South Asia Investor Review

Pakistani-American Saira Malik has been named chief investment officer of Nuveen which manages US$1.2 trillion in equities, fixed income, real estate, private markets, natural resources, other alternatives and responsible investments, according to US media reports . She will maintain her portfolio management and leadership responsibilities for Nuveen’s US$450 billion global equity business, and remain lead portfolio manager for the US$132.95 billion CREF Stock strategy and a listed portfolio manager for the US$37.84 billion CREF Growth and US$27.21 billion CREF Global Equities strategies. Saira Malik, Nuveen Saira has held a variety of positions since joining Nuveen in 2003. Prior to being named CIO, she was head of global equities portfolio management, and before that, head of global equities research. Previously, Saira was with JP Morgan Asset Management, where her roles included vice president/small cap growth portfolio manager and equity research analyst. Saira Malik's parents ...

The World Economic Forum forecasts that Pakistan will rise to become the world's 7th largest consumer market by 2030. Nearly 60 million Pakistanis will join the consumer class (consumers spending more than $11 per day) to raise the country's consumer market rank from 15 to 7 in the next 10 years. WEF forecasts the world's top 10 consumer markets of 2030 to be as follows: China, India, the United States, Indonesia, Russia, Brazil, Pakistan, Japan, Egypt and Mexico.  Global investors chasing bigger returns will almost certainly shift more of their attention and money to the biggest movers among the top 10 consumer markets, including Pakistan.  Already, the year 2021 has been a banner year for investments in Pakistani  technology startups .  Consumer Markets in 2030. Source: WEF Here's  Brookings Institution  overview of the top 5 movers in the next 10 years: 1. Bangladesh (+17 positions), from place 28 to 11; future consumer class: 85 million (+50 millio...

Pakistan textile industry is booming with exports soaring 27% to more than $6 billion in the first four months (July-October) of the current fiscal year. “We believe that $5 billion investment (in textile industry) in the Musharraf era would be matched in the next six to eight months”  says Zubair Motiwala, a leading textile industrialist and chairman of Businessmen Group (BMG), as quoted in the Pakistani  media reports . Pakistan textile exports more than doubled from $5.2 billion to more than $11 billion during Musharraf years. Exports soared 19.43% in 2001, 20% in 2004, 24.5% in 2005 and 11.23% in 2006, all on President Musharraf's watch, according to "The Rise and Fall of Pakistan's Textile Industry: An Analytical View" published by  Javed Memon, Abdul Aziz and Muhammad Qayyum .      Pakistan Textile Exports Growth. Source: Javed Memon Pakistani government officials report that the textile sector has invested $3-3.5 billion on modernization and exp...

Pakistan led South Asia region and ranked 4th in the world in infrastructure investment commitments in the first half of 2020, according to World Bank's "Private Participation in Infrastructure" report for the first half on the year 2020. Mexico led the pack with $4,016 million, followed by Brazil 2nd with $3,543 million, China  3rd with $2,859 million, Pakistan 4th with $1,921 million and India 5th with $1,762 million in private infrastructure investment commitments in the first 6 months of 2020. Here is an excerpt of the World Bank report: "Pakistan had the fourth highest investment commitments—a new entrant to the top five countries this year—with US$1.9 billion of investment commitments, accounting for 0.69 percent of GDP. This can be attributed to the financial closure of the Thar Block-I Coal-Fired Power Plant, which was the only project to reach financial closure in the country during this time period. The Thar power plant and the pipeline in Mexico were the o...

Indian consumers are hooked to a whole range of Chinese products. India's industry sources critical components from China. Indian startups rely on Chinese venture capital. Can Indians really afford to boycott China without seriously hurting themselves after the killing of Indian soldiers by the Chinese Army in  Ladakh ?  Let's look at the data. China-India Lopsided Trade. Source: Times of India Volume of China-India Trade: India accounts for $70 billion of China's export,   less than 3%  of the country's $2.5 trillion in exports. Chinese products make up about 18% of India's total imports. India imports almost seven times more from China than it exports to it, according  Indian media reports . India runs huge trade deficit with China – its largest with any country. In 2018-19, India’s exports to China were mere $16.7 billion, while imports were $70.3 billion, leaving a trade deficit of $53.6 billion. Indian Industries Dependence on China: Indian industry de...

Remittance inflows from  Pakistani diaspora  have jumped 21-fold from about $1 billion in year 2000 to $21 billion in 2018, according to the World Bank. In terms of GDP, these inflows have soared nearly 7X from about 1% in year 2000 to 6.9% of GDP in 2018. Meanwhile,  Pakistan's exports  have declined from 13.5% of GDP in year 2000 to 8.24% of GDP in 2017.  At the same time, the country's  import bill  has increased from 14.69% in year 2000 to 17.55% of GDP in 2017.  This growing trade imbalance has forced Pakistan to seek IMF bailouts four times since the year 2000.  It is further complicated by external  debt service  cost of over $6 billion (about 2% of GDP) in 2017. Foreign investment in the country has declined from a peak of $5.59 billion (about 4% of GDP) in 2007 to a mere $2.82 billion (less than 1% of GDP) in 2017. While the current account imbalance situation is bad, it would be far worse if Pakistani diaspora did n...

Speaking at a recent Delhi investment conference, Managing Director and Chief Strategist Christopher Wood of CLSA (formerly known as Credit Lyonnais Securities Asia) surprised everyone, by saying that he loves the Pakistan stock market more than any other in Asia, according to  Indian media reports . Wood, based in Hong Kong, has been named as the "best strategist" in Asia several times by magazines such as Asiamoney and Institutional Investor. Christopher Wood of CLSA in New Delhi, India Strong Recovery: After recently visiting Pakistan for the first time,Wood wrote that Pakistan faces some short-term issues  but its "economy can recover quickly from its latest crisis once the current hole in the balance of payments is plugged, as is likely to be the case by a combination of China and IMF funding, combined with some extra support provided by Saudi Arabia". Exports as Percentage of GDP. Source: CLSA Wood explained  that "minimal (private sector) d...

The bulk of Pakistan's exports consist of low value commodities like chadar, chawal and chamra (textiles, rice and leather). These exports have declined from about 15% to about 8% of GDP since 2003. Pakistan's trade deficits are growing at an alarming rate as the imports continue to far outstrip exports. This situation is not sustainable.  What must Pakistan do to improve it? What can Pakistan do to avoid recurring  balance of payments crises ?  How can Pakistan diversify and grow its exports to reduce the gaping trade gap? How can Pakistan's closest ally China help? Can China invest in export oriented industries and open up its huge market for exports from Pakistan? Let's explore answers to these question.  Exports as Percentage of GDP. Source: World Bank East Asia's Experience: East Asian nations have greatly benefited from major investments made by the United States and Europe in export-oriented industries and increased access to western markets ...

A headline in the Economist magazine's recent issue screams: "Bangladesh's GDP per person is now higher than Pakistan's". Let's examine this development to understand its causes. Per Capita GDP: The  Economist article  explains its headline as follows: "Last month revealed a remarkable turnaround. Bangladesh’s GDP per person is now higher than Pakistan’s. Converted into dollars at market exchange rates, it was $1,538 in the past fiscal year (which ended on June 30th). Pakistan’s was about $1,470....Strange as it may sound, Bangladesh jumped ahead because of an advance in Pakistan. On August 25th Pakistan released the results of its census, updating earlier population estimates. They showed that the country has  207.8m people , more than 9m more than previously thought. It may now have the fifth biggest population in the world, surpassing Brazil’s. But the new count also lopped 4-5% off Pakistan’s GDP per person, the arithmetic consequence of revealing...

Is Pakistan's growing population a "disaster in the making" ? Is it a bigger disaster than the population bust in Europe and East Asia with their aging societies and shrinking labor force? Where will the investment in education, health and job creation come from in Pakistan to meet the growing population? Is there a demographic dividend with Pakistan's labor force growing faster than the overall population? Will growth in labor force help increase domestic savings rate in Pakistan? What is the relationship between GDP growth and job creation? What is Pakistan's employment elasticity relative to other nations in South Asia? Source: World Bank Report "More and Better Jobs in South Asia" Who are the Rohingya? Why are they being attacked, raped, killed and driven out of their homes in Rakhine state? Why is the Myanmar government and its allied Buddhist militias, including monks, burning Rohingya villages? Is it a " textbook example of ethnic cl...

Is China ripping off its all-weather friend Pakistan by charging high interest rates on loans and exorbitant guaranteed returns on investments in  China Pakistan Economic Corridor (CPEC)  projects?  That's a question that is being asked on a frequent basis by Pakistan's friends and foes alike. While friends of China-Pakistan ties are concerned about an undue burden on Pakistanis, the foes see CPEC as an opportunity to create a lot of  fear, uncertainty and doubt  about it and its benefits for Pakistan's economy and society. Who's right? Who's wrong? Why? Let's dive into it. CPEC Projects in Pakistan Claims by CPEC Detractors: Many Western and Indian opponents claim that the cost of CPEC financing will be so high that Pakistan will not be able to bear it. They assert that China is attempting to catch Pakistan in a debt trap from which the country will not be able to escape, eventually turning it into a Chinese colony. The financing costs for Chinese loan...