Pakistan Economy: News & Discussion

[HariPrasad-1]

Country nowhere near tax-to-GDP ratio target: NFC

Land of pure is dying at its natural death.

 

[OnePunchMan]

anyone on reddit here come join me on discussion related to this now

https://www.reddit.com/r/Israel/comments/5k126y/pakistan_defense_minister_warns_israel_of_nuclear/

 

[Indx TechStyle]

PSX receives only 3 IPOs despite huge gains in 2016

Pakistan Stock Exchange (PSX) witnessed only 3 initial public offerings (IPOs) during 2016, raising Rs 4.2 billion. This is significantly lower than last year’s 6 IPOs of Rs 116 billion, which was led by Habib Bank Limited’s (HBL) secondary offering of Rs 102.3 billion.

Few IPOs came despite strong market gains year to date (YTD).

Oil and banks heavy KSE-100 index generated total return of 43 percent in 2016 YTD after relatively flat performance in 2015. Price only KSE-100 index is up 41 percent YTD and had touched 47,000 points.

Strong market gains during 2016 are in line with those seen in 2013 and 2014 where the index posted above average returns of 49 percent and 27 percent, respectively.

Furthermore, this is better than last 10-Year average gain of 20 percent.

The 3 IPOs in 2016 comprised of Hi-Tech Lubricants (Rs 1.8 billion), Loads Limited (Rs 1.7 billion) and TPL Properties (Rs 0.7 billion). Two of the public offerings relate to sectors that have significantly outperformed market during 2016 YTD.

Loads Limited is a local auto parts manufacturer where local auto sector has posted gains of 68 percent YTD, highest gain in 2016.

Similarly, Hi-Tech Lubricants is part of local Oil Marketing Sector, which is up by phenomenal 60 percent during 2016 YTD. Both sectors have outperformed market gains of 43 percent.

The analysts expect some improvement in IPOs in 2017 as there are already a few companies that are vying for listing. However, with no big offerings from government, except State Life, the overall share supply will remain low.

The analysts said around 5-7 public offerings in following sectors are expected: Foods/Dairy, Banking, Information Technology, Media and Pharmaceuticals.

 

[Indx TechStyle]

Pakistani Rupee Will Be At All Time Low In a Decade

 

[Indx TechStyle]

Is Pakistan heading towards a serious debt problem?

For several months, Pakistani economists have been warning that the country is heading towards a serious debt problem that will destabilise the economy. The overall debt, estimated at 12.7 trillion rupees in 2016, is considerably higher than the 9.5 trillion rupees in 2013. External debt, at 73 billion dollars, has also increased substantially, compared to 61 billion dollars in 2013.

There is nothing wrong with debt in itself. Private businesses borrow happily, as long as the rate of return on the debt-financed investment is higher than the cost of borrowing. Similarly, countries should borrow if their Gross Domestic Product (GDP) growth is faster than the rate at which debt is serviced (interest plus principle payments).

However, governments can shift the bad consequences associated with debt to the private sector or to the next generation. ‘Feel good’ projects, that translate into votes, but do not help the economy, do this.

Good economists, therefore, look for early warning signs.

One sign is the size of the total debt relative to the economy (total debt to GDP ratio). If this ratio rises fast, the government will either increase taxes or borrow huge amounts from banks — thus raising interest rates.

The other warning sign concerns the external debt. The cost of external debt is incurred in foreign currency, so that the appropriate ratio to focus on is the cost of external debt service to exports. A rapid increase in this ratio depletes foreign reserves, triggers devaluation and increases the cost of debt.

Using Ministry of Finance data, the World Bank estimates the debt-to-GDP ratio to be at 67.4 per cent, considerably higher than the 60 per cent limit. Interest payments will thus continue to eat into the budget, squeezing much needed infrastructure and social sector investments.

The State Bank of Pakistan estimates that external debt service-to-exports ratio at 20 per cent for 2016, which is better than the 22.5 per cent last year. The worry, however, is that exports are stagnant, even declining (27.4 billion dollars in 2016, compared to 31.5 billion dollars in 2013), which means that our ability to service future external debt liabilities is eroding.

An important message, therefore, is that there be no surprises (unaccounted for contingent liabilities) in large debt -financed investments (including those associated with the China-Pakistan Economic Corridor), and that there be improvement of export performance.

Otherwise, debt service will become a huge burden on the economy.

 

[Cutting Edge]

Notebandi fears spark gold rush in Pakistan

ISLAMABAD: The resolution by Pakistan's upper house of parliament demanding scrapping of Rs 5,000 currency notes has led to an increase in demand for gold. Denials by the government and State Bank of Pakistan has failed to check public anxiety over its largest denomination notes.

"The resolution by senate demanding demonetisation of Rs 5,000 notes has led to rumours that after India, Pakistan is contemplating to dump its highest-value note to curb cash economy," currency dealers in Karachi were quoted by Dawn as saying.Currency hoarders are rushing to get rid of these notes and there has been a simultaneous increase in demand for gold in markets here.Pakistan's upper house of parliament had adopted a resolution on December 19 calling for demonetisation of Rs 5,000 notes to halt money laundering and corruption.

The PML(N) government had opposed the resolution, saying it would cause a monetary crises, as is happening in India. But the resolution nonetheless triggered enough uncertainty in the retail market with many trading bodies refusing to accept Rs 5,000 notes. There were several reports of customers haggling at payment counters of fast-food restaurants and superstores over the issue.

Since the resolution, gold prices have increased in Pakistan, although they were already higher than the international rate. Due to excessive buying, the precious metal was at Rs 50,600 per 10gm more than Rs 46,000 per 10 gm in international market.

"Gold buying on future delivery heated up after the resolution," said a currency dealer. Holders of Rs 5,000 notes are not opting for dollars, although the exchange rate is increasing in the open market. Currency dealers said that quantity of gold can store millions of rupees.

Meanwhile, there's increasing demand that Pakistan take similar steps as India to expose hidden assets and prevent tax evasion.

http://timesofindia.indiatimes.com/...old-rush-in-pakistan/articleshow/56175820.cms

 

[Neo]

340MW Nuclear Power Plant 'C-3' to be inaugurated Dec 28
DAWN.COM

A 340MW extension unit of the Chashma Nuclear Power Plant (CHASNUPP), titled C-3, is all set to be connected to the national grid on Wednesday, reported Radio Pakistan.

The plant has been completed with support from China, the report added. Prime Minister Nawaz Sharif is expected to inaugurate the plant.

The project was executed by the Pakistan Atomic Energy Commission under the guidelines of the International Atomic Energy Agency.

Another unit of the same capacity, titled C-4, is expected to be connected to the national grid in the future.

CHASNUPP Unit-1 and CHASNUPP Unit-2 are already functional.

 

[Blackwater]

340MW Nuclear Power Plant 'C-3' to be inaugurated Dec 28
DAWN.COM

A 340MW extension unit of the Chashma Nuclear Power Plant (CHASNUPP), titled C-3, is all set to be connected to the national grid on Wednesday, reported Radio Pakistan.

The plant has been completed with support from China, the report added. Prime Minister Nawaz Sharif is expected to inaugurate the plant.

The project was executed by the Pakistan Atomic Energy Commission under the guidelines of the International Atomic Energy Agency.

Another unit of the same capacity, titled C-4, is expected to be connected to the national grid in the future.

CHASNUPP Unit-1 and CHASNUPP Unit-2 are already functional.

nice to only china investing in Pakistan from stock exchange to motorway to defense to CPEC to railway lines to power sector .

 

[Indx TechStyle]

Higher deficit, low revenue challenge economic growth: SBP
KARACHI: Higher fiscal deficit, sharp decline in non-tax revenue and tax revenue much below expectations are serious challenges for the government willing to spur economic growth, the State Bank of Pakistan (SBP) said in its first-quarterly report for 2016-17 issued on Friday.

In terms of gross domestic product (GDP), the fiscal deficit during the July-September quarter stood at 1.3 per cent, the highest quarterly level since 2011-12, the SBP said.

Given the revenue shortfall during the quarter, achieving the annual fiscal deficit target of 3.8pc of GDP would be challenging and would require additional fiscal consolidation efforts on part of the government, it said.

The State Bank expects the current account deficit to remain in the range of 1pc to 2pc of GDP in the current fiscal year, which is higher than its earlier forecast of 0.5pc to 1.5pc.

More importantly, the deficit increased despite an exceptional growth in provincial surpluses, it said, adding that the major drag came from a sharp decline in non-tax revenues (mainly due to the absence of inflows under the Coalition Support Fund, drop in dividends from public sector enterprises, and lower profit from the SBP).

Tax revenues also remained well below expectations. On the expenditure side, the government was more prudent, as current spending registered a marginal decline. Development expenditures, on the other hand, increased 12.4pc year-on-year during the quarter, on top of the 47.4pc rise recorded in the first quarter of FY16.

State Bank’s initial assessment indicates that the economy is moving on its growth trajectory despite some challenges. Agriculture, sugarcane and maize harvests (accounting for 14.6pc of the crop sector) are expected to reach record levels in the current fiscal year.

Furthermore, though the cotton production missed the target of 14.1 million bales by a significant margin, it is still higher than the last year’s level.

However, lower production of rice compared to the last year and a decline in sowing area in the cotton belt of Punjab do raise some concerns. Specifically, rice production has remained below last year’s level — this was the third consecutive year when rice output recorded a year-on-year decline.

Similarly, the shortfall in cotton production, when compared to the target, is mainly due to a 20.8pc decline in area under the crop in Punjab. “This in itself was the result of low cotton prices at the time of sowing,” the SBP said.

Meanwhile, the government has been able to contain current expenses due to lower spending on subsidies. Interest payments, however, remained unchanged as the gains realised from low interest rates were largely offset by an accumulation of public debt stock.

On the other hand, the strong growth in development expenditure during the quarter was led by the provinces, as federal development spending dropped 7.6pc year-on-year in July-September. Most of the spending by provinces went to infrastructure improvement, followed by health and education.

The SBP said that overall stock of public debt increased by Rs866.1 billion in the July-September quarter, with over 85pc of the incremental debt contributed by government borrowings from domestic sources.

As for inflation, an uptick was already expected in the current fiscal year, the central bank said, adding that the recent revival of global oil prices after a global agreement on oil supply may lead to higher non-food inflation. On the other hand, food inflation may remain in check as the current stocks of staple food (wheat and rice) seem sufficient.

“On balance, therefore, the inflation is expected to remain within the target for the year,” the report said.

On large-scale manufacturing growth, which has been fairly low compared to the last year, the State Bank said it expects some pick-up in its pace on the back of continued supportive policies, like low interest rates, reduced cost of energy with improved availability, strong domestic demand, healthy corporate margins, and a conducive investment environment.

 

[Neo]

Here's what to expect from Pakistan's economy in 2017

Five industry leaders share their predictions.

As we exit a tumultuous 2016 we asked industry leaders what they expect from the country’s economy in 2017. Our questions, and some of their responses, were:

Q1: There is a global movement towards protectionism. How do you see this affecting Pakistan’s economy?

Q2: 2016 saw many unexpected twists and turns in the political and economic environment. Based on the subsequent changes, which sectors of the country do you foresee as the major winners and losers in the New Year?

Shazia Syed
Chairperson and CEO, Unilever Pakistan Limited

1. “While Pakistan may not face immediate implications, our GDP does have major contributions from exports and remittances. In this backdrop, foreign investment assumes greater significance and this needs continuing improvement in the economic and security environment. Most importantly, local industry needs to step up cost efficiencies and quality standards in order to survive in this new competitive world”.

2. “With the CPEC taking shape and a possible end to the power crisis, economic outlook is positive. Major gains are already being seen by the service industry, construction sector and the auto industry with global players also entering the Pakistani market. The FMCG sector is also confident of growth being fueled by rising consumer confidence and expenditure.”

Atif Bajwa
President and CEO, Bank Alfalah

1. Replacing decades of global free-trade with protectionism, will not be easy, comprehensive or quick. Protectionism will be resisted even by Western commercial interests. In the event that a degree of protectionism does take hold, Pakistan will largely escape the negative implications, as its economy is not as trade-dependent as most Asian countries.

2. Unlike many other countries, Pakistan’s economic outlook is quite bright. Aside from falling exports and stagnant remittances, our economy is supported by range-bound oil prices, the CPEC and a tangible improvement in security. Cement, steel, bulk chemicals, consumer durables, and the power sector should do well in 2017, but there are concerns about textiles, lost opportunities in agriculture, and the disadvantages facing companies that operate in the formal sector. There is a dire need to improve the documentation of Pakistan’s economy.

Dr Shahida Qaisar
Managing Director, Pharmatec Pakistan

1. Since Pakistan’s pharmaceutical industry has not been granted a price increase since 2001, we rely heavily on exports. With a global movement towards protectionism, our exports will suffer in the global market, due to a higher level of competition. With low domestic prices, and high competition abroad, profit margins have been sinking rapidly. If we see no change, the Pharmaceutical Industry in Pakistan has a grim future.

2. With the initiation of the CPEC this year, Pakistan’s economy will benefit vastly due to better infrastructure, which could lead to a higher rate of employment.

Mohammad Ali Tabba
Chief Executive Officer, Lucky Cement

1. Pakistan is one of the most liberal countries when it comes to imports. There are numerous challenges in the manufacturing sector and one of them is the very liberal import policy. Also, because of local protectionism our exports will continue to suffer while the import bill will continue to rise. Unfortunately when this thorny issue is discussed with the relevant government departments, their view is that the local industry needs extra protection to increase profitability.

2. All those industries catering to domestic consumption are doing relatively better. Inversely, export oriented sectors are the biggest losers since the cost of doing business in Pakistan is one of the highest in the region and from a global perspective — we are uncompetitive.

Dr Zeelaf Munir
Managing Director and CEO, English Biscuit Manufacturers

1. The global movement for protectionism will be another challenge to our export industry which has declined. Higher cost of production, lack of energy, institutional support and R&D remain major challenges. Trade, as opposed to protectionism, leads to the domestic industry becoming competitive and able not only to defend its domestic market share but also compete in regional and global markets. However, for this competitiveness to develop, the industry needs a level playing field in its own markets. In Pakistan, domestic manufacturers have to contend with massive under invoicing, misdeclaration in imports and outright smuggling.

2. Given the country’s huge market base and rapidly growing middle class, I believe practically all consumer goods sectors will continue to do well in 2017. However, the challenge of fiscal consolidation and tapping the undocumented economy which, by rough estimates constitutes at least the third of the documented economy, needs to be tackled more aggressively, in addition to the thriving counterfeit and intellectual property infringement sector. Otherwise the documented sector will be the loser and others will be the winner due to competitive imbalance.

 

[Neo]

Investment takes a step forward
NASIR JAMAL

Pakistan is now on the path to increased economic growth


A shaky investment outlook will continue to pose a challenge to economic policymakers as well as the country’s economic prospects during 2017, in spite of signs of improvement in the fundamentals.

Indeed, foreign investors have begun returning to Pakistan as security conditions across the country, particularly in Karachi, improve on the back of the military led operation and the China Pakistan Economic Corridor (CPEC) project gets under way.

With Chinese firms buying major stakes in Karachi Electric (KE) and the Pakistan Stock Exchange (PSX), a Turkish investor acquiring Dawlance and Europeans taking over Engro Foods, the ‘investor confidence’ appears to be surging over the last few months.

“After a lull of 6-7 years, FDI is picking up. Indeed, the CPEC has helped. But I think even without it our perception has improved”
The recent changes in the top military command amidst reports of growing tensions between the civilian authority and the armed forces under its previous chief, Gen Raheel Sharif, too has raised hope of political stability and an end to uncertainty and turbulence from the country.

But local investors largely refuse to follow the lead of foreign investors and still remain hesitant about committing their money to the industry in spite of historically low interest rates and improved energy supplies, especially in Punjab.

“I cannot say anything about the future. But until now even foreign investors are buying existing businesses and not investing in new Greenfield projects,” a Karachi-based banker told Dawn.

A Punjab Board of Investment and Trade (PBIT) official agreed saying most foreign investors — read Chinese — are showing more interest in the possibility of acquiring existing businesses instead of investing in new projects.

Foreign and domestic private investment has consistently been dropping in the country over the last several years due to deteriorating security conditions, energy crunch, political instability and tensions with India, affecting the economy’s ability to create new jobs. Foreign direct investment (FDI), for example, shrank 45pc to $460m from a year ago.

Even the State Bank of Pakistan has expressed its concern over falling private investment in the economy, saying higher private sector investments need to be accelerated.

“While public sector investment is increasing despite resource constraints, investment by the private sector has not increased sufficiently. This has inhibited the country’s potential growth,” the central bank said in its annual State of the Economy report for 2015/2016.

Zeeshan Afzal, a financial analyst at Insight Securities, however, expects significant foreign investment flowing into the manufacturing industry during 2017. “We cannot quantify it right now but we can see foreign direct investment returning to the country during the year.”

He said sectors like auto, cement, steel, food, etc were amongst the top contenders for foreign private investment as security improves and energy shortages reduce.

“The investment climate in the country has significantly improved. Until a couple of years ago no foreign investor was prepared to commit its money to Pakistan. The situation has changed now and we see investors coming back,” Zeeshan argued.

“They are coming to Pakistan to take advantage of our growing middle class. They aren’t investing in the export-oriented industry because our exports are uncompetitive and have a very narrow base.”
Taha Khan Javed, director research at Alfalah Securities, agreed. “After a lull of 6-7 years, FDI is picking up. Indeed, the CPEC has helped. But I think even without it our perception has improved,” he insisted.

He admitted that foreign private investors were not attracted in committing money in export-oriented industries. “They are coming to Pakistan to take advantage of our growing middle class. They aren’t investing in the export-oriented industry because our exports are uncompetitive and have a very narrow base.”

Syed Ali Ehsan, a textile manufacturer and Aptma-Punjab chairman, contended that the investment outlook for 2017 remained ‘very dull’.

“I can tell you about the textile industry, which is feeling very low and does not have enough appetite for investment in spite of low interest rates.

“The government’s failure to announce the textile package despite repeated promises and reduce cost of energy, especially in Punjab, has created uncertainty and affected business confidence,” he argued.

He said the industry was importing machinery for modernisation and expansion. “But the investment being made in the textile industry at present is just 5-10pc of what it should or would have been if the government had kept facilitated the exporters.”

Shahzad Ali Khan, a spinner and oil extractor, expects the industrial sector to shrink over the next one year and beyond unless the government takes measures to cut the cost of doing business, especially in Punjab.

“We are witnessing de-industrialisation — particularly in Punjab — because of rising costs of doing business, harassment of businesses by tax collectors, difficulties in getting utility connections for a new industry, etc.

“Therefore, people are investing their money in the services sector, retail and stock exchange.

“Which industry can give you a more than 40pc return on your investment? Why should people work hard to be penalised by the government if they can make so much money by investing in the stock exchange?” Khan said.

Published in Dawn, Business & Finance weekly, January 2nd, 2017

 

[F-14B]

DAWN Is printing these wow thanks for the comic relife @Neo early in the morning

 

[Blackwater]

Here's what to expect from Pakistan's economy in 2017

Five industry leaders share their predictions.

As we exit a tumultuous 2016 we asked industry leaders what they expect from the country’s economy in 2017. Our questions, and some of their responses, were:

Q1: There is a global movement towards protectionism. How do you see this affecting Pakistan’s economy?

Q2: 2016 saw many unexpected twists and turns in the political and economic environment. Based on the subsequent changes, which sectors of the country do you foresee as the major winners and losers in the New Year?

Shazia Syed
Chairperson and CEO, Unilever Pakistan Limited

1. “While Pakistan may not face immediate implications, our GDP does have major contributions from exports and remittances. In this backdrop, foreign investment assumes greater significance and this needs continuing improvement in the economic and security environment. Most importantly, local industry needs to step up cost efficiencies and quality standards in order to survive in this new competitive world”.

2. “With the CPEC taking shape and a possible end to the power crisis, economic outlook is positive. Major gains are already being seen by the service industry, construction sector and the auto industry with global players also entering the Pakistani market. The FMCG sector is also confident of growth being fueled by rising consumer confidence and expenditure.”

Atif Bajwa
President and CEO, Bank Alfalah

1. Replacing decades of global free-trade with protectionism, will not be easy, comprehensive or quick. Protectionism will be resisted even by Western commercial interests. In the event that a degree of protectionism does take hold, Pakistan will largely escape the negative implications, as its economy is not as trade-dependent as most Asian countries.

2. Unlike many other countries, Pakistan’s economic outlook is quite bright. Aside from falling exports and stagnant remittances, our economy is supported by range-bound oil prices, the CPEC and a tangible improvement in security. Cement, steel, bulk chemicals, consumer durables, and the power sector should do well in 2017, but there are concerns about textiles, lost opportunities in agriculture, and the disadvantages facing companies that operate in the formal sector. There is a dire need to improve the documentation of Pakistan’s economy.

Dr Shahida Qaisar
Managing Director, Pharmatec Pakistan

1. Since Pakistan’s pharmaceutical industry has not been granted a price increase since 2001, we rely heavily on exports. With a global movement towards protectionism, our exports will suffer in the global market, due to a higher level of competition. With low domestic prices, and high competition abroad, profit margins have been sinking rapidly. If we see no change, the Pharmaceutical Industry in Pakistan has a grim future.

2. With the initiation of the CPEC this year, Pakistan’s economy will benefit vastly due to better infrastructure, which could lead to a higher rate of employment.

Mohammad Ali Tabba
Chief Executive Officer, Lucky Cement

1. Pakistan is one of the most liberal countries when it comes to imports. There are numerous challenges in the manufacturing sector and one of them is the very liberal import policy. Also, because of local protectionism our exports will continue to suffer while the import bill will continue to rise. Unfortunately when this thorny issue is discussed with the relevant government departments, their view is that the local industry needs extra protection to increase profitability.

2. All those industries catering to domestic consumption are doing relatively better. Inversely, export oriented sectors are the biggest losers since the cost of doing business in Pakistan is one of the highest in the region and from a global perspective — we are uncompetitive.

Dr Zeelaf Munir
Managing Director and CEO, English Biscuit Manufacturers

1. The global movement for protectionism will be another challenge to our export industry which has declined. Higher cost of production, lack of energy, institutional support and R&D remain major challenges. Trade, as opposed to protectionism, leads to the domestic industry becoming competitive and able not only to defend its domestic market share but also compete in regional and global markets. However, for this competitiveness to develop, the industry needs a level playing field in its own markets. In Pakistan, domestic manufacturers have to contend with massive under invoicing, misdeclaration in imports and outright smuggling.

2. Given the country’s huge market base and rapidly growing middle class, I believe practically all consumer goods sectors will continue to do well in 2017. However, the challenge of fiscal consolidation and tapping the undocumented economy which, by rough estimates constitutes at least the third of the documented economy, needs to be tackled more aggressively, in addition to the thriving counterfeit and intellectual property infringement sector. Otherwise the documented sector will be the loser and others will be the winner due to competitive imbalance.

Ghanta

 

[LordOfTheUnderworlds]

Pakistan predicted to be world’s fastest-growing Muslim economy in 2017

Pakistan has been forecasted to be the world’s fastest-growing Muslim economy in 2017 ahead of Indonesia, Malaysia, Turkey and Egypt, according to London’s The Economist magazine.



Pakistan’s estimated GDP growth – 5.3% – is also ahead of 4% GDP growth of Israel. This makes Pakistan world’s fifth fastest-growing economy in the world, only behind India and China and two other countries.

The live data, which is updated twice-daily, is published on The Economist website in the form of an interactive table of economic and financial indicators. This data reinforces a Harvard University study which predicted Pakistan to grow by more than 5% in the next decade.

 

[Indx TechStyle]

fastest-growing Muslim economy

Islamic atomic bomb, Islamic space program, Islamic missiles, Islamic economy
@sayareakd @Bornubus @Screambowl

 

[Neo]

World Bank revises Pakistan’s growth rate upwards to 5.2% in FY17
January 11, 2017

ISLAMABAD: The World Bank has revised Pakistan’s growth rate upwards to 5.2% for fiscal year 2017 and 5.5% for 2018.

It previously estimated growth in Pakistan’s gross domestic product (GDP) at 5% and 5.4% for FY17 and FY18, respectively, a private news channel reported.

The report ‘Global Economic Prospects; weak investment in uncertain times’, states that the uptake in activity was spurred by a combination of low commodity prices, increasing infrastructure spending, and reforms that lifted domestic demand and improved the business climate.

‘Pakistan Development Update’: World Bank projects economy will grow at 5%, miss govt target

In Pakistan, growth is forecast to accelerate from 5.5% in fiscal year 2018 to 5.8% in fiscal year 2019-20, reflecting improvements in agriculture, infrastructure, energy and external demand.

The report further mentioned the successful conclusion of the IMF Extended Fund Facility (EFF), aimed at supporting reforms and reducing fiscal and external sector vulnerabilities, lifted consumer and investor confidence.

The China-Pakistan Economic Corridor (CPEC) project is also tipped to increase investment in the medium-term, and alleviate transportation bottlenecks and electricity shortages.

 

[Kshatriya87]

Pakistan stocks fall on profit-taking; foreign selling

Stocks fell on Monday as profit-taking continued in blue-chips such as energy stocks after a string of records last week, while foreign investors selling also weighed, dealers said

They added that institutional investors opted for profit taking given uncertainty in the global equities amid weakening crude prices. Ahsan Mehanti at Arif Habib Corp said stocks battered on uncertainty in global equities.

“Weak global crude prices invited pressure in oil stocks. Concerns over weak exports and foreign outflows played a catalytic role in bearish close”.

The Pakistan Stock Exchange (PSX) benchmark KSE-100 shares index shed 321.96 points or 0.65 percent to close at 48,888.54 points.

KSE-30 shares index lost 225.54 points or 0.84 percent to end at 26,513.69 points. As many as 419 scrips were active of which 133 advanced, 269 declined and 17 remained unchanged.

The ready market volumes stood at 316.062 million as compared to 514.224 million shares a day earlier.

Faisal Bilwani at Elixir Securities said equities closed lower on selling primarily in index names. “A short positive open was followed by wider market entering in the red zone as institutional profit taking during the day in notable names across financials, oils, cements and industrials pulled KSE-100 Index lower to test support below 49K.”

Fertilisers, however, weathered the general downtrend and traded higher tracking positive news over the weekend that government has restored subsidy on urea.

“Regulatory changes applicable on mutual funds that now require minimum 5.0 percent of assets as cash and agreements with creditors to meet possible redemptions was likely one of the factors that triggered profit taking, however, we would highlight no major material impact as most funds already remain complaint,” Bilwani added.

K-Electric (KEL) up 2.3 percent led volumes with over 22 million shares traded on system and another 20 million off market with stock closing green after Chinese regulators okayed the recent stake purchase in the company.

Going forward, analysts see volatility to increase as institutional flows guide market in absence of triggers while earnings related excitement seems to be overshadowed by flows, primarily foreign funds selling.

Companies reflecting highest gains include Mari Petroleum up by Rs47.69 to end at Rs1455.28/share and Ghandhara Industries up Rs46.55 to end at Rs977.59/share.

Companies reflecting highest losses include Unilever Foods down Rs235 to Rs5750/share and Rafhan maize down Rs230 to end at Rs7810/share.

Highest volumes were witnessed in K-Electric Limited with a turnover of 22.746 million shares. The scrip gained 21 paisas to close at Rs9.46/share.

Sui Southern Gas Company was second with a turnover of 18.177 million shares. It gained 90 paisas to end at Rs38.64/share. Engro Fertilizer was third with a turnover of 16.943 million shares. It gained 80 paisas to finish at Rs70.39/share.

 

[Neo]

78% of US investors plan to invest in Pakistan, American survey reveals
AAGENCIES
January 16, 2017
BU
KARACHI: Over 78% of US investors say they plan to invest in Pakistan over the next 12 months in light of improving law an order situation, among other factors, a survey by the American Business Council (ABC) of Pakistan indicated.

According to the ‘perception survey’, 83% of the participants are optimistic about the long-term economic landscape in the country. Only 65% of respondents in last year’s survey said they intend on investing in Pakistan.

Majority of the participants rated the business climate of Pakistan in 2015-16 as satisfactory with only 8% giving it a poor rating.

Participants were asked to rate on factors including economic and political factors and performance of industries and businesses in the country in the last two years.

The US investors also believe there has been a notable improvement of 30% in law and order situation as compared to last year.

‘Our members are positive and remain committed to Pakistan,’ said Mr. Sami Ahmed, President of American Business Council of Pakistan.

He added that Pakistan’s standing in the international committee is vital in determining its competitiveness as other Asian countries continue to attract foreign capital.

 

[Project Dharma]

78% of US investors plan to invest in Pakistan, American survey reveals
AAGENCIES
January 16, 2017
BU
KARACHI: Over 78% of US investors say they plan to invest in Pakistan over the next 12 months in light of improving law an order situation, among other factors, a survey by the American Business Council (ABC) of Pakistan indicated.

According to the ‘perception survey’, 83% of the participants are optimistic about the long-term economic landscape in the country. Only 65% of respondents in last year’s survey said they intend on investing in Pakistan.

Majority of the participants rated the business climate of Pakistan in 2015-16 as satisfactory with only 8% giving it a poor rating.

Participants were asked to rate on factors including economic and political factors and performance of industries and businesses in the country in the last two years.

The US investors also believe there has been a notable improvement of 30% in law and order situation as compared to last year.

‘Our members are positive and remain committed to Pakistan,’ said Mr. Sami Ahmed, President of American Business Council of Pakistan.

He added that Pakistan’s standing in the international committee is vital in determining its competitiveness as other Asian countries continue to attract foreign capital.

What a shameless troll, it's not 78% of US investors but 78% of US MNCs plan to continue to function or expand into Porkistan. Why wouldn't they, even Iraq has a McDonalds. Ask the average US citizen if they want to invest in Porkland and the answer will be "hell no, ain't that country going to collapse soon?"

 

[Neo]

Consumer spending rockets as poverty shrinks, terrorism drops and democracy holds

Motorcycles, seen here recently in Rawalpindi, are considered a bellwether for a growing middle class in Pakistan. PHOTO: QASIM NAUMAN

ISLAMABAD—Pakistan, often in the headlines for terrorism, coups and poverty, has developed something else in recent years: a burgeoning middle class that is fueling economic growth and bolstering a fragile democracy.

The transformation is evident in Jamil Abbas, a tailor of women’s clothing whose 15 years of work has paid off with two children in private school and small luxuries like a refrigerator and a washing machine.

For companies like the Swiss food maker Nestlé SA, such hungry consumers signal a sea-change.


“Pakistan is entering the hot zone,” said Bruno Olierhoek, Nestlé’s CEO for Pakistan, saying the country appears to be at a tipping point of exploding demand. Nestlé’s sales in Pakistan have doubled in the past five years to $1 billion.

Although often overshadowed by giant neighbors India and China, Pakistan is the sixth most-populated country, with 200 million people. And now, major progress in the country’s security, economic and political environments have helped create the stability for a thriving middle class.

An unpublished study last year that measured living standards, from Pakistani market research firm Aftab Associates, found that 38% of the country is middle class, while a further 4% is upper class. That’s a combined 84 million people—roughly equivalent to the entire populations of Germany or Turkey.

Such households are likely to have a motorcycle, color TV, refrigerator, washing machine and at least one member who has completed school up to the age of 16, the study found. Official figures show that the proportion of households that own a motorcycle soared to 34% in 2014 from 4% in 1991, and a washing machine to 47% from 13% over that same period. These trends are also attracting international business.

Last month, Royal FrieslandCampina NV, a Dutch dairy company, paid $461 million to buy control of Engro Foods, a Pakistani packaged milk producer in a country where most milk is sold unpasteurized from open milk containers.

“What we see is consumer spending is rising and a middle class coming up,” said Hans Laarakker, Engro’s new chief executive.

Late last year, China’s Shanghai Electric Power agreed to pay $1.8 billion for a majority of Karachi’s electric supply company; Turkish electrical appliance maker Arçelik paid $258 million for a Pakistani appliance maker, Dawlance, saying Pakistan has an “increasingly prosperous working and middle class”; and French car maker Renault SA said it was seeking to set up a plant in Pakistan.

Meanwhile, during the past three years, deaths from terrorist attacks have fallen by two-thirds, as the army battles jihadists. Economic growth reached an eight-year high of nearly 5% in the past financial year, and China has begun a multibillion dollar infrastructure investment program. The Karachi stock market rose 46% last year and continues to soar.

The 2013 election marked the first democratic transition from one elected government to another. The big winners were two parties of the middle class: the Pakistan Muslim League-N of Nawaz Sharif and Imran Khan’s Pakistan Tehreek-e-Insaf. Mr. Sharif formed the government, appealing to a business constituency with his focus on private sector-led economic growth. Mr. Khan’s previously marginal party, which has the biggest proportion of college graduate voters, campaigned on improving public services and fighting graft.

Ijaz Gilani, chairman of pollster Gallup Pakistan, said that the salaried middle class will pressure the government to improve poor public services. “You cannot move forward with weak governance, and bypassing the state, by relying on individual empowerment alone,” Mr. Gilani said.

Pakistan experienced a “staggering fall” in poverty from 2002 to 2014, according the World Bank, halving to 29.5% of the population. That period saw a spurt of economic growth in the early part, a takeoff in property values, a surge in the money that Pakistanis working overseas send home (now $20 billion a year), while the government also started an income subsidy for the poorest.

Still, the millions of Pakistanis living below the poverty line endure misery in a country with the world’s third-highest rate of childhood stunted growth due to chronic malnutrition.

During roughly that same period, 90% of the increase in national consumption came from the middle class, found a study by Jawaid Ghani, a professor at the Karachi School for Business and Leadership.

The living standards of the middle class in Pakistan and other developing nations is modest by Western standards, and there’s no agreed or official definition. A study by the Organization for Economic Cooperation and Development forecasts that the bulk of the growth in the middle class in the years ahead will come from Asia, which will account for two thirds of the global middle class by 2030.

The tailoring shop of Jamil Abbas, back turned to the camera, in Islamabad recently. PHOTO: QASIM NAUMAN
By contrast, the American middle class is shrinking: The proportion of U.S. adults living in middle-income households fell to 50% in 2015 from 61% in 1971, as the poor and the rich segments grew, according to the Pew Research Center.

In the developing world, the ability to purchase durable goods such as motorcycles—which itself can lead to new opportunities in employment, education and leisure—is generally viewed as an indicator of a middle class lifestyle. Motorcycle purchases soared in Pakistan to 2 million a year now from 95,000 in 2000, leading Honda Motor Co. to double its production capacity there. Buyers of Honda’s cheapest motorcycle typically earn between just $200 and $300 a month, which would put them well below the poverty line in the West, but here that gives them disposable income.

“All these big companies globally, if they’re not looking at Pakistan, need to look at Pakistan, because it’s a huge consumption economy emerging,” said Saquib Shirazi, chief executive of Honda’s Pakistan joint venture.

At his tailor shop, run from a basement on the outskirts of the capital Islamabad, 39-year-old Mr. Abbas makes $350 a month from a business that employs four other people. That’s enough to rent a two-room home and buy a motorcycle 18 months ago that cut his commute to work from two hours to 30 minutes.

“I’m sure there are many others like me who are trying to work hard and improve their lives,” Mr. Abbas said.

—Qasim Nauman contributed to this article.

https://www.wsj.com/articles/pakistans-middle-class-soars-as-stability-returns-1485945001