South Asia Investor Review

A $44 million 820 kilometer fiber optic cable being laid between Pakistan and China will be the 6th high-speed connection to add redundancy and to cater to rapidly growing Internet traffic from-to Pakistan. It is part of the $46 billion  Pak-China Economic Corridor project  recently agreed between the two neighbors. Fiber Optic Network in Pakistan Source: KHL Undersea Fiber Connectivity: Pakistan is  currently connected with the world through four undersea fibre optic cables. These include India-Middle East-Western Europe (I-ME-WE),  Southeast Asia-Middle East-Western Europe 3 (SEA-ME-WE-3) and Southeast Asia-Middle-East-Western Europe 4 (SEA-ME-WE-4), operated by Pakistan Telecommunication Company Limited (PTCL) and TWA-1, which is owned by Trans-World Associates. A fifth undersea cable called South East Asia-Middle East-Western Europe (SEA-ME-WE)-5 is being laid to connect Pakistan with the rest of the world, according to  Pakistani media reports . O...

A new country Exchange Traded Fund (symbol  PAK ) started trading on New York Stock Exchange (NYSE) this week. The ETF will track the price and yield performance of the MSCI (Morgan Stanley Composite Index) All Pakistan Select 25/50 Index. Pakistan ETF:  The new  Pakistan ETF  launch coincided with Chinese  President Xi Jinping's visit to Pakistan  where he announced massive  $46 billion investment  in Pakistan's energy and infrastructure. The sectors expected to benefit most initially from the Chinese investment are: energy, cement and financial services. Pakistan Outperforms Emerging, Frontier Markets Source: Economist Although the ETF launch timing was fortuitous, it was actually planned well before the Chinese leader's visit. It caters to individual investors seeking outsize returns in Karachi where  KSE-100 index has been outperforming  both emerging and frontier markets for several years. Pakistan GDP, CAD Source: Ec...

This ( China's $46 billion investment in Pakistan ) can not be purely politically driven. Beijing is commercial: CEO’s, not think tank intellectuals, travel with politicians.  Barron's Asia Spurred by  Chinese investment , the smart money is taking notice of Pakistan as an attractive investment destination. The investors are looking at the fact that Pakistani stocks have been outperforming both emerging and frontier markets for several years. The benchmark index of the Karachi Stock Exchange (KSE100) is up more than 20% in the last 12 months, according to  NASDAQ.com . Pakistani Shares in 2015: After a dismal March, MSCI Pakistan rebounded strongly this month, returning 9.1% so far. In April, the iShares MSCI Frontier 100 ETF (FM) rose 4.3%, the WisdomTree India Earnings Fund (EPI) dropped 1.2%, the iShares MSCI India ETF (INDA) fell 1.9%, according to  Barron's Asia . Source: Economist Magazine KSE-100 Performance: In 2014, the KSE-100 Index gained 6,8...

India runs massive current account deficits. Its  imports far outstrip exports  year after year. According to the  Reserve Bank (RBI) data , in the April-December 2014 period of last fiscal, India's current account deficit stood at $31.1 billion or 2.3% of  GDP . In spite such large recurring deficits, India has built up over $300 billion in foreign exchange reserves. How does it do it? The simple answer is: Foreign money inflows in the form of debt and investments mainly from the West keep the Indian economy afloat. Sources of FDI in India Source: Financial Express These inflows have dramatically increased with western support for India in the  post Cold War world . Here's how Indian journalist Pankaj Mishra explains the larger western interest driving this phenomenon: "Seen through the narrow lens of the West’s security and economic interests, the great internal contradictions and tumult within these  two large nation-states (India and Pakis...

“America has no permanent friends or enemies, only interests.” Henry Kissinger Rapidly unfolding events confirm shifting post-cold-war alliances in South Asia. Chinese President Xi Jinping is starting his first state visit to Pakistan to commit investment of over $45 billion in Pakistan, representing the single largest Chinese investment in a foreign country to date. This investment is part of China's “One Belt, One Road” initiative, which is a global project in character and scope representing China’s inexorable rise on the world stage as a superpower. The Pakistan part of it is variously described as Pakistan-China  "economic corridor" ,  "industrial corridor" , "trade corridor" and "strategic corridor". Pak-China Industrial Corridor Source: Wall Street Journal Chinese and Pakistani naval forces have also agreed to boost maritime security cooperation in the Indian ocean with the sale of eight  diesel-electric AIP-equipped submar...

"The estimated “evacuation (defecation) rates” are 0.3 kilograms per day for goats and 0.8 kilograms per day for sheep. The study, titled “Positive Environmental Externalities of Livestock in Mixed Farming Systems of India,” was conducted jointly by the Central Institute for Research on Goats, in Makhdoom, Uttar Pradesh, and the National Center for Agricultural Economics and Policy Research in New Delhi. With all those “droplets” added in, the value of India’s livestock sector in the new GDP series is 9.1 billion rupees, or $150 million, higher than it was in the old series."   Wall Street Journal on India's GDP Revisions Animal droppings (BS) is just one of many innovations of Central Statistical Office (CSO) that are being used to support India's claim to be growing faster than China. Until early February, when CSO changed the way it measures economic activity, India was enduring its weakest run of growth since the mid-1980s. Now it is outpacing China, having grow...

Haier-Ruba joint venture in Pakistan has announced plans to start manufacturing laptops and smartphones in Lahore this year, according to the JV chairman Shah Faisal Afridi. The Haier-Ruba group is one of the largest manufacturers of polyester yarn and home appliances in the country. “We are not relying on importing mobile phones from China but our focus is the transfer of technology in the country so that we could manufacture our own product here. We have already started an assembly line for the laptops in Pakistan”,  Afridi said in an interview with More magazine . Haier Pakistan is currently producing refrigerators, deep freezers, washing machines, home air conditioners, commercial air conditioners, television sets, microwave ovens and  other small appliances in a special economic zone (SEZ) on the outskirts of Lahore. “Pakistan is one of eight countries around the world where the Chinese government plans to help its investors set up and operate SEZs, to use the...

IATA (International Air Transport Association) forecasts Pakistan domestic air travel will grow at least 9.5% per year, more than 2X faster than the world average annual growth rate of 4.1% over the next 20 years. The Indian and Brazilian domestic markets will grow at 6.9% and 5.4% respectively. Source: CAA Via Express Tribune  In a clear sign of  Pakistan's rising middle class  choosing air travel,  the number of domestic and international air travelers in Pakistan grew by 8% to 17.9 million in fiscal year 2013-14 compared to previous year, recording the fastest growth in passenger traffic in the last three years, according to data provided by the  Civil Aviation Authority (CAA)  and published by Pakistan's  Express Tribune newspaper . Growth in air travel is pushing new airport upgrades and new construction to handle more passengers. Examples of  new or upgraded airports  include Islamabad, Multan and Sialkot. Chinese domestic air ...

Guest Post by Monis Rehman, CEO of  Rozee.pk Based on Presentation at  TIECON  2015 in Karachi #5: Pakistan is the World’s most dangerous country You are 50 times more likely to be murdered in St. Louis than killed in a terrorist attack in Pakistan You are 10 times more likely to be killed in a car accident in the US than killed in a terrorist attack in Pakistan *** 75% of VC funded startups fail - worried about 0.0009%? Really? *** #4: Pakistan is small market with little purchasing power ■ 190 Million People ○ World’s 6th most populous country  ■  (PPP) of $835 Billion in 2013 ○ World’s  24th largest GDP ○ Higher than Netherlands, Malaysia and UAE  ■ 54% of Population is youth ○ Rapidly growing  middle class consumers ○ Motorcycle sales increased 4X over last 10 yrs  ■ 37M people with GDP per capita > $12,200 ○ Comparable to South Africa and China #3: Pakistani economy is failing ■ Ret...