South Asia Investor Review

The year 2012 was a mixed bag. Economy continued its modest recovery with the stock market hitting new records but it was marred by rising civilian casualties and the worsening energy crisis. The coalition government led by the Pakistan Peoples' Party is nearing its full term with a new prime minister and the political parties have begun campaigning for general elections in the first half of 2013 .  Below is a summary of positive trends and problems witnessed by Pakistanis in 2012:   Positive Trends: 1. GDP growth rate doubled from the low of 1.71% in 2009 to 3.67% in 2012.   Consumer price index hit a low of 7.9% in December, the lowest in South Asia region . 2.  Terrorism related fatalities declined from the peak of 11,700 in 2009 to 6,211 in 2012, and slightly decreased from 6,303 in 2011, according to SATP . Sectarian deaths accounted for 507 of the 6,2011 victims of terrorism in 2012. 3. Karachi's KSE-100 index surged nearly 50% (37% in US $ t...

Karachi's KSE-100 index surged nearly 50% (37% in US $ terms) in 2012 to top all Asian market indices . It was followed by Bangkok's SET index which advanced 36%. It also easily beat India's Sensex index which was the top performer among BRICs with 25.19% annual gain . A string of strong earnings announcements by Karachi Stock Exchange listed companies and the Central Bank's rate cuts helped the KSE-100 index approach 17,000 level, a gain of  49.84% (37% in US dollar terms). In spite of this run-up in KSE-100 , Andrew Brudenell, manager of the HSBC Frontier Markets fund (HSFAX) in London, remains bullish on Pakistani equities, according to Barron's . Pakistan is one of the cheapest markets he follows, at about seven times earnings. He notes that earnings growth has kept pace with the market. The firms, he adds, are typically cash-rich, boast strong return on equity levels in the 20% range, and pay good dividends. Here's an excerpt of a recent Busine...

The "Hindu rate of growth" is a derogatory description of the low annual growth rate of the pre-1991 Indian economy, which stagnated around 3.5% from 1950s to 1980s, while per capita income growth averaged 1.3%. In what appears to be an exaggeration, the Financial Times in its latest issue has an article titled "India’s abject return to talk of Hindu growth rates". Written by James Lamont, the FT story says that "India trails in terms of attracting foreign capital and beating inflation.... some economists and industrialists fear India’s economy could shrink back towards what was derisively called the “Hindu rate of growth” from initial projections of 9 to 7 per cent this year." With the India story unraveling due to big corruption scandals and governance deficit this year, the FDI fell by 28% , the second consecutive year of decline and the first such large decline since the opening up of the economy in 1991-92. As a result of this decline, the present l...