Multi-Year Bull Market in Pakistan?

Elliot Wave theorist Mark Galasiewski is forecasting continuation of multi-year bull market in Pakistan. This forecasts marks an unusual agreement of  a technical analyst with fundamental research done by  Jim O'Neill of Goldman Sachs who recently  reiterated Pakistan's place on its growth map

 The Elliott Wave Theory, formulated in 1939 by Ralph Nelson Elliot,  is the basis of technical analysis that some traders use to analyze financial market cycles and forecast market trends by identifying extremes in investor psychology, highs and lows in prices, and other collective factors.


Here are some excepts of a recent interview of Elliot Theorist Mark Galasiewski on what he calls the "Indian Ocean Renaissance":

".... 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". 


These latest analyses remind me of what Reuters' Mark Bendeich  wrote on June 10, 2008:

"A little more than six years ago, immediately after the Sept. 11 attacks on U.S. cities, few sane investment advisers would have recommended Pakistani stocks. They should have. Their clients could have made a fortune. Since 2001, the nuclear-armed South Asian country, blamed for spawning generations of Islamic militants and threatening global security, has been making millionaires like newly minted coins. As Western governments have fretted about Pakistan's nuclear weapons falling into the hands of militants, the Karachi Stock Exchange's main share index has risen more than 10-fold."

 Related Links:

Haq's Musings

Pakistan on Goldman Sachs' Growth Map

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 is a News report on foreign buying pushing shares to four year highs in Karachi:

The Karachi Stock Exchange’s benchmark 100-share index rose 2 percent on Thursday to close at a four-year high as strong foreign buying encouraged local investors to take new positions in key stocks, dealers said.



“Healthy foreign buying buoyed market sentiment,” said Ovais Ahsan, head of equity sales at Optimus Capital Management. Foreign investors bought shares worth $13 million in Thursday’s and Wednesday’s sessions.



The benchmark 100-share index increased by 277.40 points, or 1.96 percent, to close at a 48-month high of 14,419.92 points – the level last seen on May 15, 2008. The index closed just 34.58 points lower than the intra-day high of 14,454.50 points. The KSE 30-share index surged by 211.79 points, or 1.71 percent, to 12,578.11 points.



Out of total 389 companies’ shares traded, 247 advanced, 90 declined, while 52 closed unchanged.



Stocks which played a leading role in driving the 100-share index up included Pakistan Telecommunication Company Limited (PTCL), Oil and Gas Development Company Ltd. (OGDCL), MCB Bank, Allied Bank Limited, Habib Bank Limited, Standard Chartered Bank Limited and Unilever Pakistan. Other notable stocks included Lotte PakPTA, Fatima Fertilizer Company, National Bank of Pakistan, Lucky Cement, Engro Foods, Faysal Bank and Nestle Pakistan.



Ahsan said that foreigners were taking fresh positions as Pakistani markets remain cheaper in the region. Moreover, foreign investors were expecting a positive outcome from ongoing talks between Pakistan and the United States over new terms of engagement on war on terror.



He said that fertiliser stocks remained hot for investors on reports that the government might buy 0.3 million ton of urea from local manufacturers instead of importing the same quantity to maintain its strategic reserves.



Samar Iqbal, an equity dealer at Topline Securities, said that heavyweight OGDCL remained in the limelight and gained Rs3 on reports that the government was expected to increase wellhead price of Qadirpur field.



Ahmed Rauf, a trader on foreign desk of JS Global Capital, said that many of the investors were bringing in their money into Pakistan since the government allowed them to invest in shares without disclosing their source of investment till June 2014.



He added that foreigners were acquiring stocks in fertiliser, banking, cement and oil sectors. “Yesterday, they were seen buying stocks including Fatima Fertilizer Company, PTCL, Engro Corporation, Lucky Cement, DG Khan Cement and Karachi Electric Supply Company.”



Turnover improved to 293.97 million shares from 246.39 million shares traded in the previous session. Turnover in futures market enhanced to 16.70 million shares from 11.87 million shares traded a day earlier.



Market capitalisation rose by Rs68 billion to Rs3,683 billion.



PTCL was the turnover leader with 26.41 million shares as it closed at Rs14.42 with one-day maximum allowed increase of Re1. It was followed by Lotte PakPTA with 22.76 million shares turnover as it closed at Rs9.32 with an increase of 78 paisas. DG Khan Cement was on third position with 22.76 million shares turnover as it closed at Rs43.41 with a surge of Rs1.57.


http://www.thenews.com.pk/Todays-News-3-106367-Foreign-buying-helps-KSE-100-index-rise-2pc-closes-at-48-month-high
Riaz Haq said…
Here is a News report on foreign buying pushing shares to four year highs in Karachi:

The Karachi Stock Exchange’s benchmark 100-share index rose 2 percent on Thursday to close at a four-year high as strong foreign buying encouraged local investors to take new positions in key stocks, dealers said.



“Healthy foreign buying buoyed market sentiment,” said Ovais Ahsan, head of equity sales at Optimus Capital Management. Foreign investors bought shares worth $13 million in Thursday’s and Wednesday’s sessions.



The benchmark 100-share index increased by 277.40 points, or 1.96 percent, to close at a 48-month high of 14,419.92 points – the level last seen on May 15, 2008. The index closed just 34.58 points lower than the intra-day high of 14,454.50 points. The KSE 30-share index surged by 211.79 points, or 1.71 percent, to 12,578.11 points.



Out of total 389 companies’ shares traded, 247 advanced, 90 declined, while 52 closed unchanged.



Stocks which played a leading role in driving the 100-share index up included Pakistan Telecommunication Company Limited (PTCL), Oil and Gas Development Company Ltd. (OGDCL), MCB Bank, Allied Bank Limited, Habib Bank Limited, Standard Chartered Bank Limited and Unilever Pakistan. Other notable stocks included Lotte PakPTA, Fatima Fertilizer Company, National Bank of Pakistan, Lucky Cement, Engro Foods, Faysal Bank and Nestle Pakistan.



Ahsan said that foreigners were taking fresh positions as Pakistani markets remain cheaper in the region. Moreover, foreign investors were expecting a positive outcome from ongoing talks between Pakistan and the United States over new terms of engagement on war on terror.



He said that fertiliser stocks remained hot for investors on reports that the government might buy 0.3 million ton of urea from local manufacturers instead of importing the same quantity to maintain its strategic reserves.



Samar Iqbal, an equity dealer at Topline Securities, said that heavyweight OGDCL remained in the limelight and gained Rs3 on reports that the government was expected to increase wellhead price of Qadirpur field.



Ahmed Rauf, a trader on foreign desk of JS Global Capital, said that many of the investors were bringing in their money into Pakistan since the government allowed them to invest in shares without disclosing their source of investment till June 2014.



He added that foreigners were acquiring stocks in fertiliser, banking, cement and oil sectors. “Yesterday, they were seen buying stocks including Fatima Fertilizer Company, PTCL, Engro Corporation, Lucky Cement, DG Khan Cement and Karachi Electric Supply Company.”



Turnover improved to 293.97 million shares from 246.39 million shares traded in the previous session. Turnover in futures market enhanced to 16.70 million shares from 11.87 million shares traded a day earlier.



Market capitalisation rose by Rs68 billion to Rs3,683 billion.



PTCL was the turnover leader with 26.41 million shares as it closed at Rs14.42 with one-day maximum allowed increase of Re1. It was followed by Lotte PakPTA with 22.76 million shares turnover as it closed at Rs9.32 with an increase of 78 paisas. DG Khan Cement was on third position with 22.76 million shares turnover as it closed at Rs43.41 with a surge of Rs1.57.


http://www.thenews.com.pk/Todays-News-3-106367-Foreign-buying-helps-KSE-100-index-rise-2pc-closes-at-48-month-high
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…
Karachi's KSE-100 is the 3rd fastest growing index so far this year, according to London's Telegraph:

Egyptian stocks suffered last year amid the turmoil that followed the toppling of its president. But 2012 has signalled a recovery in their fortunes, notwithstanding a recent wobble on concerns that a dispute between the interim government and parliament threatened to derail talks on a loan from the International Monetary Fund, yet to be secure
----------
In calmer times, it is economics rather than politics that will drive share price performance, of course. In second place, Vietnam’s benchmark Ho Chi Minh Index seems to have broken its downward trend, up more than 35pc so far.

What was last year one of the worst Asian performers certainly had room for a bounce back. The index plunged in 2011 on worries that tight monetary policy to fight double-digit inflation would hurt economic growth and corporate earnings. Inflation has since been slowing however, and the market has picked up.

Vietnam is seen as a “frontier” market, one of those economies which are smaller than developing or emerging markets and offer a worse environment for business and in terms of corruption.
-----------
The third biggest riser so far this year has been Pakistan’s benchmark Karachi 100, which this week reached its highest level in four years.

Figures showed that offshore investors increased their holdings of local stocks. “There are a number of foreign investors increasing positions in Pakistani shares and locals are following,” Ahmed Rauf, a trader at JS Global Capital, told Bloomberg.
---------
1 EGX 30, Egypt UP 36.1pc

2 Ho Chi Minh, Vietnam UP 35.5pc

3 Karachi 100, Pakistan UP 28.8pc

4 Bucharest BET, RomaniaUP 23.8pc

5 OMX Tallinn, EstoniaUP 19.2pc Box light
LOSERS

1 General Market, Cyprus DOWN 24.7pc

2 Ibex 35, Spain DOWN 19.7pc

3 Colombo All-Share, Sri Lanka DOWN 11.5pc

4 Merval, Argentina DOWN 10.5pc

5 FTSE Mib, Italy DOWN 7.8pc


http://www.telegraph.co.uk/finance/markets/9249349/Egypt-leads-global-markets-in-2012-while-Cyprus-suffers-from-Greek-bail-out.html
Riaz Haq said…
Industry Business Journal is reporting that Starwood Hotels & Resorts Worldwide has announced plans to open two new hotels in Pakistan. According to the Stamford, Conn.-based hotel giant, the Pakistan properties will ride a surge of international expansion throughout 2012, 2013 and into 2014. India is already one of the company’s key markets.

“Sheraton’s impressive global pipeline is being fueled by phenomenal demand in China and India as well as by a surge in high-quality conversions in developed markets,” said Simon Turner, president of global development for Starwood. “In Europe, there is a large landscape of independent hotels ripe for flags, and we’re also keenly focused on an expected uptick in portfolio transaction activity in North America which should lead to even more conversion opportunities.”

Starwood plans to open its new Pakistan properties in 2014.

Leading into its Pakistan efforts, Starwood’s development is lead by a number of main projects, including 12 new hotels in China and the opening of its largest hotel – the Sheraton Macao. Slated to open in 2012, the 4,000-room hotel will have three restaurants with poolside cafes, 140,000 square feet of meeting space and two outdoor swimming pools and will be located on the Cotai Strip, also known as the “Las Vegas of Asia.”

Starwood Hotels & Resorts Worldwide has 1,090 properties in 100 countries and territories with 154,000 employees at its owned and managed properties. Starwood is a owner, operator and franchisor of hotels, resorts and residences with the following brands: St. Regis, The Luxury Collection, W, Westin, Le Méridien, Sheraton, Four Points by Sheraton, Aloft and Element.

http://www.indusbusinessjournal.com/ME2/Audiences/dirmod.asp?sid=&nm=&type=Publishing&mod=Publications%3A%3AArticle&mid=8F3A7027421841978F18BE895F87F791&tier=4&id=D09B26CDA11E42E9A122E9D5FC9F5B09&AudID=0F67F28B87104E04915E08DD7E316C9E

Starwoods (owner of Sheraton) plans to add hotels in Pakistan and other key emerging markets, reports Emirates 24 7:

Starwood Hotels & Resorts Worldwide is strengthening its position as the leading hotel operator in the Middle East and North Africa (Mena) region with an existing portfolio with a pipeline of 40 new hotels.

This growth, primarily in the luxury and upper-upscale segments, represents an increase of nearly 60 per cent over the next five years.

In the past 18 months, Starwood has debuted six new hotels throughout Mena and momentum continues in the region where the company has recently inked deals for 10 additional hotels.

"Despite economic and political uncertainty in parts of the region, Starwood continues to see demand for growth of all of our brands across the Middle East and North Africa," said Frits van Paasschen, President and CEO, Starwood Hotels & Resorts.
----
With more than 70 per cent of the world's economic growth coming from fast-growing markets over the next few years, Starwood is focused on expansion in developing markets such as the UAE, Saudi Arabia and Algeria as well as key emerging markets including Iraq, Tajikistan and Pakistan.


http://www.emirates247.com/business/economy-finance/starwood-to-add-40-hotels-2012-05-07-1.457592
Riaz Haq said…
Here's an ET report on Avari's hotel expansion in secondary cities in Pakistan:

Avari Group has decided to develop Avari Xpress three- and four-star residences and boutique hotels in secondary cities of Pakistan on a lease basis.

Avari Group Chairman Byram D Avari while talking to journalists on the sidelines of a press briefing on Thursday informed that two such properties already exist in Islamabad. “We’ll have two more Avari Xpress properties in Lahore soon,” he said, adding that the group also planned to have similar properties in Faisalabad, Gujranwala, Multan and Sialkot.

The Avari properties provide all room amenities that are provided by their larger counterparts, including gym, restaurant and meeting facilities. However, they are limited in the food service and without a swimming pool and banquet facilities. Avari noted that Hyderabad did not apparently have enough demand to justify the establishment of a full-fledged Avari hotel there. However, he said he wanted to set up a three-star in Hyderabad. He added that Sukkur seemed more feasible for a four-star Avari hotel..


http://tribune.com.pk/story/373711/avari-group-set-for-local-expansion/
Riaz Haq said…
Here's Daily Times on rising domestic sales of cement in Pakistan:

The cement sales in domestic market posted fifth straight month of increase as compared to last year but the industry is still passing through difficult times as its exports registered third consecutive month of decline.

A spokesman of All Pakistan Cement Manufacturers Association stated this while discussing performance of the cement industry during first 10 months of the current fiscal.

He said that the total cement despatches up till April 2012 were 26.643 million tonnes, which is 3.31 percent higher than despatches during the corresponding period of last fiscal. The domestic sales during this period increased by 8.51 percent but exports registered a decline of 8.91 percent. He said performance of north and south-based mills depicted different trends both in domestic sales and exports. He said local sales of the north-based mills increased by 7.77 percent to 15.928 million tonnes while the south-based mills registered higher domestic consumption by 11.81 percent to 3.701 million tonnes. In exports, however, the mills in the north suffered comparatively less decline than in the south. The cement producers based in north exported 5.087 million tonnes of cement posting a decline of 6.23 percent over exports made during the same period last year. The exports of south region mills declined by 15.29 percent to 1.928 million tonnes.

Among the export markets, the Afghanistan market remained relatively stable as exports declined nominally by 0.15 percent to 3.778 million tonnes. Exports to India increased by 15.19 percent to slightly over half million tonnes. This includes exports by sea, as well as, through Wagah border. Exports to other destinations through sea however decreased by 16.96 percent to 2.699 million tonnes. Cement industry people said that cement is one the major commodities that is abundantly available in Pakistan and can be exported to India through the land route. Despite tall claims to increase bilateral trade, the respective governments failed to remove non-tariff barriers imposed on Pakistani products. There is currently a labour strike on Indian side resulting in piling up of consignments, which is affecting the movement of trucks from Pakistan.

Besides, merely 10 wheeler trucks from Pakistan are allowed to cross the border and maximum weight may not be more than 40 tonnes per truck. Unfortunately, most of the available transportation for cement has a loading capacity of more than 40 tonnes.

Availability of 10 wheeler trucks with a loading capacity up to 40 tonnes for cement is limited; resulting in the cement industry being unable to export its surplus capacity

There is only one scanner installed at the new gate at Wagah border resulting in long queues creating hurdles and delay for Pakistani exports to India. The Pakistani exporters have demanded of the government to look into the matter and allow trucks with a loading capacity up to 80 tonnes instead of 40 tonnes. They further urged the government that exporters should also be provided all necessary facilities at the border points so that they could easily clear their consignments.


http://www.dailytimes.com.pk/default.asp?page=2012\05\08\story_8-5-2012_pg5_2
Riaz Haq said…
NHA to implement 82 highway schemes at Rs 569bn, reports Daily Times:

National Highway Authority (NHA) is implementing 82 highway schemes at the cost of Rs 569 billion, while 14 new projects are in pipeline costing Rs 95 billion.

The participants of 11th Senior National Management Course visited NHA head office here on Wednesday where

NHA’s member (planning) Sabir Hasan while briefing about the functioning of the NHA to visiting faculty members of the 11th Senior National Management Course said 98 Toll Plazas have been approved on NHA, out of which 84 were operational.

NHA is striving hard for availability of National Trade Corridor (NTC), in the country. Practical advancement is being made for achieving North South economic corridor, providing linkages with Gwadar and up gradation of Karakoram Highway in particulars.

Under NTC programme highways, Motorways, Expressways are being constructed from ports to borders with the view to provide linkages for the Transit Trade. NTC will reduce 50 percent travelling time, decrease 10 percent transportation cost and reduce 70 percent road fatalities.

Rs 300 billion will be spent during the next 5 to 7 years for this gigantic programme. Toll Collection System is being established on modern lines, he added.

He said pragmatic steps have been taken to save asset of highways from bad effects of overloading. To this effect weigh stations have been set up at specific locations to check the overloaded vehicles. In order to ensure construction of durable roads state of the art and advanced technologies are being employed. NHA is attaching great importance to make journey safe and sound on its network, he added.


http://www.dailytimes.com.pk/default.asp?page=2012\05\08\story_8-5-2012_pg5_5
Riaz Haq said…
PSMC to post PAT of Rs413mn (EPS 5.02), up 351% YoY, 237% QoQ, reports Investorguide360.com

The company is expected to announce PAT of Rs413mn (EPS Rs5.02) in 1QCY12, up by a massive 351% YoY. The gigantic rise in the profitability is mainly due to 31%YoY increase in unit sales coupled with 9%YoY increase product prices. Moreover, the other income of the company is also estimated to have helped in boosting up the bottomline of the company as it registers a healthy growth of 49%YoY to Rs196mn in 1QCY12. In the light of historical payout trend, we do not expect any cash dividend from the company with the results.

Company’s bottomline is also expected to jump 237% on QoQ basis due to 23%QoQ primarily due to increase in company’s sales volumes. As the customers prefer to book vehicles with the new year registration, therefore, during the last quarter company’s unit sales remained dull. As such, the other income of the company is also expected to decline (income comes from the customers’ advances).

At current levels, the company scrip is trading at a PE of 5.5x and 6.1x based on CY12 and CY13 earnings estimates, respectively. We recommend ‘Buy’ on the scrip with our revised Jun-12 target price of Rs92/share.


http://investorguide360.com/lucky-cement-3qe-gm-at-3-yr-high-pak-suzuki-motors-pat-up-237-qoq-investcap/
Riaz Haq said…
Here's a Bloomberg story on demutualization of Pak stock exchanges:

Pakistan’s president Asif Ali Zardari, signed into law yesterday a bill to demutualize the nation’s stock exchanges, a move aimed at bringing the bourses in line with international peers.

Lawmakers approved the stock exchange corporatization, demutualization and integration law on March 27. Approval of the bill requires the nation’s three stock exchanges to be converted into companies.

The main Karachi Stock Exchange, home to companies including Oil & Gas Development Co. (OGDC) and Pakistan Telecommunications Co. (PTC), follows bourses from India to Malaysia in demutualization. Under a reform plan started in 1997, management independent of the government automated trading and risk-management systems were introduced at the exchange.

The law allows the Karachi, Islamabad and Lahore stock exchanges to convert themselves into for-profit entities owned by shareholders from non-profit, mutually owned organizations.

“It will be a step forward in every way,” said Shahrukh Naqvi, head of equity sales at Invest Capital Markets Ltd. in Karachi. “It will improve confidence among retail investors, provide better price discovery and turn the market into a real source of capital for companies.”

To contact the reporter on this story: Farhan Sharif in Karachi, Pakistan at


http://www.bloomberg.com/news/2012-05-08/pakistani-president-signs-law-to-demutualize-stock-exchanges.html
Riaz Haq said…
Here's a Reuters' report on buoyant Pakistani shares market:

Pakistan stocks rallied on Wednesday with strong performances in the chemicals and food sectors, and an easing of fears that another showdown between the government and the Supreme Court might be imminent, analysts said.

The Karachi Stock Exchange (KSE) benchmark 100-share index ended 0.69 percent, or 99.63 points, higher at 14,613.59 points, with a volume of 256.7 million, compared to Tuesday's close of 14,513.96.

Pakistan's Supreme Court on Tuesday released its detailed judgment in a case where it had earlier declared Prime Minister Yusuf Raza Gilani guilty of contempt of court for refusing to reopen corruption cases against President Asif Ali Zardari.

The prime minister received a symbolic sentence of a few minutes' detention in the courtroom, but some lawyers have said the conviction should disqualify him from office. Gilani has said he will appeal against the verdict.

"There was concern that political uncertainty will increase with the detailed judgment of the Supreme Court (in the Gilani case), but it was essentially the same as the earlier order so the situation did not change," said Atif Zafar, a research analyst at the JS Global financial services company.

"It did not dampen the bullish mood in the market today."

Among the top performers were Engro Corporation, which ended 5 percent higher at 118.93 Pakistan rupees, helped by the strong performances of its food and chemicals divisions.

Engro Foods ended 5 percent higher at 77.31 rupees, while Engro Polymer and Chemicals closed 3.51 percent higher at 12.68 rupees.

Chemicals company Lotte Pakistan closed 9.87 percent higher at 10.02 rupees.

In the currency market, the Pakistani rupee ended almost flat at 90.80/85 to the dollar, compared to Tuesday's close of 90.82/88.

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 totalled $1.14 billion.

Overnight rates in the money market ended lower at 9.10 percent, down from Tuesday's close of 11.25 percent, because of increased liquidity in the market.


http://mobile.reuters.com/article/idUSL4E8G98S820120509
Riaz Haq said…
Here's a News report on Pakistan's 2011-12 GDP estimates:

The size of Pakistan’s economy increased to Rs20.653 trillion and per capita income in dollar terms stood at $1,372 after the revision of GDP growth estimates from 3.2 percent to 3.7 percent for the outgoing fiscal year 2011-12.

“The per capita income on market price basis has increased by 9 percent in the outgoing fiscal year as it went up to $1,372 in 2011-12 compared to $1,258 in the last fiscal year 2010-11,” an official working paper available with The News disclosed. The per capita income will be officially unveiled in the Economic Survey 2011-12 which will be launched a day ahead of the upcoming federal budget 2012-13.



The economic managers, sources said, have used average exchange rate at Rs88.31 against a dollar for the first nine months (July-March) period of the outgoing fiscal year and estimated population at 178.9 million. If average exchange rate of first ten months (July-April) is used, which is at Rs88.7 to a dollar, then per capita income will fall to $1,354 for outgoing fiscal year. It is yet to see which average of exchange rate is taken by the government to estimate per capita income.



After revision of GDP growth estimates up to 3.7 percent by National Accounts Committee (NAC) by abandoning rebasing exercise and deciding to use the previous base year of 1999-2000, the size of the economy increased by Rs2 trillion and went up to Rs20 trillion from earlier estimates of falling around Rs18 trillion.



The rise in size of the economy has helped the government to restrict its budget deficit in the range of 6.7 percent to 7 percent of GDP for the outgoing fiscal year. The one percent of GDP, equivalent to Rs206 billion, means that the budget deficit in rupee terms will be standing at Rs1,442 billion in case of deficit of 7 percent of the GDP.



The Pakistan Statistical Bureau (PSB) had committed blunders in this rebasing exercise as authorities estimated that the financial sector that was shown falling by negative 11 percent in 2011-12 by using base year of 2005-06 but it actually achieved plus 6 percent growth in 2011-12 on the basis of previous base year 1999-2000.



The economic deflator grew by 9.5 percent in outgoing fiscal year from revised estimates of over 18 percent in last fiscal year 2010-11, indicating that it declined by almost 100 percent.



The reasons for this massive decline in deflator was attributed to highest ever increase in cotton prices in international market that surged up to 129 percent in last fiscal year 2010-11 resulting into jacking up deflator in a massive way.



The prices of cotton are not catered into CPI based inflation so it was reflected by end of the last fiscal year through deflator while in outgoing fiscal year the prices of cotton dropped significantly so the deflator in outgoing fiscal year also declined.



In the last Economic Survey 2010-11, it was stated that Pakistan’s per capita real income had risen by 0.7 percent in 2010-11 as against 2.9 percent last year. Per capita income in dollar terms rose from $1,073 last year to $1,254 in 2010-11, thereby showing an increase of 16.9 percent.



This is mainly because of stable exchange rate as well as higher growth in nominal GNP. Real private consumption rose by 7.0 percent as against 4.0 percent attained last year. However, gross fixed capital formation lost its strong growth momentum and real fixed investment growth contracted by 0.4 percent as against the contraction of 6.1 percent in last fiscal year.


http://www.thenews.com.pk/Todays-News-3-107322-Size-of-economy-rises-to-Rs206trn-after-GDP-growth-revision
Riaz Haq said…
Here's a Businessweek report on Karachi stock market rally:

The Karachi Stock Exchange 100 Index may rally as high as 17,000 this year, Farrukh Hussain, chief investment officer of Karachi-based BMA Asset, Pakistan’s second-biggest private money manager, said in a May 7 interview. That would be the highest level on record. The gauge closed at 14,613.59 yesterday. BMA’s Pakistan Opportunities Fund, the nation’s only offshore, dollar- based fund, returned 23 percent this year, beating 99 percent of its peers, according to data compiled by Bloomberg.

Pakistan’s benchmark stock index has surged 29 percent this year after the government eased rules on a capital-gains tax and demand for energy and building materials bolstered company earnings. The gauge, which slid 5.6 percent in 2011, is trading at 7.3 times estimated earnings, the lowest valuation in Asia, reflecting the country’s struggles to cope with militant attacks and political instability.

“Stocks are dirt cheap compared to regional markets and by any standard of the imagination,” Hussain said. “The change in the capital-gains tax regime provided the much needed impetus but the trigger this year is corporate earnings and market fundamentals.”
Earnings Growth

Company profits in Pakistan will grow an average 20 percent in the year ending June 30, said Hussain, who oversees about $97 million at BMA. Investors should buy fuel explorers, banks and cement stocks, which will have profit growth of 20 to 25 percent, he said.

BMA’s Pakistan Opportunities Fund holds shares in Pakistan Oilfields Ltd. (POL), the nation’s third-biggest energy explorer, Engro Corp. (ENGRO), a maker of fertilizer, food and plastics, and Lucky Cement Ltd. (LUCK), the country’s biggest producer of the building material, Hussain said.

Pakistan Oilfields has gained 11 percent this year, Lucky Cement 77 percent, and Engro 67 percent. The shares are trading at less than 7 times estimated earnings, according to data compiled by Bloomberg.

“This is the world’s sixth-most populous country and a population of 180 million people who need housing, energy and food,” Muddassar Malik, chief executive officer of BMA, said.

Malik in September 2010 predicted a rally in stocks after Pakistan’s deadliest floods, which caused losses estimated by the government at $7 billion. The Karachi 100 share index jumped 20 percent in the last three months of that year.
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Trading volumes have surged since Jan. 21 when Pakistan decided to ease rules on a capital-gains tax, exempting some investors from declaring their source of income. Average daily trading volume for the past three months almost tripled to 172 million shares from 61 million shares a year earlier, according to data compiled by Bloomberg.

“There’s been unprecedented turbulence in Pakistan and we don’t try to hide that,” Malik said. “But it’s also a story that’s yet to be discovered.”


http://www.businessweek.com/news/2012-05-09/dirt-cheap-pakistan-stocks-seen-rallying-15-percent-bma-says
Riaz Haq said…
Here's a Nation report on UNESCAP's projection on Pakistan's economy:

The economy of Pakistan is projected to grow by 4 percent in 2012, according to the United Nations Economic and Social Survey of Asia and Pacific.In its report on Thursday, it said the gross domestic product (GDP) in Pakistan is projected to grow by 4 percent in 2012 which is an improvement from 2.4 percent growth in 2011.Speaking at the launch of report, economist Dr Ashfaq Hassan, said the economic growth of the country “has increased mainly due to the enhanced output of agriculture sector”. He said the agriculture sector was improving due to the post-flood recovery in cotton, rice, wheat, sugar cane and other minor crops.Dr Ashfaq said cut in monitory policy by 200 basis points by the State Bank of Pakistan also supported the economic growth of the country."Pakistan, after several increases in the policy rate, lowered the policy rate by 50 basis points in July 2011 and further by 150 basis points in October, 2011 despite inflation remains elevated. The moves were aimed at stimulating private investment and economic growth."The GDP growth in the country slowed considerably to 2.4 percent in fiscal year 2011 from 3.8 percent in the previous year, mainly due to prevailing security concerns, the exogenous shock from elevated oil prices and unprecedented floods in a large part of the country and shortage of electricity and natural gas have also hampered the economic growth, he added.The economic survey of Asia reported that to reduce the budget deficit in Pakistan, the government was making efforts to improve tax compliance and broaden the tax base.The report said that current account of balance of payments in the country registered surplus in 2011."In Pakistan, the external sector registered a surplus on the current account, making it a bright spot of the economy in 2011", the report added.According to the report the exports increased by 29.3 percent and workers' remittances reached an historic level of more than $11.2 billion in 2011.Rising prices of value-added textiles helped propel the rapid growth of exports. Foreign exchange reserves also increased considerably.The report further said that in order to address energy shortages, the government should take various measures including setting up viable new power projects, minimizing transmission and distribution losses including theft of electricity, increasing exploration of natural gas, crude oil and coal, tapping of regional markets and setting up infrastructure for energy imports.The report said that widespread poverty continues to be major challenge in South Asia. "To fight against poverty, countries need to continue to implement economic reforms to improve productivity, strengthen public institutions, improve economic governance and build social safety nets to protect the more vulnerable segments of the population", the Economic Survey of Asia added.Clovis Freire, representative said on the occasion that Asia and the Pacific faces another year of slowing growth as demand for its exports falls in developed nations and capital costs rise, but the region will remain the anchor of global economic stability.He said that the growth rate of the region's developing economies is projected to slow down to 6.6 percent in 2012 from 7.0 percent last year compared to a strong 8.9 per cent in 2010.

http://www.nation.com.pk/pakistan-news-newspaper-daily-english-online/islamabad/11-May-2012/-pakistan-economy-to-grow-by-4pc
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 a Businessweek story on risks to Pak economic growth:

akistan will seek to reduce inflation to less than 10 percent for the next fiscal year as it grapples with the fastest pace of price increases in Asia.

The inflation goal for the 12 months starting July 1, 2012 is 9.5 percent, the prime minister’s office said in a statement in Islamabad yesterday. Earlier this month, the government projected gross domestic product will rise 4.3 percent in the period, up from 3.7 percent in the current fiscal year.

Pakistan’s economy has been hurt by blackouts, a trade deficit, diminished aid flows and an insurgency on the Afghan border. The government plans to boost spending on roads, health care and education to support growth and is due to present its last federal budget next week before elections that must be held by February.

“The economy is facing huge challenges,” said Khalid Iqbal Siddiqui, head of research at Karachi-based United Bank Ltd. “Power blackouts, reduced aid inflows and the law and order situation are the key constraints that will keep growth depressed in the next fiscal year.”

Pakistan’s rupee has weakened about 6.5 percent against the dollar in the past 12 months. Domestic risks and the threat to global growth from Europe’s debt crisis have curbed demand for the currency.

Farm output will climb 4 percent next fiscal year, up from 3.1 percent in 2011-2012, according to yesterday’s statement. The industrial sector may expand 4.1 percent, from an estimated 3.6 percent this financial year, the projections showed.
Inflation Risk

The targets were set in a meeting of the National Economic Council, which is headed by Prime Minister Yousuf Raza Gilani.

Pakistan’s inflation accelerated to an eight-month high of 11.27 percent in April, limiting scope to cut interest rates to support the $200 billion economy. The pace of price increases is the fastest in a basket of 17 Asia-Pacific economies tracked by Bloomberg.

The central bank left borrowing costs unchanged at 12 percent last month for a third straight meeting, after cutting them by 2 percentage points in 2011.

The International Monetary Fund said in February that Pakistan should broaden the tax base, curb some subsidies and curtail central bank financing of the budget deficit. It described the economy as “highly vulnerable.”

The council proposed to spend 873 billion rupees ($9.5 billion) on development projects in the year starting July 1, up 19.5 percent from 730 billion rupees in the current fiscal period. The council originally proposed expenditure of 863 billion rupees yesterday, before increasing the planned outlay by 10 billion rupees in a revised statement later the same day.

The Asian Development Bank has said the power deficit in Pakistan and damage to the cotton crop from floods last year may restrict economic growth to 3.6 percent in the year ending June.

The government will unveil the federal budget in parliament in the first week of next month, according to local media reports.


http://www.businessweek.com/news/2012-05-25/pakistan-seeks-inflation-below-10-percent-as-risks-threaten-growth
Riaz Haq said…
Here's an FT report on Sweden's Pakistan Fund:

With Pakistan so much in the news for the above (negative) reasons it is no surprise that few fund managers have set up single country Pakistan funds.

However, newly established Swedish fund manager, Tundra Fonder, was determined to look beyond the headlines.

Tundra was founded in September last year by partners Johan Elmquist and Mattias Martinsson. By October the group had launched its first funds, one investing in Russia and the other in Pakistan. In February Tundra unveiled a third offering: the Global Emerging Markets Agri & Food Fund.

Launching Tundra Pakistanfond was a particular ambition for Mr Martinsson, the fund’s lead manager, who had formed a personal conviction in the country’s growth story. Even he has been taken by surprise, however, by how well things have gone. By last month, Mr Martinsson says, he and Mr Elmquist had noticed an extraordinary thing – the Tundra Pakistan fund was on top of the most clicked list, “Mest clickade fonder ” on the Swedish version of Morningstar, the fund news and data provider.

Investors have not only been clicking. They have been investing too. “We currently have approximately $65m in assets under management of which a little bit more than $50m right now is in the Pakistan fund,” says Mr Martinsson.

Early investors have already been rewarded. By May 31, year-to-date returns were 27.9 per cent, according to Morningstar.

Mr Martinsson says the strong inflows into Tundra’s Pakistan fund could be due to the structure being something that investors can understand and trust – it is Ucits IV compliant and open for daily trading. A buoyant period for Pakistan’s stock market (the KSE 100 has risen more than 20 per cent since January 1) might also have been helpful. But these factors cannot explain the whole story. The World Investment Oppportunities Funds – Pakistan, a Luxembourg registered Sicav still has only $1.75m in assets under management and it launched in 2008.


www.ft.com/intl/cms/s/0/76092248-af06-11e1-a8a7-00144feabdc0.html

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