South Asia Investor Review

Shares in the Karachi Stock Exchange 100 Index trade at 9.6 times reported earnings, the lowest in Asia excluding Japan, after the gauge rose 21 percent in 2009, according to Bloomberg . Dollar-denominated debt sold by Pakistan returned 86.4 percent so far this year, more than any of the 45 emerging markets tracked by New York-based JPMorgan and 19 developed countries followed by Merrill Lynch & Co. Aberdeen Asset Management Plc in London is bullish about Pakistan because the country is a beneficiary of international support. The U.S. House voted on June 11 to triple economic and development aid and to increase military assistance to stabilize a country vital to the war in neighboring Afghanistan. While the US aid announcement attracts the attention of investors, the fact is that the Pakistani global diaspora's remittances to Pakistan are far larger than any foreign aid packages. Over 7 billion dollars have already been received in the first eleven months (July-May) of the curr...

Amidst major counterinsurgency operations in and around Swat Valley and growing refugee crisis, there are signs of optimism by investors and bond holders in Pakistan's economy. The KSE-100, Karachi's stock index, is up 27 percent this year, compared with a 12 percent gain in MSCI’s emerging-market stock index of 26 emerging economies, including Argentina, Brazil, Chile, China, Colombia, Czech Republic, Egypt, Hungary, India, Indonesia, Israel, Jordan, Korea, Malaysia, Mexico, Morocco, Pakistan, Peru, Philippines, Poland, Russia, South Africa, Taiwan, Thailand, Turkey and Venezuela. The Pakistani rupee, which declined 22 percent against the dollar last year, the second-worst performer in Asia, fell 1.8 percent this year. Pakistan’s 6.875 percent dollar bond maturing in June 2017 yielded 18.62 percent last month, versus a record high of 26.30 percent on Nov. 3, 2008, according to data compiled by Bloomberg . The price has climbed to 52 cents on the dollar, from as low as 35 cen...

In yet another act of conciliation on the part of Western religions towards Islam, the Vatican newspaper Osservatore Romano has voiced its approval of Islamic finance. The Vatican paper wrote that banks should look at the rules of Islamic finance to restore confidence amongst their clients at a time of global economic crisis . “The ethical principles on which Islamic finance is based may bring banks closer to their clients and to the true spirit which should mark every financial service,” the Osservatore Romano said. “Western banks could use tools such as the Islamic bonds , known as sukuk, as collateral”. Sukuk may be used to fund the “‘car industry or the next Olympic Games in London,” the article says. The Vatican article is only one of many articles that have recently appeared on the acceptance by Western governments and bankers of an Islamic financing system . More than accepting it, they seem to be welcoming it, though they are certainly being pressured into this by unnamed force...