, the war on terror. We have to pay a huge price in terms of damaging our investor confidence -- both domestic and foreign.

On the other hand, we should bear in mind that more than two-thirds of the population lives in rural areas and agriculture has done well, especially in cotton -- prices and exports are up and the farmer is relatively more comfortable.

The country's human capital is a strong suit, the Pakistani people are very talented, their skills levels are impressive and they are hard-working. There's a huge number of Pakistanis working overseas and we can export a few more million and there won't be an iota of difference because there is a whole pipeline of trained – and untrained - people coming.

Q. You mentioned the need for good management. How would you assess the current management of the economy? I ask that in light of the lapsing of the stabilization plan with the IMF.

A. Being out of the IMF -- obviously this reflects the desire of the government to have more flexibility to pursue its reforms. The IMF program does bring with it certain macroeconomic discipline and that's beneficial, but I also believe in economic sovereignty. You need good governance and good management, but abdicating the economy to the IMF is not the way to succeed. What we need is growth and job creation, like every other country in the world.

Q. The disagreement with the IMF is at least in part related to tax collection, which has been notoriously weak in Pakistan. There is a lot of concern whether Pakistan can muster the political will to make tough reforms, partly because of self-serving elites among the political class that have brought the country to the point of being nearly a failed state.

A. No, I think that's not true. The country is large -- roughly 180 million people -- and it's functioning. It has many challenges -- governance issues, transparency and management issues -- on top of the security issues that have cost us dearly. But the country is functioning. Obviously it could function better, but it's not come to a grinding halt. Life is going on.


http://finance.fortune.cnn.com/2012/01/09/pakistan-shaukat-aziz/
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.
----------
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 Wall Street Journal report on Gilani-Singh meeting in Seoul:

Mr. Singh met Pakistan Prime Minister Yousuf Raza Gilani briefly on the sidelines of a nuclear summit in Seoul on Tuesday. He told reporters Wednesday that he’d thanked Mr. Gilani for recent trade concessions and offered to make an official visit to Pakistan.

“I had a good meeting with him. I thanked him for the trade concessions that they have announced. He said when are you coming there (Pakistan). So, I said let us do something solid so that we can celebrate,” the Press Trust of India quoted him as saying. Mr Singh also said he told M. Gilani that he would “look into” the Pakistani leader’s request for India to supply power.

The chumminess of this encounter is likely to annoy India’s Pakistan hawks, who see no reason to make gestures toward Pakistan. Islamabad has failed to push ahead with the trials of the seven men it has charged with attacks on Mumbai in 2008 which killed more than 160 people and should be shunned until it does so, they argue.

Mr. Singh has taken a different approach.He invited Mr. Gilani to watch a World Cup cricket match between India and Pakistan a year ago, an act which sparked hopes of cricket diplomacy.

Although no breakthroughs have happened on the big issues that bedevil relations, like over the disputed Himalayan region of Kashmir or what India says is Pakistan’s continued support of militant groups, India and Pakistan have edged forward in recent months on other, smaller issues, like trade.

Last month, Pakistan agreed to normalize trade with India by the end of the year, a move which is part of a strategy to build confidence without yet touching issue like Kashmir.

This is a strategy dear to Mr. Singh’s heart. He’s said in the past that building economic ties with Pakistan is crucial to achieve peace but also to give India access to trade through Central Asia and beyond.

But the focus on trade has angered some in India, who see it as obfuscating the goal of getting Pakistan to crack down on militant groups. In Pakistan, too, there has been some opposition to normalizing trade with India. Mr. Gilani told Mr. Singh getting domestic support for the move was not “entirely easy,” PTI reported.


http://blogs.wsj.com/indiarealtime/2012/03/28/singh-says-hes-willing-to-visit-pakistan/
Riaz Haq said…
Here's an excerpt from an Op Ed by LUMS professor Ijaz Nabi as published in The Hindu:

Anglo-Russian rivalry and the long Chinese slumber cut off the land routes and markets to the West and the North, and Pakistan-India disputes truncated the routes to the East. Independent Pakistan invested heavily in infrastructure and trade along the North-South corridor via Karachi replaced trade across land borders. For the first time in history, Pakistan's three historical regional centres achieved a high degree of connectivity defining an Indus Basin market across the length of modern day Pakistan.

The Indus Basin market that spurred growth rates of 6 per cent or more for several decades has now run its course. Pakistan thus has to create a new “vent” for long-term sustained economic growth that is regionally balanced. This requires reverting to geography and history.

Pakistan lies at the heart of a rapidly transforming world around its land borders. To the North and East are the skills and savings-rich economies of China and India with a combined population of over 2 billion growing at 8 per cent or more. To the West are resource rich Central Asia, Iran and the Persian Gulf states. Reopening the historical East-West-North trade routes and linking them with a strong North-South corridor will make Pakistan the trade hub of South Asia. And trade hubs, that lower cost of transporting materials and people, are precursors of industrial hubs that produce sustained economic growth.

This is the strategic vision that should guide Pakistan's trade relations with all its neighbours, including India, and not the short-term cost-benefit analysis of the impact of liberalisation on some niche manufacturers.

And how should India lift up its game? All paths to economic development and prosperity do not have to be routed through sweat shops catering to affluent western consumers. A large and vibrant Asian regional market would constitute a significant and, given demographic shifts, growing part of global demand for products. India's long-term strategic interest is to help create that Asian market. That, in turn, requires strengthening Pakistan to be an effective regional hub that connects the Asia-wide market.


http://www.thehindu.com/todays-paper/tp-opinion/article3252366.ece
Riaz Haq said…
Pakistan's KSE-100 hit a new 4-year high today, according to The Nation:

Bullish sentiments prevailed in trading session at Karachi Stock Exchange across the board.

The benchmark KSE-100 share index gained 125.68 points or 0.93 percent on Wednesday to close the day’s trading at 13,575.41 points as compared to 13,449.73 points of previous day.

Equity dealer Samar Iqbal said, bull-run at local market continues as KSE index touched a new 4 year high. The positive thing about today’s rally was rising rupee turn over that crosses Rs 9 billion mark after a gap of 14 months.

National Bank of Pakistan once again closed at upper limit as investors hoped that 2012 earnings will be better than last year. Cement stocks continued to remain in the limelight with DGKC increasing by 2.3pc, she added.

KSE-Allshare index added 84.56 points to close the day at 9525.78 points, KSE-30 share index achieved 165.73 points to stop the day at 11903.77 points while KMI-30 share index increased 329.93 points to conclude the session at 23,213.86 level.

Analyst observed that expectations of issuance of SRO on announcements made for CGT issues and reformed CGT regime implementation from April 1 by the Federal Finance Minister affected the sentiment ahead of quarter end close. Investors concerns remained on the prevailing law and order situation in the country.

Volume of business extended to 450.238 million shares up from 352.783 million shares a day earlier. In a total of 375 active issues, 158 shares ended in a plus column, 153 in minus and 64 shares remained unchanged.

BoP was the top traded company of the day with 36.288 million shares down by Re1.00 to close at Rs 10.47, followed by Azgard Nine that shed Re0.55 and closed at Rs 9.32 with 32.827 million shares. Jahangier Siddiqi Company gained Re79 to stop at Rs 22.39 with 31.705 million shares, TRG Pakistan Ltd up by 18 paisas to close at Rs 4.33 with 26.749 million shares and Lafarge Pakistan shed 0.01 paisa to end at Rs 3.96 with 20.797 million shares.

UniLever Pak LtdXD and Indus Dyeing were the highest price gainer of the day increased by Rs 17.38 and Rs 15.38 while the top loser were led by Nestle PakXD and Colgate Palmolive decreased by Rs 61.41 and Rs 42.80 respectively.


http://www.nation.com.pk/pakistan-news-newspaper-daily-english-online/business/29-Mar-2012/kse-touches-4-year-high
Riaz Haq said…
Here's an Op Ed in The Nation written by economist and author Dr. Kamal Monnoo:

While there is no denying the fact that Pakistan’s economic health, its global ratings and image per se are all taking a serious dent and, of course the recent (released in February 2012) IMF report on the state of the Pak economy notwithstanding, the reality also is that it has a very resilient and robust side that continues to surprise. A picture that depicts the glass to be at least half full, points to the sectors that are consistently growing and adding value and, more importantly, exposes the huge underlying economic potential which despite poor governance keeps taking the national economic activity to the next level. Amidst great adversities and serious financial challenges, there does exist a silver lining on how the economy has performed over the last 12 months and some of the positives going forward.

On the back of a slowly but surely evolving middle class, there exists a visible consumption boom in the economy where companies are going through a period when domestic sales have never been higher. An exceptionally high percentage of young employable youth is unearthing new dynamics, as these fresh minds strive to create their own opportunities, thereby unleashing a wave of innovative entrepreneurial benefits. For example, the quality and speed at which the Pak urban consumer and service sectors (fashion wear, eateries, home decor, healthcare centres, private education, beauty salons, leisure and entertainment etc) are growing has but a few parallels in the world.

The inflow of foreign exchange remittances by Non-Resident Pakistanis (NRP) has never been stronger and provided its current rate of growth does not stall, the government envisages that the final figure is well on course to touch the $18 billion per annum level. Add to this, the fact that our exports registered $25 billion in 2011 and the possibility that if we can somehow supplement these inflows from NRP remittances and national exports, by re-attracting the presently dried up Direct Foreign Investment, there actually exists a strong case for successfully balancing our current account status - Pakistan as we know (even with the oil prices are high) is an economy that traditionally imports between $35 and $38 billion per annum.

The reserves in the meanwhile have held their ground at around the $17 billion mark and when doing a regional comparative analysis on parity with the US dollar one finds that the Pak rupee has also fared better than most of its neighbours. In fact, against the European currencies, like the Euro and the Sterling, the Pak rupee has gained in value when comparing its parity during the pre- and post-European crisis periods.

Further, according to the latest data released by the FBR, the revenue collection this year is on target and is likely to cross the Rs2,000 billion mark for the first time in history. ...
-------------
Large Scale Manufacturing (LSM) has begun to turn the corner by registering a 1.50 percent growth from negative 0.80 percent in 2011, more than 1.50 million motorcycles were sold last year and Automobile Sector’s sales are about 30 percent above from the fiscal year 2004-05 (regarded by auto pundits to be their best year). Companies and banks in general have announced healthier profits with especially the consumer goods companies leading the pack by churning out some unprecedented results. This coupled with the new policy announcement on investment in the shares markets has given a boost to the stock markets with the KSE (Karachi Stock Exchange) Index climbing to near 14,000 points. If the returns can continue to be interesting, such an opportunity is bound to even lure back foreign investment into the Pakistani markets.


http://www.nation.com.pk/pakistan-news-newspaper-daily-english-online/columns/28-Mar-2012/pakistan-s-economy-some-positives
Riaz Haq said…
Here's a Council on Foreign Relations (CFR) blog on regional trade in South Asia:

South Asia is among the least economically integrated regions of the world, in part because partition cleaved apart various natural economic communities. Regions, such as Bengal, which had been well integrated historically, suffered considerable economic ill effects. And post-1947 policies have only exacerbated the problem through tariffs, production restrictions, and various trade controls.
---------
So it’s interesting that Indian foreign policymakers seem, in various ways, to be reemphasizing the economic dimensions of their country’s strategy. At a conference in New Delhi last week, for example, Shivshankar Menon, India’s savvy national security advisor, urged India and its neighbors to refocus on economic integration. Ironically, Menon argued, economic success has raised the costs of not doing business.
---------

This is why it’s encouraging that Menon and others in India seem to be giving regional trade integration new emphasis. After all, India’s size and rapid growth give it some potential to help lead the way.

Here are three areas that bear watching:

The Strategic Consequences of Indian Growth

First, how will India choose to play the strategic consequences of its economic growth?

My friend, Sanjaya Baru, has long argued that India should work not just for India-Pakistan bilateral cooperation or regional cooperation within the South Asian Association for Regional Cooperation (SAARC) but also on a parallel track. Given the slow pace of the former two efforts, Sanjaya has written, “it may be necessary for India to … see if regional economic cooperation can be pursued at a faster pace in a wider South Asian context.”

One vehicle, he has argued, might be an expanded “Bay of Bengal Community.” This would build eastward off the platform of an existing effort, “BIMSTEC,” which involves technical cooperation among Bangladesh, Bhutan, India, Nepal, Sri Lanka, and two Southeast Asian countries—Myanmar and Thailand. And if Myanmar’s process of political opening ultimately proves to be real (and is matched by an economic opening), then India would be well positioned to help forge new patterns of integration between South and Southeast Asia.

Melding Economics into Indian Strategy

Now, flip from the strategic consequences of economic growth to the economic dimensions of Indian strategy.
-----------
Mohsin Khan of the Peterson Institute has argued that Pakistan’s November 2011 decision to grant most favored nation (MFN) status to India could prove especially significant. Of course obstacles remain, but Pakistan has continued to take important and constructive steps—for example, shifting from a “positive” to a “negative list”-based import regime with a February 29 Cabinet decision. India’s trade minister, Anand Sharma, has noted that this step will increase from 17% to about 90% the number of items that India can trade with Pakistan.

There has been movement elsewhere as well—with Bangladesh and Sri Lanka, for example. Over at Ajay Shah’s blog on the Indian economy, there is a good debate about whether and how India’s growth may have spillover effects elsewhere in South Asia.

The bottom line is this: India’s debate about economics and strategy is intensifying. And to my mind, at least, that is a decidedly good thing. After all, India’s success will increasingly depend on how New Delhi (and India’s states) respond to opportunities generated beyond the country’s borders.


http://blogs.cfr.org/asia/2012/03/22/economics-and-indian-strategy/
Riaz Haq said…
Here's a NY Times blog post on BRICS summit in Delhi:

The leaders of Brazil, Russia, India, China and South Africa announced on Thursday that they would investigate establishing a system that would allow them to bypass the dollar and other global currencies when trading among themselves.

The leaders of the BRICS group of nations also announced that they would explore setting up an alternative to the IMF and the World Bank that would loan to developing countries and bypass the U.S.-European axis of power that has dominated global economic affairs since World War II.

In a story on the stakes and the obstacles before the BRICS nations, our colleague Jim Yardley explained that the group had not accomplished very much before this, their fourth summit meeting, in New Delhi. But Jim wrote that they were expected to come away with at least one concrete product this time:

They are expected to announce agreements that would enable the nations to extend each other credit in local currencies while conducting trade, sidestepping the dollar, a substantive move if not yet the kind of game-changing action once expected from BRICS.

But that raises the questions:

Do you expect the BRICS to change the global game? What is their potential as a bloc or an alliance? Indeed, are they a bloc at all, or just a list of countries whose growing economic might symbolizes the rise of a world where the United States is no longer solely dominant?

The five countries have very different agendas and forms of government. Does this make forming any kind of unified policy or outlook unlikely? Are they really just a smart catchphrase from a Goldman Sachs economist to encapsulate changing global economics, as Walter Ladwig, a visiting fellow at the Royal United Services Institute, argued in the Opinion pages of the IHT?

The French daily Le Figaro believes that “little by little, the BRICS are asserting themselves.” To what end, it does not say.

In its analysis of the summit meeting, the Times of India concentrates on the group’s political statements urging negotiated resolutions of the conflict in Syria and the West’s nuclear standoff with Iran.

Reuters concentrates on the lecturing and hectoring that BRICS leaders delivered to the profligate West, quoting the customary end-of-summit joint declaration: “It is critical for advanced economies to adopt responsible macroeconomic and financial policies, avoid creating excessive global liquidity and undertake structural reforms to lift growth that create jobs.”


http://rendezvous.blogs.nytimes.com/2012/03/29/what-do-you-think-the-brics-can-build/?scp=1&sq=BRICS&st=cse
Riaz Haq said…
Is India losing its mojo because of bad politics? asks BBC's Soutik Biswas. Here's an excerpt:

It's an obvious question to ask at a time when powerful - and populist - regional parties are again flexing their muscles at a fickle federal government, key economic reforms are seemingly stuck in the bog of messy coalition politics, and the government is struggling under an avalanche of corruption charges. Economic growth and investment have cooled and inflation remains high.

So is it surprising that The Economist magazine, in its latest issue, says the politics is "preventing India from fulfilling its vast economic potential"?

Or when Fareed Zakaria, editor-at-large with Time magazine, tells an audience in Delhi this week that India's politicians are "out of touch… they try to portray India as a victim, not the victor".

With uncharacteristic exaggeration, The Economist even invokes a return to the stifling days of the controlled economy.

"Lately, like a Bollywood villain who just refuses to die, the old India has made a terrifying reappearance," says the magazine. It blames a "nastily divisive political climate" for the crisis and believes that India requires "energetic, active leaders, plus politicians who are ready to compromise".
'Corrupt and corroded'

Both the magazine and the pundit are right and wrong.
“Start Quote

Reformers need to be patient; there are no shortcuts in India”

The quality of India's politicians, many argue, has declined drastically, as in many parts of the world. Most of them seem to be out of sync with modern day realities - expectations have fallen so ridiculously low that an iPad carrying politician is described by the media as a modern one!

Most are also seen as greedy, corrupt and disinterested in serious reform. The increasing number of politicians with criminal records and the brazen use of money to buy party tickets and bribe voters erodes India's ailing democratic process.

It is not a happy picture. "Today the Centre is corrupt and corroded," historian Ramachandra Guha wrote recently. "There are allegedly 'democratic' politicians who abuse their oath of office and work only to enrich themselves; as well as self-described 'revolutionaries' who seek to settle arguments by the point of the gun." Only serious electoral reform can ensure a better breed of politician.
---------
Public consensus is harder to come by in an awfully unequal society where the middle class and the rich root for further opening up of the economy, while the poor want the state to invest in health and education and check corruption. The elitist biases in public policy is made easier by a poorly-informed and often unlettered electorate with low expectations.

Many would argue that India never got any magic going, so there is no question of losing it.

Consensus is painfully slow in such a society, and sometimes only a crisis can provoke the government - and the people - to bite the bullet. Reformers need to be patient; there are no shortcuts in India.


http://www.bbc.co.uk/news/world-asia-india-17537615
Riaz Haq said…
Karachi stock index KSE-100 outperforms Mumbai's Sensex in Q1/2012.

During the three-month period, the benchmark KSE-100 index posted a gain of 2,414 points, up 21 percent (20% in terms of US), according to Business Recorder.

http://www.brecorder.com/market-data/stocks-a-bonds/0/1170656/

During the same period, Mumbai's Sensex rose 12.6%, according to Marketwatch.

http://www.marketwatch.com/story/india-stocks-rise-for-week-jump-in-quarter-2012-03-30
Riaz Haq said…
Is India another illusion? asks Pierro Scaruffi of IEET:

Last year I predicted that the Chinese bubble will burst soon, and that it’s unlikely that China will become the biggest economy in the world any time soon, contrary to what most analysts predict (See The great illusion?). Now it looks like India might also disappoint, although for completely different reasons.

The closer we look, the more Indian ills look like a scary combination of European ills and American ills. Start with the budget deficit: India’s economy needs to grow frantically just to pay its debt, which is about 8.5% of GDP. Defense spending increased 10% last year and this year should grow even faster. At the same time, growth is projected to slow down to 6-7%. That sounds a lot like the problem the USA is facing with colossal defense spending that is not justified by the facts on the ground (who’s planning to invade the USA? who’s planning to invade India?)

On top of defense spending, the Indian government also spends billions to provide subsidies to the oil industry and to farmers. Just like the USA. Finally, the Indian parliament resembles the fractured and paralyzed parliaments of Italy and Belgium, in which the governing party is tamed by the tiny allies that it needs in order to claim a majority. Just like Europe, the balance sheet and ridiculous bureaucracy are scaring away foreign investors.

India is famous for a dumb and gargantuan bureaucracy, which was never truly reformed when it moved from pseudo-communism to free-market capitalism, and that bureaucracy recently has been at work to make it difficult for anybody to do business in India. (And even for tourists to visit it: India is the only country in the world that forbids tourists from reentering India for two months).

The social and political problems of India have long been ignored by the world as remote and passing nuisances.

The truth is that many more people are killed by terrorists of various factions in India than in the other emerging powers.

The truth is that India still has a caste-based system that has created incredible social injustice.

The truth is that India, unlike China, Brazil and Russia and virtually any other emerging country, is a federation of linguistically and ethnically different states, a fact that could potentially derail the union.

The truth is that it is the largest Muslim country in the world (or second largest after neighboring Pakistan), a fact that constitutes a perennial threat to its identity.

The truth is that, unlike China, Russia and Brazil, who are unlikely to go to war with any of their neighbors, India is in a constant state of alert along the border with Pakistan, a nuclear enemy.

The truth is that corruption in India is more widespread than even in Russia (see for example for example).

The truth is that this year 27 million babies will be born in India (versus 10 million in China and 4 million in the USA): India needs to create an improbable number of jobs to improve the conditions of its population, or even to keep it where it is and avoid social unrest.
The closer one looks, the less reassuring India looks as a place to invest money.


This would matter little if growth were still exponential and business opportunities were popping up everywhere. However, just like China, India is vulnerable to oil prices and to prices of commodities in general. Those prices are unlikely to come down any time soon, now that the US economy is picking up steam.

Last but not least, India may have run out of Western customers willing to offsource jobs to cheaper English-speaking countries (i.e., to India) and may have to rely on its own domestic market. That market is, in theory, huge. Alas, the World Bank estimates that 300 million of them live under the poverty line, and the others have an average salary which is below $1,000 a month


http://ieet.org/index.php/IEET/more/scaruffi20120330
Riaz Haq said…
Here's a Daily Times report on some of the German multinational companies in Pakistan:

ISLAMABAD: The German embassy in cooperation with the Pakistan German Business Forum (PGBF) and German-linked companies and institutions active in Pakistan held an exhibition titled ‘Germany on the Road’ in Multan. Germany on the Road has been designed to present the multitude of linkages between Germany and Pakistan by giving German companies, Germany-linked companies and German institutions the opportunity to display their activities in Pakistan in a concise and vivid manner. During the exhibition up-to-date information about Germany as well as appealing give-away were handed out and a buffet dinner was offered. The event was sponsored by BASF Pakistan, CEI Logistics, EXCEL Group/PrintSol, GWE German Water and Energy, KSB Pumps, Küppersbusch/Teka Pakistan, MAN Diesel Pakistan, METRO Cash and Carry Pakistan, Nordex SE Germany, SAAS Synergie/Alno and SAP Pakistan.

I am surprised that Siemens Pakistan is not at the event.

http://www.dailytimes.com.pk/default.asp?page=2012\04\01\story_1-4-2012_pg5_15
Riaz Haq said…
Here's an excerpt from a Dawn Op Ed by economist Sakib Sherani:

The estimates of the size of Pakistan’s middle class are truly astounding. Amongst the first to take a stab at this nearly a decade ago, as part of a request from a large fast-moving consumer goods (FMCG) client, I estimated the cohort to be at around 35 to 40 million, using a global definition of ‘middle class’ taking into account just one parameter — income. Later, eminent economic historian and commentator Shahid Javed Burki published his estimate in the context of the expansion of the middle class in the Musharraf years, and also arrived at a figure of around 40 million.

More recently, while preparing my presentation on ‘The Pakistan Opportunity’ for the Marketing Association of Pakistan’s flagship event MARCON 2012, I updated the figures arrived at earlier, making one crucial adjustment: for the estimated size of Pakistan’s undocumented (or, ‘black’) economy. The adjusted figure for the middle class is a staggering 70 million people, or 40 per cent of the population.
-----------
To put this number in perspective, Pakistan’s middle class is larger in size than the individual population of UK, France and Italy — and is a shade smaller than the total population of Germany. In absolute terms, it is the fourth largest middle class cohort in Asia, behind China, India and Indonesia. Affluent, educated, urbanised, and increasingly ‘globalised’, Pakistan’s middle class is not only growing, but is already a voracious consumer. The ADB report estimated total consumption spending by this group at $75bn.

This can be gauged by the furious pace of sales nationwide of cars, motorcycles, cellphones and durable goods over the past few years. Over 1.5 million motorcycles and nearly half a million cars have been sold in the country since 2008 (based on registration data), while the number of cellular subscribers has crossed over 100 million. True, despite such ‘glamorous’ numbers, Pakistan is a two-speed economy where the vulnerability of too many people has increased. Successive shocks to the economy — a severe energy crisis, unprecedented floods for two consecutive years, a fight against militancy which has gone on for several years — have all taken their toll on jobs and incomes.

However, despite these challenges, what amazes observers and commentators alike is the sheer resilience of the Pakistani nation.

Over the past few years, this resilience has come to a large extent from the performance of the rural economy, which has drawn strength from bumper crops and booming prices. The government’s intervention in the market for wheat has poured an additional several hundred billion rupees into the rural economy, propelling demand for cars, motorcycles, tractors, durable goods as well as fast-moving consumer goods (FMCG). In fact, the FMCG sector has witnessed an unprecedented boom in sales since 2008, which has defied expectations — and gravity.

Additional support for consumption has come from remittances from the Pakistani diaspora, and, in part, from the fiscal behaviour of the government which has injected several hundred billion rupees into the economy via borrowing from the central bank. From the foregoing, it is clear that the Pakistani consumerism story is not cyclical, but has structural underpinnings. Rapid urbanisation, a young, mobile and spirited population entering the work force, global connectivity via the Internet, social media and cable TV are all driving aspirations — and conspicuous consumption...


http://www.dawn.com/2012/03/23/consumption-conundrum.html
Riaz Haq said…
Here's TED blog on Peter Diamandis, the author of "Abundance":

Diamandis starts off his talk with some fast-cut clips of “crisis! Death! Disaster!” he’s collected from the last six months. The news media, he says, preferentially presents us with negative stories, because that’s what we pay attention to. And there’s a reason for that: since nothing is more important than survival, the first stop for all this awful information is the amygdala, the human early warning detection system that looks out for things that might harm us. In other words, we’re hard-wired to pay attention to the negative, dark side.

“So it’s no wonder that we’re pessimistic. it’s no wonder that people think the world is getting worse.” But Diamandis didn’t co-found Singularity University on a mere whim. From here, he swings into his more usual, optimistic mode: “We have the potential in the next three decades to create a world of abundance [the theme of Diamandis' recent book.] I’m not saying we don’t have our set of problems; we surely do,” he says. “As humans we’re far better at seeing the problems way in advance. Ultimately, we knock them down.”

Diamandis runs through some stats from the last century to show how things have improved for humankind. And he outlines some of the extraordinary advances made, particularly within the technological realm. After all: ”The rate at which technology is getting faster is itself getting faster.” And based on the likes of Moore’s Law ride some incredibly powerful technologies, not least robotics, 3D printing, artificial intelligence and nanomaterials.

Now, some stories:

Energy

Napoleon III once invited the King of Siam to dinner. Napoleon’s troops ate with silver utensils; Napoleon ate with gold utensils; the King of Siam used aluminum utensils–precisely because at that time, aluminum was the most valuable metal on the planet. It was only with electrolysis that the metal became cheap. Similar moves are happening in energy in our current times; solar energy, for instance, is now 50% of the cost of diesel in India.

Water

We talk about water wars. And yet we fight over 0.5% of the water on the planet. Diamandis talks of Dean Kamen’s Slingshot device, which can generate 100 liters clean water from any source. Coca Cola is apparently going to test this in the field soon–with a view to deploying it globally. Given how much water that company consumes, this is a big deal. Or, as Diamandis puts it, “this is the kind of innovation empowered by this technology that exists today.”

Health

Diamandis talks of the recently-announced Qualcomm Tricorder X Prize, challenging teams to incorporate medical diagnostic tools into a mobile device. “Imagine this device in the middle of the developing world,” he says, starrily. What of the potential of someone swabbing an unrecognized disease, calling it into the CDC and preventing a pandemic? Heady stuff.

Population

“The biggest protection against the population explosion is making the world educated and healthy,” says Diamandis, detailing that 5 billion people will be connected online by 2020. “What will these people want and desire?” And why wouldn’t that cause an economic injection rather than an economic shutdown? Why won’t they be healthier through the use of the Tricorder, better educated because of the likes of Khan Academy or using 3d printing to be more productive than ever before?


http://blog.ted.com/2012/02/28/creating-a-world-of-abundance-peter-diamandis-at-ted2012/
Riaz Haq said…
Here's a report about growth of B2B transactions led by tradekey.com in Pakistan:

The global B2B e-commerce transactions have crossed US$ 12.4 trillion milestone in 2012 which was just US$ 3.4 trillion in 2005. If Pakistani businesses explore the online business opportunities, Pakistan has enormous potential to increase its exports many fold within few years.

These views were expressed by Hafiz Saqif, head of global business expansion of TradeKey while addressing the MIT enterprise forum Pakistan, at IBA Campus. TradeKey, a Pakistani B2B online portal which is ranked 3rd largest business to business website in the world, facilitates over US$ 100 million import/export transactions every month through its website.

Tradekey claims that world over the online trade business is touching new heights but Pakistan doesn’t have any substantial share in online trade. Internet is the future of Pakistani economy and if we utilize the full potential of opportunities available on the internet, country can easily accelerate its exports many fold.

The senior TradeKey official emphasized on the need to utilize universities and academia in developing resources that can explore the true strength of online businesses. He also shared the next year plan of TradeKey in reviving Pakistani exports by laying a comprehensive corporate club program that smartly integrate resources from the manufacturing industry and teams them up with universities students having online exposure. This, Tradekey claims, will not only reduce the gap between the industry and the online world but will also develop a pool of skilled resources that can take Pakistani export to the next level.

TradeKey facilitates importers and exporters worldwide by providing them with the opportunity to interact with the businesses of their interest around the world through its website. TradeKey is Pakistan’s first and only Business to Business website and has its major clientele in US and China. Over US$ 100 million buying and selling that takes place through TradeKey website is mainly from US, China and Europe.


http://www.thenewstribe.com/2012/04/03/pakistan-crosses-global-b2b-e-commerce-transactions-of-12-4-trillion-in-2012/#.T3o298XnI14

http://www.tradekey.com/
Riaz Haq said…
Here's an Express Tribune story on Tradekey, a B2B company based in Karachi:

You would never think that a company that was giving Alibaba.com – the world’s largest business-to-business portal – a run for its money around the world was based out of Karachi and yet there it is. Tucked away in an office suite on Sharae Faisal, the global headquarters of Tradekey.com look rather unremarkable, until you start asking the executives what they have achieved and what they plan on doing next.

“We want to be one of the world’s biggest companies,” says Junaid Mansoor, the founder and CEO of Tradekey, in a rather matter-of-fact tone of voice. “We want to be in businesses that affect the largest number of people.”

Tradekey.com, the world’s third largest B2B portal, is certainly an impressive beginning by the 32-year-old Mansoor, though by no means his first venture into the world of web-based start-ups. The serial entrepreneur created his first company when he was just 15 years old: a web-based e-mail service that promised to share its revenues with its users. (The site – moneywithmail.com – went bust when the dotcom bubble burst in 2001).

Tradekey.com has about 5.8 million members, of whom only about 5,000 have paid subscriptions, the source of the bulk of the company’s revenues, though the company also offers advertising services. While it does not release financial information about itself, based on the company’s fee for its two levels of premium services, Tradekey’s revenues are estimated to exceed $3 million a year.

Crucially from the company’s perspective, however, it has been growing at a rate of more than 86% a year (Tradekey did not offer a precise number). According to Mansoor, an analysis conducted by a third-party expert valued the company at around $700 million......


http://tribune.com.pk/story/275463/tradekey-a-pakistani-david-taking-on-a-chinese-goliath/
Riaz Haq said…
Here's a Pak Observer story on UK-Pakistan trade:

British Deputy High Commissioner, Alison Blake says relations between her country and Pakistan have always been cordial and continued to grow.

In an exclusive interview with Pakistan Observer she said trade between the two countries will double in three years. More than 100 British companies are operating in Pakistan and more intend to join them.

She said “the hall-mark of our foreign policy for Pakistan is ‘people to people’ approach. “This is the way to deepen relations between the two nations,” she observed.

Blake said: “The UK and Pakistan are deeply connected. Yet not many people know about the connections in terms of people, trade, culture, education and development that form our unbreakable partnership”.

She spoke of key facts regarding Pakistan-UK relations: The UK is home to the largest overseas Pakistani community, approximately 1.2 million today. There are 30,000 Pakistanis studying in the UK at any one time. British Pakistanis are heavily involved in all levels of British politics. From MPs in the House of Commons to Peers in the House of Lords including Baron Nazir Ahmed and Baroness Warsi.

On bilateral trade she said: UK & Pakistan have an ambitious target to boost bilateral trade in goods and services from the 2010 level of £2.0 billion to at least £2.5 billion by 2015. The UK is the top destination in Europe for exports from Pakistan. Pakistan’s exports to the UK rose by 17% from Jan to Oct 2011, with particularly strong growth in textiles. UK is the largest European investor in Pakistan. UK is Pakistan’s strongest advocate for market access to the EU. UK is the 3rd largest overseas investor in Pakistan with 13.46% market share (FY 2009-10). Over 100 British Companies operate in Pakistan with major interests in the Pharmaceutical, Financial Services, Energy and Retail sectors. On education, the British Deputy High Commissioner said: There are 30,000 Pakistanis studying in the UK at any one time. There are more people studying for O and A levels in Pakistan – some 170,000 of them - more than anywhere else outside of the UK. Pakistan is British Council’s largest overseas market for exams. UKaid will spend £650 million on education in Pakistan over the next 4 years. The UKaid funds will help to get more than four million children into school. UKaid will recruit and train an additional 90,000 teachers in Pakistan. UKaid will supply more than six million textbooks sets. UKaid will construct or rehabilitate more than 43,000 classrooms in Pakistan. Alison Blake said that the United Kingdom is home to the largest overseas Pakistani community. The population of British Pakistanis has grown from about 10,000 in 1951 to approximately 1.2 million today. She said: British Pakistanis are heavily involved in all levels of British politics. From MPs in the House of Commons including Sadiq Khan (MP for Tooting) Khalid Mahmood (MP for Birmingham Perry Barr) and Mohammad Sarwar (MP for Glasgow Central) to Peers in the House of Lords including Baron Nazir Ahmed and Baroness Warsi. Baroness Warsi is also a current Cabinet member”.


http://pakobserver.net/detailnews.asp?id=148206
Riaz Haq said…
Here's a Reuters' report on Pak shares and currency markets:

(Reuters) - Pakistan stocks rose almost 1.8 percent to a new four-year high on Wednesday, led by blue chips on hopes of progress on capital gains tax (CGT) reforms, dealers said.

The Karachi Stock Exchange (KSE) benchmark 100-share index ended up 1.79 percent, or 244.83 points, at 13,945.30 points, its highest close since May 2008.

Volume rose to 409.3 million shares, compared with 318.14 million shares traded on Tuesday.

"Investors remained interested in blue-chip stocks as volumes climbed to 9 billion rupees ($99 million)," said Samar Iqbal, a dealer at Topline Securities Ltd.

Among heavyweight companies, the National Bank of Pakistan ended 5 percent higher at 49.40 rupees, Pakistan Telecommunication Co Ltd closed up nearly 1 percent at 12.61 rupees and Oil and Gas Development Co Ltd rose 2.5 percent to 168.15 rupees.

In the currency market, the rupee ended firmer at 90.30/35 to the dollar, compared with Tuesday's close of 90.49/54 to the dollar amid a lack of import payments.

The rupee has also been supported recently by remittances from overseas Pakistanis, rising by nearly a quarter to $8.59 billion in the first eight months of the 2011/12 fiscal year, compared with $6.96 billion in the 2010/11 period.

In February, remittances totaled $1.16 billion.

In the money market, overnight rates fell to 9.10 percent, compared with the previous day's close of 9.75 percent amid increased liquidity in the interbank market.


http://uk.reuters.com/article/2012/04/04/financial-pakistan-idUKL3E8F450L20120404
Riaz Haq said…
Here's a Businessweek story on Pakistan's informal economy:

It’s early morning in Karachi, Pakistan’s biggest city, and Muhammad Nasir is outside his makeshift shelter of palm leaves, rags, and bamboo, washing up after breakfast. He uses water stolen from a nearby supply pipe that belongs to the local water utility. The 17-year-old bids farewell to his mother, an unlicensed midwife, and walks to his tire-repair shop, an open-air stand in a residential area with a table of tools and a wooden bench. He checks to make sure the electricity he’s drawing illegally from the overhead power line is on so he can run his tire pump. Then he sends 10-year-old Abid, one of his two employees, along with 12-year-old Irfan, to get tea from a nearby shop.

Nasir’s business, his home, his power and water supply, and even the cup of tea Abid brings him don’t exist in Pakistan’s official figures. They’re part of another economy that doesn’t pay taxes or heed regulations. It probably employs more than three quarters of the nation’s 54 million workers and is worth as much as 50 percent of Pakistan’s 18 trillion rupee ($200 billion) official gross domestic product. And while the documented economy had its smallest expansion in a decade at 2.4 percent in the year ended June 2011, soaring demand for cars, cement for houses, and other goods shows the underground market is thriving.
----------
the nation’s purchasing power is more than estimated, says Nadeem Naqvi, managing director of the Karachi Stock Exchange. Rising crop prices have pumped an extra 1 trillion rupees into the rural economy in the past four years, most of it undocumented, Naqvi says. He estimates agriculture may account for as much as 35 percent of GDP, instead of the 21 percent reported.

Evidence of consumer demand is everywhere as new shopping malls and restaurants in Karachi are filled to capacity. Car sales rose 14 percent in February from a year earlier, as more people could afford a Toyota Corolla or Suzuki Mehran (a small hatchback), according to the Pakistan Automotive Manufacturers Association. More than half a million motorbikes hit the road in the eight months ended February, a 5 percent increase, perhaps a sign that Nasir’s tire business has a bright future. ..


http://www.businessweek.com/articles/2012-04-05/the-secret-strength-of-pakistans-economy#p2
Riaz Haq said…
Here's an excerpt from Express Tribune on FBR's efforts to collect taxes:

In an effort to document black economy in phases, the government has decided to gradually enforce the condition of declaring national tax numbers or identity card numbers at the time of bulk purchases.

In this regard, the Federal Board of Revenue (FBR) has amended existing rules and added a chapter to Sales Tax Rules of 2006. According to a statutory regulatory order issued here on Friday, the condition will gradually be enforced from March to July this year.

In the first phase beginning March 1, all manufacturers, importers and exporters have been asked to make minimum 60% of their sales to identifiable persons having either sales tax registration number, national tax number (NTN) or computerised national identity card (CNIC).

While there are no official estimates of the size of the black economy, independent experts and former tax officials put the figure in the range of 50 to 60% of the total size of formal economy. For the current fiscal year, the projected size of national economy is Rs21.04 trillion, according to the finance ministry.

The government had earlier tried to enforce the NTN/CNIC condition from July 2011 but fierce opposition from businesses forced it to defer the plan to January 2012. Now, it has decided to fully implement the much talked about condition by July this year.

An official of the FBR said the purpose of gradual implementation was to facilitate the industry and now this condition would also be applied to the sugar industry, which had earlier been granted exemption.

However, retail supplies will remain exempted. According to the notification, manufacturers-cum-retailers and importers-cum-retailers making retail sales to unregistered persons will not be required to provide CNIC number or NTN to the extent of retail sales, which will be separately shown in sales tax return.

The notification further states that provisions of the newly added chapter will be applied to registered manufacturers, importers and exporters while making taxable, dutiable or exempted supplies to unregistered persons.

The FBR has asked all registered manufacturers, importers and exporters to issue an invoice containing NTN or CNIC number of the buyers. The sellers will be bound to declare 60% sales to identifiable persons in March. In April, the ratio will increase to 70%, in May 80%, June 90% and in July all sales will be made to identifiable persons only.

Currently, only 146,000 traders have sales tax registration numbers while less than 100,000 regularly file returns.

Penalties

The notification states that if any registered person gives an NTN or CNIC number, which is not verified from the FBR’s database or database of the National Database and Registration Authority (NADRA), such person will have to pay a penalty of Rs5,000 or 3 per cent of the amount of tax involved, whichever is higher. The amount would be considered as arrears against the supplier.

Furthermore, all payments of the amount for transactions will be made by the buyers through bank instruments.


http://tribune.com.pk/story/341397/netting-black-economy-manufacturers-to-identify-bulk-purchasers/
Riaz Haq said…
Here's a Wall Street Journal India Realtime piece:

Justice Markandey Katju, a former Supreme Court Justice turned chairman of the Press Council of India, has done it again. Already known for his recent views of the journalists he oversees – they “are of a very poor intellectual level” – he has widened the focus of his condemnation to include approximately 1.08 billion anonymous Indians.

That’s our calculation based on India’s estimated total population, but we made it after Mr. Katju stated in an Indian Express op-ed Monday that he was presenting us with an “unpleasant truth: 90 per cent of Indians are fools.” He was humble enough to attribute a “great defect” to himself, too, though it was one couched in virtue: “ I cannot remain silent when I see my country going downhill. Even if others are deaf and dumb, I am not. So I will speak out.”

And speak out he did.

His first example for reaching his controversial conclusion: “When our people go to vote in elections, 90 per cent vote on the basis of caste or community, not the merits of the candidate. That is why Phoolan Devi, a known dacoit-cum-murderer, was elected to Parliament — because she belonged to a backward caste that had a large number of voters in that constituency.”

Example no. 2: “90 per cent Indians believe in astrology, which is pure superstition and humbug. Even a little common sense tells us that the movements of stars and planets have nothing to do with our lives. Yet, TV channels showing astrology have high TRP ratings.”

Example no. 3: “Cricket has been turned into a religion by our corporatised media, and most people lap it up like opium. The real problems facing 80 per cent of the people are socio-economic — poverty, unemployment, malnourishment, price rise, lack of healthcare, education, housing etc.”

Example no. 4: “I had criticised the media hype around Dev Anand’s death at a time when 47 farmers in India were committing suicide on an average every day for the last 15 years… In my opinion, Dev Anand’s films transported the minds of poor people to a world of make-believe, like a hill station where Dev Anand was romancing some girl.”

Example no. 5: “During the recent Anna Hazare agitation in Delhi, the media hyped the event as a solution to the problem of corruption. In reality it was, as Shakespeare said in Macbeth, “…a tale/ Told by an idiot, full of sound and fury,/ Signifying nothing.”

Mr. Katju says his intention behind his harsh critique is very noble. “When I called 90 per cent of them fools my intention was not to harm them, rather it was just the contrary. I want to see Indians prosper, I want poverty and unemployment abolished, I want the standard of living of the 80 per cent poor Indians to rise so that they get decent lives,” he writes....


http://blogs.wsj.com/indiarealtime/2012/04/09/india-a-nation-of-more-than-1-billion-fools/
Riaz Haq said…
Here's a News report on rising sales of cars, motorcycles and tractors in Pakistan:

Sales of automobiles in the first nine months (July-March) of the current fiscal year increased 15 percent to 128,576 units, compared to 111,852 units same period last year, according to the data released by the Pakistan Automotive Manufacturers Association (PAMA).



According to the data, in the third quarter (Jan.-March) of this year, automobile sales increased 7 percent to 46,632 units from 43,753 units in the correspondent quarter last year. When compared with the second quarter of this year, sales in the third quarter showed an impressive growth of 22 percent.



Pak Suzuki Motor Company (PSMC) continued to depict strong sales showing a growth of 32 percent in the July-March period to 81,360 units compared with 61,693 units in the same period last year. Analysts attribute strong growth to the yellow cab scheme announced by the Punjab government. In March 2012 alone, PSMC sales stood at 11,198 units, up 16 percent from same month last year and 12 percent from February 2012.



On the other hand, Indus Motor Company sales growth remained subdued during the period under review. The company sold a total of 38,858 units compared to 37,259 units in the same period last year, up by 4 percent. In the third quarter, the company sold 14,792 units against 14,851 units in the same period last year.



Samina Kanji, an analyst at BMA Research, a 15 percent year-on-year growth in auto sales is primarily due to the yellow cab scheme of the Punjab government. On the other hand, motorcycles and three wheelers sales increased on month-on-month basis and sales in March stood at 70,671 units as compared to 65,011 an increase of 5,660 units, the data showed. Total sales of farm tractors decline to 6,229 units as compared to previous month sales of 8,906 units. Sales of trucks and buses sales in March stood at 379 units as compared to 304 units in February 2012.

http://www.thenews.com.pk/Todays-News-3-102452-Auto-sales-show-15pc-growth-in-nine-months
Riaz Haq said…
Pakistan’s teledensity crosses 70pc mark, reports Daily Times:

KARACHI: Teledensity in Pakistan crossed the 70 percent mark by end of February 2012 mainly on the growing subscriptions of cellular mobile phone companies in urban and rural areas of the country, Pakistan Telecommunication Authority (PTA) data said on Saturday.

The teledensity of cellular phone stood at 67.2 percent; wireless sector teledensity reached at 1.8 percent and landline teledensity settled at 1.6 percent, making overall teledensity at 70.6 percent.

Pakistan’s teledensity is the second highest in South Asia after India that reached 78.10 percent. It remained on top among the region till January 2011 with modest annual growth, however corrective measures and saturated markets slowed down its growth.

The teledensity is defined as the number of customers per 100 people. Hence it is roughly said that 70 percent of the population own and avail telephony services through different technologies.

The mobile phone connection has risen to 116 million on different networks, constituting the lion’s share in the field of telecom sector in terms of subscribers and their technology selection.

Similarly, the wireless phone companies have increased their number of connections to 2.7 million by February whereas the landline connections decreased to stand at 2.9 million in the country.

In the cellular sector, Mobilink grabbed the largest subscribers’ base with 35.2 million. It was followed by Telenor and Ufone with 28.8 million and 22.4 million connections, respectively. The subscribers’ number of Zong and Warid stood at 14.9 million and 14.6 million users, respectively.

Analysts in the telecom sector said that the growth in cellular subscribers’ base showed the penetration of the mobile phone operators in the rural and small areas besides the metropolis.

They said that mobile phone users of multiple SIMs have been on the rise for availing on-net calls and SMS packages of different networks for affordability and increasing services utility.

Besides, there are millions of connections inactive for months but the cellular operators try to reactivate them by offering free balance to subscribers. In this regard, the cellular operators have introduced several prize schemes to attract new and retaining customers to maintain their growing base.

In the wireless sector, Pakistan Telecommunication Company Ltd (PTCL) and TeleCard are market leaders with 1.43 million and 0.743 million, respectively. In the landline sector, PTCL and NTC are market leaders with 2.7 million and 104 million connections, respectively.

The wireless operators’ competitive packages in the limited cities witnessed gradual growth particularly on daily consumption against fixed charges. On the contrary, the landline sector witnessed constant decline in connections on the services issues, high tariff and line rent.


http://www.dailytimes.com.pk/default.asp?page=2012\04\15\story_15-4-2012_pg5_8

http://www.pta.gov.pk/index.php?option=com_content&task=view&id=269&Itemid=658
Riaz Haq said…
Here's a WSJ Op Ed by Mike Boskin on India-Pakistan trade:

With their sizable nuclear arsenals and tensions over territory, water and terrorism, India and Pakistan pose staggering risks to South Asia. But they also offer outsize economic potential for their citizens, the region and the world. Leaders in both nations seeking peace, stability and a prosperous future should seize on free trade as the best way to further these goals. The time has come for an India-Pakistan free trade agreement.

Free trade would substantially increase trade and investment flows, incomes and employment, and it would give the citizens of both countries a far greater stake in the other's success. Economists of varying backgrounds agree that free trade is a positive-sum economic activity for all involved. In the seven years following Nafta, trade among the United States, Canada and Mexico tripled and real wages rose in each country.

The International Monetary Fund reports that direct trade between Pakistan and India was a pitifully small $2.7 billion in 2010, just two-thirds of India's trade with far smaller Sri Lanka. Remarkably, Pakistan's exports to Bangladesh are larger than those to India, though Bangladesh's economy is only 6% the size of India's. South Asia doesn't have enough trade.

The tool economists use to analyze bilateral trade, called the "gravity model," suggests trade should be proportional to the states' GDP and inversely proportional to the distance between them (a proxy for transportation costs). India's GDP of over $4 trillion is roughly nine times that of Pakistan's.

Estimates based on gravity models by Amitra Batra of Nehru University and Mohsin Khan of the Peterson Institute suggest that Pakistan-India trade could be at least 20 times larger with a bilateral free trade agreement than it is today. That's a staggering expansion of over $50 billion that would raise real wages in both countries.
-----------
The obstacles to such an agreement range from cross-border security concerns to old-fashioned protectionism. The perceived economic vulnerability to free trade of some domestic firms, sectors and regions can be addressed with transition relief such as worker retraining and tariff phase-in periods.

Realistically, it will take several years to negotiate and implement a free trade agreement between India and Pakistan. Even with strong political leadership, negotiating Nafta took four years.

Still, Pakistan President Asif Ali Zardari and Indian Prime Minister Manmohan Singh spoke of the importance of trade in their brief meeting earlier this month in New Delhi. Both men appear to understand that trade liberalization is economically necessary and will diffuse tensions between these two nuclear nations. The next step is to initiate high-level discussions of a free trade agreement.


http://online.wsj.com/article/SB10001424052702304444604577338170624567022.html
Riaz Haq said…
Here are excerpts of a Marketwatch commentary on India's "fading star":

...China’s economic growth has slowed to its lowest rate in three years. Brazil’s economic growth has fallen to under 3% from around 7.5%. Russia’s economy is heavily dependent on oil and energy prices.

And India? It seems destined to never fulfill its economic potential.
-----------
Over the last two decades, India’s economy has almost quadrupled in size, growing at an average rate of about 7% per annum. India’s GDP rose by 43% between 2007 and 2012, slightly less than China’s, which increased by 56%, but much faster than developed economies that grew only 2%.

In late 2011, the Indian government’s 12th five-year plan forecast growth of 9% between 2012 and 2017. Yet by early 2012, India’s growth had slowed to around 6%, high by the standards of developed countries but well below the levels required to maintain economic momentum and improve the living standards of its citizens.
----------
ncreasingly, India’s problems — poor public finances, weak international position, structurally flawed businesses, poor infrastructure, corruption and political atrophy — threaten to overwhelm its potential.

In recent years, India has consistently run a public sector deficit of 9%-10% of GDP, including the state governments and off-balance-sheet items. The problem of large budget deficits is compounded by one major cause — poorly targeted subsidies for fertilizer, food and petroleum which may amount to as much as 9% of GDP.

In March 2012, India brought down a budget that forecasted a fiscal deficit of 5.9%, well above its previous fiscal deficit target of 4.6%. India’s strong rate of recent growth (an average rate of 14% between 2004-05 and 2009-10) made large deficits, on the order of 10 % of GDP, relatively sustainable. Slowing growth will increasingly constrain India’s ability to run continuing large deficits.

India’s government debt is around 70% of GDP. As its debt is denominated in rupees and sold domestically, India faces no immediate financing difficulty. Instead, the government’s heavy borrowing requirements crowds out private business.

But India is running a current account deficit of over 3% of GDP, and trending higher — among the highest in the G-20. The cause is slowing exports as a result of weakness in India’s trading partners, while imports, mainly non-discretionary purchases of commodities and oil, have increased. India imports around 75% of its crude oil.
-----------
Slowing growth, tighter credit and other economic problems have increased corporate defaults to the highest level in 10 years. Non-performing loans are now around 2.5%-3% of bank assets. Analysts estimate that the major banks have around $25 billion in bad loans, an amount which is increasing.

The Indian government has already moved to recapitalize state-owned banks to ensure their capital position. In the process, the budget deficit and the government borrowing requirements have come under increasing pressure.

India is plagued by inadequate infrastructure. In critical sectors like power, transport and utilities, there are significant shortages. Yet political pressure to keep utility costs low has impeded investment.

In the electricity sector, for example, state-owned utilities that purchase power from producers and sell to residential users have incurred large losses. State governments are unwilling to raise retail consumer rates despite increases in the price that power producers charge the utilities. Attempts to increase rail ticket prices have failed. The Railways Minister’s own party opposed the proposal and demanded he be removed from his job. ...


http://www.marketwatch.com/story/indias-economic-star-is-fading-2012-04-19?link=MW_story_popular
Riaz Haq said…
Here are excerpts of a WSJ Op Ed by Pak finance minister Dr. Shaikh:

For more than a decade, Pakistan has partnered with the United States to combat the extremism and militancy that threatens the stability of our region and the world. This fight has taken an enormous human toll on our people, with over 37,000 civilians killed and more than 5,000 police and soldiers lost. In addition to the enormous human tragedy, this struggle has directly and negatively impacted our economy and the development of our nation.

We have witnessed the loss of more than $100 billion of foreign investment, a tightening of our financial markets, and a freeze on the progress of many social programs. But that trend has now dramatically reversed, and there is an emerging story of a new Pakistan strategically located at the crossroads of the world's most dynamic economies, ready to take its place as a critical emerging market.

We have a consumer base of more than 170 million, a young and educated work force, and a culture of entrepreneurship. The opportunity for our economy to grow is immense. People in the West may not be aware, but the positive change that is sweeping Pakistan as we speak has profound economic and political consequences for the future.
----------
...over the last four years, the Pakistani government has taken difficult but important steps to get our economy back on track. This year real growth in gross domestic product is likely to reach 4%, nearly double last year's rate. During the first nine months of fiscal year 2012, tax collections have surged by 24%, remittances from Pakistanis abroad by 21% (to $9.7 billion), and our exports by 5.5% over last year's base of $25 billion.

Inflation and consumer prices were down in March, easing pressure on small and medium-size companies. The Karachi Stock Exchange KSE100 Index now stands at 14,000, having been at 6,000 in 2008. Pakistan's foreign exchange reserves increased to $18 billion in 2011, the largest in history, and our financial obligations are declining. In 2015, Pakistan's annual repayment to the International Monetary Fund will be a quarter of its 2012 obligation.

Six months ago, Pakistan granted Most Favored Nation trading status to India, a paradigm-shifting policy change driven by the business sectors on both sides of the border. With its complete implementation and the concomitant reduction of India's nontariff barriers, this decision has the power to reconfigure the region's economic landscape and dramatically increase its stability. Today, bilateral trade between India and Pakistan stands at $2.7 billion per year. Business chambers in both countries predict that figure could quadruple to $10 billion by 2015.
----------
Investing in any emerging market has its challenges, but Pakistan is poised for growth. For the first time in our history, a democratically elected government will complete a full five-year term next year. Our judiciary is independent and upholding the rule of law. Our military is working with our civilian government to protect our borders and keep militancy and extremism in check. Our civil society is expanding, and our media are robust and uncensored.

Business contracts have been consistently honored and the return on investment for many investors has been enormous. And though the last decade has taken a toll on our economy and our infrastructure, our resilience is evident and turning the tide. We are building infrastructure and expanding our energy capacity, we are modernizing our agriculture sector, we are a leader in telephone access, our textile sector is one of the largest in the region, and our information-technology companies are some of the best in the world.


http://online.wsj.com/article/SB10001424052702303592404577363903670333254.html
Riaz Haq said…
Here are some excepts of a BBC Op Ed on Indian economy titled "Five things wrong with India's economy":

After several official predictions that India would grow by 7-8% in 2011-12, the finance minister finally admitted in his Budget 2012 speech that the growth would be 6.9%.

The actual figure may be lower at 6.5%, thanks to the statistical error in sugar production, which dragged down January's industrial production growth figure from 6.8% to 1.1%.

Although ratings agency Standard and Poor's estimate for 2012-13 is 5% or above, Indian economists feel they won't be surprised if the economy grows by just 4%.

"If things remain the way they are, in terms of policy decisions, investments and sentiments, I would go to the extent that the figure may be 3%," says a senior economist with a leading business association.
--------
Wholesale price inflation, which is under 7%, could increase to 9-10% over the next few months.

Food inflation is still high at double-digit levels, and any hike in fuel (petrol and diesel) prices in the near future will spur inflation.

A combination of low growth and high inflation, or near-stagflation, would be India's worst economic nightmare come true.
-------------
In 2011-12, the fiscal deficit zoomed from a projected 4.6% of GDP to 5.9%. Although Budget 2012 predicted it would come down to 5.1% in 2012-13, most economists remain sceptical.

Low growth rates, lower-than-estimated government revenues, and higher-than-expected expenditures, especially on welfare schemes for rural employment and the right to food, may force the deficit to go up in 2012-13, as happened in the previous financial year.

Although exports grew by 20% in 2011-12, imports rose at a faster pace, and the trade deficit went up to $185 billion, the highest ever in the country's history.

Since August 2011, foreign exchange reserves have dipped from $322bn to $293bn due to the higher trade deficit and other foreign exchange outflows.
-----------
Coalition compulsions, a united opposition and corruption allegations have forced the government to backtrack on key economic reforms, including foreign direct investment (FDI) in multi-brand organised retail.
--------------
In 2011-12, the domestic private sector was wary of huge investment commitments; many firms delayed or postponed plans to invest in expansion or building new factories.

An April 2012 overview of the Reserve Bank of India (RBI) stated that "consultations with industry and banks suggest that new project investment continue to be sluggish"
-----------



http://www.bbc.co.uk/news/world-asia-india-17891946
Riaz Haq said…
Here are excepts of an interview of Elliot Theorist Mark Galasiewski who's bullish on Pakistan:

To answer your question, there are various ways to make long-term investment decisions. For example, Warren Buffett has shown that picking individual stocks can provide good returns over time. But it's a very labor-intensive and time-consuming process, to research companies thoroughly enough to have the kind of conviction that he does. And his “buy and hold” strategy means that he suffers significant drawdowns in his portfolio at times -- like during the 2007-2009 crash.

Elliott wave analysis gives you the opportunity to make long-term bets with a similar conviction -- but with a fraction of the elbow grease. Instead of pouring over hundreds of quarterly reports and legal documents, you look for Elliott wave patterns in the charts of market indexes. Those patterns reflect investors' collective bias, bullish or bearish. (I won't go into details of why this is so; our Club EWI has tons of free reports explaining the mechanics of the Elliott Wave Principle.)

So, knowing what part of the Elliott wave pattern your market is in, you know how the pattern should progress from there, ideally. And that gives you a probabilistic forecast for the trend. It doesn't work 100% of the time (what does), but our subscribers remember more than one successful forecast we've made using Elliott waves.

For example, on March 23, 2009 -- at the time when almost no one felt bullish -- we issued a special report to our subscribers forecasting a multi-year bull market in Indian stocks. Two weeks later, we identified three more markets in the region -- Pakistan, Sri Lanka, and Indonesia -- that we believed were also likely to enjoy an "Indian Ocean Renaissance."

India, Pakistan, Sri Lanka, Indonesia have all since generated some of the best returns among global stock markets. Without knowledge of the Elliott Wave Principle, it would have been difficult to forecast the boom -- especially given the dismal news events at the time. Do you remember the headlines in early 2009?

The world was engulfed by the global financial crisis, and most people believed the worst was still ahead. The currencies of India, Pakistan, Sri Lanka, and Indonesia had collapsed. Pakistan and India were on the brink of conflict over the Mumbai terrorist attacks of late 2008. A civil war was still raging in Sri Lanka. Who would turn bullish on stock under those "fundamental" conditions? We did, and only because Elliott wave patterns in the price charts of those four markets told us to "buy."

And by the way, the terrible conditions in India, Pakistan and Sri Lanka mostly reversed along with the market rally over the next year.
---------
The Wave Principle is how the market works. Financial markets are non-rational and counter-intuitive. Investing according to conventional assumptions eventually leads to financial ruin, since the market too often does the opposite of what most people expect.

Even thinking contrarily is insufficient, because sometimes it’s necessary to run with the herd. But Elliott wave analysis helps you to determine which psychological stance is most appropriate at any given time. Often, the news at the time would be suggesting you do the opposite.


http://www.elliottwave.com/freeupdates/archives/printer/2012/04/26/India,-Pakistan,-Sri-Lanka,-Indonesia-How-Elliott-Wave-Analysis-Turned-BULLISH-When-Few-Dared.-Part-.aspx
Riaz Haq said…
Here's a Reuters' report on KSE's record close on May 4, 2012:

May 4 (Reuters) - Continued buying by foreign investors and expectations of strong corporate performance by heavily-weighted companies boosted local confidence in the Karachi Stock Exchange, analysts said, leading it to close at its highest level since May 2008.

Foreign investors bought shares worth a net $19,569,904 on Friday according to the National Clearing Company of Pakistan.

The Karachi Stock Exchange (KSE) benchmark 100-share index closed 1.33 percent, or 192.36 points, higher at 14612.28 points, with a volume of 240.9 million shares. The market hit an intra-day high of 14,628.96, and posted its highest close since May 5, 2008 when the index closed at 14,673.13.

"The expectation of good corporate earnings and consistent buying by foreign investors combined to keep the market bullish," said Atif Zafar, a research analyst at the JS Global financial services company.

Among the heavyweights, Pakistan Telecommunication Company closed 6.93 percent higher at 15.42 rupees.

In the currency market, the Pakistani rupee closed almost flat at 90.76/78 to the dollar, compared with Thursday's close of 90.72/77. The rupee has been supported by remittances, which rose 21.45 percent to $9.73 billion in the first nine months of the 2011/12 fiscal year, compared with $8.02 billion in the same period last year.

In March, remittances totaled $1.14 billion.


http://www.reuters.com/article/2012/05/04/financial-pakistan-idUSL4E8G45CI20120504
Riaz Haq said…
Here's Pak Observer report on South Korean investment in Pakistan:

Ambassador of South Korea, Choong Joo Choihas has said that Tuwairqi Steel Mill (TSML) potentially rich to serve as a catalyst for industrial growth in Pakistan.

During a visit to TSML, the Korean diplomat said “South Korean steel giant POSCO, has so far invested US$ 15 million in this project, and contemplating to invest more. Owing to the strategic geographical location of Pakistan, in central and south Asia, this joint venture appears to be vital initiative in the global business operations of POSCO,” he said.

Choong Joo also said that South Korea is willing to invest in different sectors, particularly steel sector, which offers huge growth opportunities spurred by government’s investment-friendly policies

He said, that scores of South Korean companies are operating in energy, petrochemical and infrastructure industries, while many more have plans to invest in future, provided law and order situation improves in Pakistan. He further informed, that around 10,000 workers from Pakistan are currently serving in Korea.

Young-Ho Yoo, the Resident Director of POSCO said that the new plant is now on the verge of completion and is expected to commence operations by the end of the second half of the current year. “After completion of the first phase, we are looking forward to examine the feasibility for the second and third phase of the project, as its forward and backward integration,” he remarked.

Earlier, Zaigham Adil Rizvi, Director (Projects), TSML gave a detailed presentation about the project and shared statistics about the global steel industry. “There is a consistent growth in the production of DRI over the years, owing to environment-friendly production process and consistent quality of the product,” he said.

He was of the view that currently, Pakistan was among the countries that relied mostly on imports, when it comes to heavy mechanical structures and engineering goods. “By producing high-quality steel within Pakistan, we can manufacture such equipment locally by value addition, with the help of downstream industries,” he concluded.

Tuwairqi Steel Mills Limited (TSML) is Pakistan’s first private sector integrated environment-friendly steel manufacturing project of Al Tuwairqi Holding.

The plant spreads over an area of 220 acres at Port Qasim, Karachi and employs the world’s most advanced DRI (Direct Reduction of Iron) technology of the MIDREX process, owned by Kobe Steel of Japan. The first phase of the project, that constitutes a DRI plant, to produce 1. 28 million tons of high-quality DRI, is now on the verge of completion.

POSCO is the world’s third-largest steel maker, by market value, and Asia’s most profitable steelmaker. It has been the bedrock of Korea’s industrial development over the past 40 years. The Korean shipbuilding and automobile industries primarily are dependent on POSCO for their steel requirements. POSCO produces some 33.7 million tons of steel products each year. Currently, POSCO ships those products to over 60 countries around the globe, satisfying some of the world’s most quality-sensitive manufactures.


http://pakobserver.net/detailnews.asp?id=153766
Riaz Haq said…
Here's a Business Line story on India's bills coming due:

A rapidly depreciating rupee, dipping foreign exchange reserves and strong financial links with the Euro Zone are pushing India against the wall. The over 20 per cent depreciation of the rupee against the dollar in the last one year has hugely increased the repayment burden of Indian companies.

According to the Bank for International Settlements' (BIS) preliminary data for December 2011, international claims on India, payable within the next one year, are $137 billion.. This is 60 per cent of the total claims of overseas banks on India in non-rupee currencies. This can eat up one half of the $293-billion foreign exchange reserves that India now has. European banks account for over 40 per cent of India's total foreign dues. At $132 billion, this is twice India's liabilities towards the US.

But leaving out the UK, India's Euro Zone exposure is about $60 billion. That is close to 3.4 per cent of India's GDP. Any full-blown crisis in Greece could spill over to the other European nations, posing a risk of capital flight from India.

The immediate impact of capital flight and the depreciating rupee would be more pressure on domestic liquidity, says Ms Sonal Varma, Executive Director and India Economist at Nomura. That also means a higher risk of interest rates moving upwards.

International claims, other than rupee-denominated ones, include trade credit and other borrowings. The data on international claims from the BIS, roughly tally with the RBI's data on non-rupee external debt.


http://www.thehindubusinessline.com/industry-and-economy/article3429540.ece
Riaz Haq said…
Here's Bloomberg on worsening imbalances in India:

Indian Finance Minister Pranab Mukherjee missed his budget-deficit target by the most in three years and announced a 12 percent increase in debt sales, sending bond yields to a two-month high.

The shortfall in finances in the year ending March will be 5.9 percent of gross domestic product, 1.3 percentage points more than the goal, Mukherjee said in a March 16 speech in parliament. That was the biggest margin of failure since falling short of the aim by 3.5 percentage points in the 12 months through March 2009, the height of the global financial crisis.

Goldman Sachs Asset Management Ltd. and FIM Asset Management Ltd. said the budget didn’t do enough to restore the credibility of Mukherjee, who pledged to cut the deficit to 5.1 percent of GDP in the 12 months starting April. The yield on 10- year bonds had the biggest weekly increase since January to 8.43 percent last week, compared with 3.55 percent in China, where the 2012 deficit was 1.5 percent of GDP.
----------
The finance ministry plans to sell a record 5.69 trillion rupees of debt the next fiscal year, compared with 5.1 trillion rupees in the 12 months ending March 31. Underwriters had to buy unsold bonds at nine auctions this fiscal year, central bank data show, signaling demand didn’t match supply of notes. The government will set the first-half borrowing target on March 23, Shaktikanta Das, additional secretary in the ministry, said on March 16.

Yields on 10-year (GIND10YR) sovereign debt jumped 14 basis points, 0.14 percentage point, last week after data on the website of the Controller General of Accounts showed India’s budget gap widened to 4.35 trillion rupees in the 10 months through January, exceeding the full-year target of 4.13 trillion rupees. A year earlier, the shortfall was 58.3 percent of the annual goal.
------------
The shortfall will reach 5.8 percent of GDP in the year starting April, he predicts. The finance ministry has exceeded its budgeted spending target in eight of the last 10 years, according to government data.

The yield on the 8.79 percent note due November 2021 fell one basis point today after climbing seven basis points on March 16. The extra yield investors seek to hold the notes instead of U.S. Treasuries has rebounded 11 basis points from an eight- month low of 601 reached on March 14, data compiled by Bloomberg show.
Spectrum Sale

Rupee-denominated bonds handed investors a loss of 0.3 percent in March, compared with a 0.2 percent return on yuan notes, according to indexes compiled by HSBC Holdings Plc. India’s revenue collection was 69.5 percent of the full-year target in the 10 months through January, compared with 92.2 percent a year earlier, official data showed this month. The rupee advanced 0.2 percent today to 50.0885 per dollar after declining 0.7 percent last week, according to data compiled by Bloomberg.
-----------
Still, global investors have cut holdings of Indian debt by $634 million since Feb. 29, pulling money out of the local market for the first time in six months, exchange data show.

The cost of protecting the debt of State Bank of India, seen as a proxy for the sovereign, against non-payment climbed this month. Five-year credit-default swaps on the lender now cost 305 basis points, compared with 300 at the end of February, according to CMA, which is owned by CME Group Inc. and compiles prices quoted by dealers in privately negotiated markets. The swaps pay face value in exchange for the underlying debt should a company fail to adhere to its agreements.
--------


http://mobile.bloomberg.com/news/2012-03-19/biggest-budget-miss-since-2009-hurts-confidence-india-credit
Riaz Haq said…
Here's Business Standard story of India's unraveling economy:

"Dear God," wrote economist Rajeev Malik as he called on the Almighty to help a "rudderless" government in a biting critique that underscored a growing frustration at home and abroad with the stewardship of Asia's third-largest economy.

Writing in the Business Standard newspaper, the well-respected Malik echoed the exasperation of Indian and foreign business groups pressing for the government to swiftly implement major economic reforms and formulate a coherent strategy to deal with its mounting problems.

Another newspaper said India could be heading to a Greek-style crisis.
Prime Minister Manmohan Singh's Congress Party blames unreliable allies in his coalition government for blocking major reforms aimed at opening up the economy to much-needed foreign investment and tackling obstacles in the way of growth, from creaking infrastructure to endemic corruption.

"Policy paralysis" has become the favoured shorthand of politicians, journalists and other India watchers.

But events since the announcement of the 2012-13 budget in March suggest a deeper dysfunction: a leadership vacuum that has led to empty promises and muddled policy decisions, most notably on tax reform.

They also raise questions about the most important economic relationship in government -- the one between Singh, who engineered the opening up of India's economy in 1991, and his former boss, Finance Minister Pranab Mukherjee.

Foreign companies looking for action are frustrated by the government's determinedly rosy view of the future that appears to ignore a recent raft of negative economic data.

The finance ministry pitched for a credit rating upgrade in a meeting with Fitch Ratings on Thursday even though Standard & Poor's Ratings Services cut the country's credit outlook just last month.

Self-awareness could avert a "macro-economic train wreck," wrote Ron Somers, president of the US-India Business Council.

India's economic growth has slumped to a near three-year low and its current account deficit is the highest since 1980, a gap that is difficult to control when the rupee is at a record low.

The government has projected a budget deficit of 5.9% of GDP, which Moody's Investor Service says is credit negative. Inflation is the highest among the so-called BRICS group of major developing countries, and industrial production contracted unexpectedly in March.

"We have a full-blown crisis on our hands," said Rajiv Kumar, secretary-general of the Federation of Indian Chambers of Commerce and Industry.

"The Indian growth story is intact," Mukherjee insisted in a speech to parliament this week as Singh sat impassively at his side in the upper house of parliament.

WHO IS IN CONTROL?

The Hindustan Times warned on Friday of a Greek-style debt crisis unless the government took firm action to rein in its fiscal and current account deficits.

"But increasingly the sense is that the government simply lacks the political capacity to make tough decisions," it said.

The government was forced late last year to backtrack on plans to open up the $450 billion supermarket sector to foreign firms such as Wal-Mart Stores after a political backlash, including from within the coalition.

Just this month, it delayed plans to tax foreign investors after an exodus of funds, partly driven by concerns the tax could be applied retroactively, battered the rupee.

"It is not an exaggeration to state that the magnitude of the economic damage and mismanagement by the Congress party under Dr Singh's watch will be embarrassing for even a student of introductory economics," Malik wrote....


http://business-standard.com/india/news/in-india-muddled-leadership-leaves-economy-adrift/165432/on
Riaz Haq said…
Here's an ET story on Credit Suisse bullish view of Pakistani stocks:

In a detailed report issued to clients on Monday, analysts at Credit Suisse said that they believed that the new rules on capital gains tax and the exemption from documenting source of income for the next two years will improve liquidity and trading volumes in the market and allow stock prices to rise to their historical levels of valuations from their currently highly depressed levels.

“Liquidity in 2012 has been concentrated in stocks offering positive earnings surprises (e.g., United Bank, Lucky Cement, DG Khan Cement and Bank Alfalah), enabling them to be strong outperformers,” said Farrukh Khan, a research analyst based in Credit Suisse’ Asia Pacific headquarters in Singapore, in his report. “With further improvements in liquidity, we expect a broad-based price discovery to take hold in attractively valued oil and fertiliser stocks as well.”

Besides liquidity, however, Credit Suisse believes there are several other reasons why Pakistan is a highly attractive market.

It notes, for instance, that Pakistan’s sovereign risk is declining. Yields on Pakistan’s Eurobond have fallen 3% over the past 90 days, which Credit Suisse believes is justified. “A few months back, it seemed imminent that the current government’s altercation with the army would lead to early elections. The crisis has been averted, and for the first time in Pakistan’s history, a democratically elected government looks likely to complete its term in office” Khan stated.

In addition, Khan points out that Pakistani stocks are undervalued by their own historical valuation levels. The seven-year average for the 12-month forward price-to-earnings (PE) ratio (a key valuation metric) is 9.0, but the MSCI Pakistan index is currently trading at an average forward PE ratio of 6.3, which Khan argues is too low.

“Although Pakistan’s macros and politics remain challenging, there is an increasing realisation that this comes with the territory, and should not deter strong bottom-up investing. A large part of the weak politics and macros is built into historical valuations as well,” said Khan.

Credit Suisse also points out that corporate profitability in Pakistan is back to the 2007 pre-crisis levels. The average return on equity for the stocks in the MSCI Pakistan index is expected to hit 30% this year. Earnings yield averages 16% and dividend yields a healthy 7.3%.

The final advantage for international investors, Credit Suisse says, is that Pakistan is highly uncorrelated with the broader global equity markets, especially Europe. This lack of correlation holds both on the upside as well as the downside, meaning investors who are looking to diversify out of their exposure to the weakening European economy should be investing in Pakistan.


tribune.com.pk/story/382654/credit-suisse-bullish-on-pakistani-equities/
Riaz Haq said…
Here's an Economist story "A Bric hits the wall":

INDIA’S economy has had some bad economic ideas inflicted on it over the past century, from imperial neglect to the cult of the village and big-ticket socialism. Maybe the concept of BRICs—a handful of emerging economies including India that were destined for fast growth—should be added to the list. It led to a bubble of complacency that is now being popped rather brutally. Growth in India was 5.3% in the three months to March—worse than the 6% expected, below the prior quarter and way below the close-to-double digit rates that were meant to be preordained and propel India to economic super-power status.

Other BRICs have slowed too, including China and Brazil. But India's GDP figures, the worst for at least nine years, will have a deep impact on the sub-continent. The country was meant to grow in its sleep—regardless of what happens in the rest of the world. A quick bounce back looks unlikely. The central bank has cut interest rates a little this year, but will struggle to loosen policy further given high inflation. The ruling coalition keeps on promising a bout of reforms to boost confidence, but it is so divided, its behaviour so erratic and its record of delivery so poor that few believe this will actually happen. Expectations for growth over the next couple of years will probably slip further, to 6%.

A 6%-growth-India raises three issues. For one, the old orthodoxy was that after liberalisation India had been on an accelerating path, driven by demographics and its high rate of savings and investment. A rival view is now likely to take hold. It notes that India has grown pretty consistently at 6% since the mid 1980s, with the exception of a faster period in 2004-2007. What looked like a step up in trajectory now looks like a one-off blip driven by a global boom, an uncharacteristic bout of tight fiscal policy and an unsustainable burst of corporate optimism. Political history may have to be rewritten too. The reformers of 1991, who include the present prime minister, have turned out to be not visionaries, but pragmatists without a deep commitment to liberalisation who have been unable to build a lasting consensus among voters and the political class in favour or reform.

Second, financial stability will become trickier. Nominal GDP growth (including inflation) has slipped to the low teens. This is still above the rate of interest India's government pays on its debt and thus in theory enough to avoid a debt spiral—despite high fiscal deficits running at almost a tenth of GDP. Government bond yields are artificially depressed because banks are forced to buy government paper and because the central bank has been buying bonds actively in the last six months. Although this can go on for a while, the stress is showing up in two different areas. One is the banking system where gross bad debts plus "restructured" loans have risen to over 8% of the total—a figure high even by western banks' standards. Bankers and the central bank argue that "restructured" loans are unlikely to result in large losses. But with lower growth more corporate borrowers will come under strain, as will the credibility of those reassurances.
----------
Perhaps growth will bounce back. And if it doesn't, perhaps public frustration will be expressed at the ballot box, creating a new, less complacent political climate. The view that India's democracy is a self correcting mechanism that steers the country back onto the right course when things go wrong, was an integral part of the bulls' view of India. Hopefully it is one idea from the boom that proves to be correct.


http://www.economist.com/blogs/newsbook/2012/05/indias-economy
Riaz Haq said…
Here are a few excerpts from Wall Street Journal story titled "India Fades":

India's growth prospects have been fading for some time. Multinationals are walking away from the country, withdrawing some $10.7 billion worth of investments in 2011 alone, according to Nomura. Manufacturing contracted by 0.3% for the year that ended March 31. Agriculture and services faltered as well.
-------------
Delhi managed to keep the party going after the 2008 financial crisis with more government spending and easier credit. But that only postponed the reckoning—while sending the inflation rate north of 8% for the better part of the last two years.

After growth dipped below 7% late last year, Prime Minister Manmohan Singh turned to gimmicks, like having state-owned Coal India boost coal supply to power producers in a one-off manner or proposing to set up special manufacturing zones where factories would get tax breaks. But businesses want less red tape permanently, especially when it comes to energy investments, as well as labor reform to make hiring and firing easier. On both fronts, the Prime Minister has done nothing.

Then there was his one serious attempt at reform. In late November he announced plans to allow foreign investment in big-box retail stores. The reform would have been a boon for consumers, and would have helped import some crucial supply-chain know how. But the reform met the usual combination of populist and special-interest resistance, and the government folded in 10 short days.

Indians are increasingly disenchanted with Congress's failure to push for pro-market reforms, and have voted accordingly in recent state elections. That's the good news. There's been a lot of talk about India's emergence as a new economic superpower. An India with the ambition to rise in the world will not treat a high-growth economy as a national birthright.


http://online.wsj.com/article/SB10001424052702303640104577440103460087194.html
Riaz Haq said…
Here's a Bloomberg story titled "Pakistan, Land of Entrepreneurs":

On a warm Sunday morning in November, Arif Habib leaves his posh home near the seafront in southern Karachi and drives across town in a silver Toyota Prado SUV. About half an hour later, he arrives to check up on his latest project: a 2,100-acre residential development at the northern tip of this city of 20 million. He hops out, shakes hands with young company call-center workers who are dressed for a cricket match, and joins them at the edge of the playing field for a traditional Pakistani breakfast of curried chickpeas and semolina pudding. After a quick tour of the construction site, he straps on his leg pads, grabs his bat, and heads onto the field. “The principles of cricket are very effective in business,” says Habib, 59. “The goal is to stay at the wicket, hit the right balls, leave the balls that don’t quite work, and keep an eye on the scoreboard. I feel that my childhood association with cricket has contributed to my success.”

Habib, who started as a stockbroker more than four decades ago, has expanded his Arif Habib Group into a 13-company business that has invested $2 billion in financial services, cement, fertilizer, and steel factories since 2004. His group and a clutch of others have become conglomerates of a kind that went out of fashion in the West but seem suited to the often chaotic conditions in Pakistan. Engro (ENGRO), a maker of fertilizer, has moved into packaged foods and coal mining. Billionaire Mian Muhammad Mansha, one of Pakistan’s richest men, is importing 2,500 milk cows from Australia to start a dairy business after running MCB Bank, Nishat Mills, and D.G. Khan Cement.

These companies have prospered in a country that, since joining the U.S. in the war on terror after Sept. 11, has lost more than 40,000 people to retaliatory bombings by the Taliban. Political violence in Karachi has killed 2,000 Pakistanis this year, and an energy crisis—power outages last as long as 18 hours a day—has led to social unrest. Foreign direct investment declined 24 percent to $244 million in the four months ended Oct. 31, according to the central bank.

At the same time, some 70 million Pakistanis—40 percent of the population—have become middle-class, says Sakib Sherani, chief executive of Macro Economic Insights, a research firm in Islamabad. A boom in agriculture and residential property, as well as jobs in hot sectors such as telecom and media, have helped Pakistanis prosper. “Just go to the malls and see the number of customers who are actually buying in upscale stores and that shows you how robust the demand is,” says Azfer Naseem, head of research for Elixir Securities in Karachi. “Despite the energy crisis, we have growth of 3 percent.”

Sherani of Macro Economic Insights estimates the middle class doubled in size between 2002 and 2012. “Those who understand the difference between the perception of Pakistan and the reality have made a killing,” Habib says. “Foreigners don’t come here, so the field is wide open.” The KSE100, the benchmark index of the Karachi Exchange, has risen elevenfold since mid-2001. Shares in the index are up 43 percent this year alone. Over the past decade, stocks have been buoyed by corporate earnings, which were bolstered in turn by rising consumer spending.
---------
Today, Habib has 11,000 employees and annual revenue of 100 billion rupees. He plans to expand into commodities trading and warehousing. “I’ve created all my wealth in Pakistan and reinvested all of it here,” says Habib, who drives himself to his cricket matches and is never accompanied by security guards. In 1998, when Pakistan’s share index fell to a record low after the government tested nuclear weapons, Habib bought shares even though “people thought I was mad.”...


http://www.businessweek.com/articles/2012-11-29/pakistan-land-of-entrepreneurs
Riaz Haq said…
Here's an Atlantic Mag piece arguing that China is much bigger than the rest of BRICs:

In 2001, China's GDP was equal to the GDP of all the RIBS combined. In the five years since the global financial crisis, just the increment of growth in China's economy is larger than the entire economies of Russia and India combined. Indeed, in the half decade since the financial crisis, 40 percent of all growth in the global economy has occurred in China.

Last year, the economy of China expanded by $1 trillion; Russia and India grew by $100 billion; Brazil and South Africa shrank. In 2001, China ranked sixth among the world's economies. Today it stands at number two, on track to overtake the U.S. and become the world's largest economy in the next decade.

In trade, China accounts for 11 percent of global merchandise exports, roughly double that of the RIBS combined. Moreover, the markets to whom China and the RIBS export and from whom they buy are the U.S., the EU, and Japan. Merchandise trade among China and the RIBS barely registers in world trade statistics.

In foreign reserves, China held twice as much as the RIBS combined in 2001 (with $220 billion), and now holds three times as much as the others (with $3.3 trillion). In greenhouse gas emissions, China accounts for 30 percent of the global total, more than twice the amount of the RIBS combined.

Goldman Sachs continues trumpeting the rise of the BRICS (though it refuses to include South Africa, which was pulled into group by China in 2010). Its latest "BRIC Fund" prospectus forecasts that by 2030, the BRIC nations will have a combined economy larger than that of the G7. If this happens, the most important part of the story will be that China added $17 trillion to the global economy, effectively creating another United States in less than 20 years.

Concepts that jumble together elements with more differences than similarities sow confusion. While it may have played a useful purpose at the beginning of the century to highlight faster-growing emerging economies, BRICS has become an analytic liability. Like generalizations about per-capita growth in countries where wealth disparities are widening (as the rich get richer while the income of the poor declines), submerging China in this acronym misses more than it captures. If a banner is required for a meeting of these five nations, or for a forecast about their economic and political weight in the world ahead, RIBS is much closer to the reality. Even if governments, investment banks, and newspapers keep using BRICS, thoughtful readers will think China and the rest.


http://www.theatlantic.com/china/archive/2013/03/china-doesnt-belong-in-the-brics/274363/
Riaz Haq said…
Here's an Indian Express story on how Indian PM was snubbed by South Africans at BRICS summit:

The Indian delegation has returned quite upset from South Africa and for good reason, because this is, perhaps, the first time that the Indian Prime Minister has gone to a country and failed to hold a separate meeting with the host.


What probably hurt more was that Singh was the first among the BRICS leaders to reach Durban on March 25, a day before the summit, and still Zuma could not find the time while he played the proper host to his Chinese and Russian counterparts. In the end, Singh managed to hold separate meetings with all BRICS leaders except Zuma.

The Chinese side had turned Xi's visit into a state visit, which meant South Africa had full-fledged bilateral fare laid out, with agreements and deals being signed on the side. While Zuma had to give nearly an entire day to Xi in Pretoria, he could not ignore Russian President Vladimir Putin in Durban because Moscow had converted the trip into a "working" visit which meant formalised bilateral content like adding some new clauses to their bilateral treaty of friendship and cooperation.

As a result, India and Brazil seemed relegated. India, perhaps, a bit more. For starters, the South African government took control of all hotel accommodation in and around Durban since heads of states and government of some 18 African countries were also to be there for a retreat with BRICS nations on March 27.


It's not clear how the dice rolled, but the Prime Minister found himself allotted a resort in Zimbali, 40 km from Durban while the Brazilian, Russian and Chinese leaders were lodged in hotels within Durban, close to the venue where the summit was held over two days.

So, Singh had to travel into the city on both days of the summit, March 26-27, and also suffer the long delays in the program

Unlike Singh, the Brazilian President, who was to meet Zuma after the meeting with the PM, refused to wait and left for her hotel — an option unavailable to the PM as his location was out of town.


http://www.defence.pk/forums/world-affairs/243108-india-ridiculed-brics.html
Riaz Haq said…
Here's a Daily Times report on Karachi stock market rally:

KARACHI: The Karachi stock market crossed 18,900 points level on the last trading day of the week Friday as earnings frenzy continued to encourage investors to go for buying in oil, fertilizer and cement sectors.

The Karachi Stock Exchange (KSE) 100-share index gained 32.10 points or 0.17 percent to close at 18,917.71 points as compared to 18,885.61 points of the previous session. The KSE 30-share index was up by 10.81 points to close at 14,584.18 points as compared with 14,573.37 points.

“Mixed activity was seen at the market with corporate results season almost coming to an end,” said Topline Sec dealer Samar Iqbal. “Mixed March quarter results were announced today.”

Once again TRG came in the limelight as it closed at its upper cap with 27.5 million shares, she said and added that Engro Corporation and Foods saw some profit-taking ahead of the weekend.

The market turnover went down by 3.53 percent and traded 206.02 million shares as against 213.57 million shares of the previous session. The overall market capitalisation rose 0.34 percent and traded Rs 4.649 trillion as against Rs 4.633 trillion. Gainers outnumbered losers 204 to 146, while 17 stocks were unchanged.

“Stocks closed higher led by second-tier stocks on strong valuations,” said Arif Habib Corporation Director Ahsan Mehanti. “Index remained in a narrow range amid concerns over security unrest in the city, economic uncertainty and rupee fall despite recovery in global commodities and record quarter-end earnings announcements in oil, fertilizer, textile and cement stocks.”

The KMI 30-share index gained 36.24 points to close at 32,930.01 points from its opening at 32,893.77 points. The KSE all-share index closed with a gain of 48.06 points to 13,455.50 points as compared to 13,407.44 points of the previous session.

“The market closed in the green zone with intraday gains clipped by selling pressure in Engro Chemicals and Pakistan Petroleum,” said JS Research analyst Ovais Ahsan. “The banking sector gained led by MCB Bank and UBL as the sector continued to limp out of a long spell of underperformance.”

Adamjee Insurance corrected overbought momentum after a weeklong rally.

“Bulls reined the final session of the week as index came close to 19,000 points level during intraday trade,” said Habib Metropolitan Finance Corporation Salman Vidhani. “Selling pressure in Engro dampened overall sentiment as some stocks also registered a negative close.”

TRG Pakistan Ltd was the volume leader in the share market with 27.54 million shares as it closed at Rs 11.30 after opening at Rs 10.30, gaining Re 1. Lotte Chemical traded 16.43 million shares as it closed at Rs 7.54 from its opening at Rs 7.35, rising 19 paisas. Maple Leaf Cement traded 11.81 million shares and closed at Rs 18.95 as compared to its opening at Rs 19.36, shedding 41 paisas. Pervaiz Ahmad traded 11.50 million shares as it closed at Rs 3.29 as against its opening at Rs 2.57, increasing 72 paisas.


http://www.dailytimes.com.pk/default.asp?page=2013\04\27\story_27-4-2013_pg5_17
Riaz Haq said…
Here's a Reuters' report on Templeton and Goldman Sachs bullishness on Pakistan:

After 18 years as a banker at firms such as Citigroup and Nomura, Shaheryar Chishty took a different direction in late 2011, starting an investment firm that, among other things, helped guide Chinese and South Korean money into Pakistan.

While Pakistan is probably not the first place the average investor would choose to park cash, Chishty's timing was spot on. The country's stock market surged 49 percent last year to become one of the five best performing markets in the world.

The victory by former prime minister Nawaz Sharif in Pakistan's general election lifted the stock market to an all-time high on Monday, in a sign that investors, which include Goldman Sachs (GS.N) and Mark Mobius of Templeton, are betting on the prospect of further market gains through a stable government.

"I'm not under-estimating the challenges, but we have one party with a simple majority," Chishty, the Pakistan-origin chief executive of Asiapak Investments Ltd, told Reuters in an interview in Hong Kong on Monday. "A lot of the market's rise happened despite the previous government."

Risks, especially violence by Islamic militant groups, remain constant, yet Pakistan's market is up another 21 percent this year, behind only Japan and the Philippines as Asia's top gainers, according to Thomson Reuters data.

Pakistan's uncertain security environment and a deteriorating economy have failed to keep emerging market fund guru Mobius and Goldman Sachs Asset Management out of the country.

Mobius invested 4.6 percent of his $18.5 billion Templeton Asian Growth Fund's assets in Pakistani shares as of the end of March, more than his exposure to shares in Hong Kong, Singapore or Taiwan, according to data from Thomson Reuters Lipper.

"Pakistan is not a small country and it is strategically significant. However, with the negative press surrounding the country, it has tended to be ignored by investors," said Mobius, executive chairman of Templeton Emerging Markets Group.

Last year, 15 equity funds from Pakistan were among the world's top 100 performers, the Thomson Reuters Lipper data show....


http://in.reuters.com/article/2013/05/14/pakistan-election-investment-idINDEE94D0HM20130514
Riaz Haq said…
Here's Wall Street Journal quoting BRIC coiner Jim O'Neill as saying “If I were to change it, I would just leave the ‘C’:


SAO PAULO–Former Goldman Sachs Asset Management Chairman Jim O’Neill, who coined the BRIC acronym describing four burgeoning emerging market countries, stands by the term he invented more than a decade ago, but admits that three of the countries have disappointed him in recent years.

The acronym created in 2001 groups Brazil, Russia, India and China, and has become a reference for a perceived shift in economic power toward developing economies.

“If I were to change it, I would just leave the ‘C,’” Mr. O’Neill said in an interview. “But then, I don’t think it would be much of an acronym.”

Economic growth in other BRIC countries has been disappointing, and the economic outlook for developing economies in general has changed in the last few years amid the end of a commodities boom and a slowdown in Chinese growth–which nevertheless remains high compared with that of its counterparts.

Meanwhile, signs of a recovery in the U.S and expectations the Federal Reserve will soon reduce its bond-buying program have helped strengthen the U.S. dollar, sucking money out of emerging markets and putting even more pressure on their less developed economies.

It has become “fashionable” to say the developed world is recovering while emerging markets are all slowing down, Mr. O’Neill said. “But what people don’t understand is the size of China,” he added.

The economist said that if China’s economy grows 7.5% this year, as he expects, that would create an additional $1 trillion in wealth, in U.S. dollar terms. “For the U.S. to contribute at the same level, it would have to grow around 3.75%,” Mr. O’Neill said.

Economists currently expect the U.S. economy to expand 1.5% in 2013, down from 2% projected in May, according to a recent survey by the Federal Reserve Bank of Philadelphia.

From 2011 to 2020, Mr. O’Neill said he has assumed average growth for the BRIC countries of 6.6% a year, less than the 8.5% average in the previous decade. Most of it up to now has come from China.

India has been the biggest disappointment among the BRIC countries, while Brazil has been the most volatile in terms of investor perceptions, the economist said.

“Between 2001 and 2004, many people told me I should never have included Brazil. Then, from 2008 to 2010, people told me I was a genius for including Brazil and now, again, people say Brazil doesn’t deserve to be there,” he said.

Brazil’s economic growth, which reached 7.5% in 2010, has been weak since then in spite of multiple government stimulus measures. The country seems doomed to growth of 2% or so in both 2013 and 2014, according to economists’ forecasts.

Brazil’s rapid growth in 2010 raised expectations, but many people forgot that the country is vulnerable to big moves in commodities prices, Mr. O’Neill said.

Another problem, he said, is that private investment remains a small share of the country’s gross domestic product. Brazil’s investment rate has been stuck at around 18% of GDP, the lowest level of any BRIC country, for a decade.

---

“They should only worry if there’s a pickup in inflation expectations; otherwise, they should relax,” he said, before the central bank late Thursday unveiled a massive intervention program to provide relief for the currency.

Brazilian inflation is currently 6.15%, close to the 6.5% ceiling of the central bank’s target range for 2013.

Even in the face of weak growth, Mr. O’Neill says he doesn’t plan to add or subtract letters from his famous acronym.

“If, by the end of 2015, there is persistent weak growth in Brazil, India or Russia, then I might,” he said, noting, however, that he expects Brazil to surprise positively in 2015, possibly even in 2014.


http://blogs.wsj.com/moneybeat/2013/08/23/china-only-bric-country-currently-worthy-of-the-title-oneill/
Riaz Haq said…
Washington Post: #Hindi, #Bengali, #Urdu languages to dominate business world by 2050. #India #Pakistan #Bangladesh http://wpo.st/9e4c0

Hindi, Bengali, Urdu and Indonesian will dominate much of the business world by 2050, followed by Spanish, Portuguese, Arabic and Russian. If you want to get the most money out of your language course, studying one of the languages listed above is probably a safe bet.

The Chinese dialects combined already have more native speakers than any other language, followed by Hindi and Urdu, which have the same linguistic origins in northern India. English comes next with 527 million native speakers. Arabic is spoken by nearly 100 million more native speakers than Spanish, which has 389 million speakers.

Of course, demographic developments are hard to predict. Moreover, the British Council only included today's growth markets, which says little about the growth potential of other nations that are still fairly small today. Also, Arabic and Chinese, for instance, have many dialects and local versions, which could make it harder for foreigners to communicate.

Despite all that, the chart above gives a broad look into which linguistic direction the business world is developing: away from Europe and North America, and more toward Asia and the Middle East.

You want to speak to as many people as possible? How about Chinese, Spanish or French?

German linguistic expert Ulrich Ammon, who conducted a 15-year-long study, recently released a summary of his research. In his book, Ammon analyzes the languages with the most native speakers and the most language learners around the world. Especially for the latter aspect, there is little original data available, which is why Ammon does not provide predictions of exact numbers of speakers per language.

Here's his top three of the languages you should learn if you want to use the language as often as possible, everywhere in the world. If you do not have time, however, don't worry too much: English will continue to top all rankings in the near future, according to Ammon.

1. Chinese. "Although Chinese has three times more native speakers than English, it's still not as evenly spread over the world," Ammon said. "Moreover, Chinese is only rarely used in sciences and difficult to read and write."

2. Spanish. Spanish makes up for a lack of native speakers — compared with China — by being particularly popular as a second language, taught in schools around the world, Ammon said.

3. French. "French has lost grounds in some regions and especially in Europe in the last decades," Ammon explained. "French, however, could gain influence again if west Africa where it is frequently spoken were to become more politically stable and economically attractive."

Popular posts from this blog

China Sees Opportunity Where Others See Risk

Economic Comparison Between Bangladesh & Pakistan

Smartphones For Digital & Financial Inclusion in Pakistan