South Asia Investor Review

A string of strong earnings announcements by Karachi Stock Exchange listed companies and the Central Bank's 1.5% rate cut have helped the KSE-100 index gain 32% year to date. In the week ended on August 16, the benchmark index surged by 238.59 points, or 1.61 percent, to 51-month high of 15,000.08 points. This was the highest close since April 30, 2008. Strong Earnings: Last week, KSE-listed Indus Motors announced 57% jump in profits on record sales of Toyota Corolla cars.  It was followed by Lucky Cement Ltd. (LUCK), Pakistan’s largest producer of the building material, announcing 71 percent surge in profits to a record as an increase in domestic sales offset a decline in exports. Pakistan Petroleum Limited (PPL), the country’s second largest oil and gas explorer, said its profits soared 30% to Rs40.9 billion in fiscal 2012. Strong earnings have also been reported by Unilever Foods and Bata shoes in the last few days. Best Performing Market:  So far in 2012 Pak...

Pakistan has continued to offer much greater upward economic and social mobility to its citizens than neighboring India over the last two decades. Since 1990, Pakistan's middle class had expanded by 36.5% and India's by only 12.8%, according to an ADB report titled "Asia's Emerging Middle Class: Past, Present And Future. New York Times' Sabrina Tavernise described the rise of Pakistan's middle class in a story from Pakistani town of Muzaffargarh in the following words: For years, feudal lords reigned supreme, serving as the police, the judge and the political leader. Plantations had jails, and political seats were practically owned by families. Instead of midwifing democracy, these aristocrats obstructed it, ignoring the needs of rural Pakistanis , half of whom are still landless and desperately poor more than 60 years after Pakistan became a state. But changes began to erode the aristocrats’ power. Cities sprouted, with jobs in construction an...

Indus Motor Company earned Rs. 4.3 billion in net income on sales of Rs. 75 billion in 2011-12, representing an increase 57% in net income and 25% in total revenue over previous year. The company that is 37.5% owned by Japan’s Toyota Motors sold over 55,000 cars during the financial year that ended on June 30, 2012, its highest ever for a single year. Both revenues and profits were the highest in the company’s history in Pakistan, according to media reports . Pakistan's total car market was about 235,000 units in July 2011-June 2012 period. The domestic auto industry sold 178,753 cars, 23% more than last year. The rest of the demand was met by imports of 55,000 cars in fiscal year 2012, representing an increase of 50% over last year. In addition to durables like automobiles, companies in FMCG (fast moving consumer goods) sector are also expected to report strong sales and earnings this year. Engro Foods has emerged emerged as the supercharged FMCG player with over 400 per...

The Industrial Revolution marked the beginning of a major shift in economic, military and political power from East to West.   A research letter written by Michael Cembalest, chairman of market and investment strategy at JP Morgan, and published in the Atlantic Magazine shows how dramatic this economic power shift has been. The size of a nation's GDP depended on the size of its population and labor force in agrarian economies prior to the Industrial era.  With the advent of  the Industrial revolution, the use of machines relying on energy from fossil fuels dramatically enhanced labor productivity in the West and shifted the balance of power from Asia to America and Europe. The shift in power was not just in economic terms. Enabled by machines such as steamboats and weapons like the repeating gun, the West engaged in long distance trade and warfare that led to the colonization and exploitation of Asia and Africa. The new colonies were used as a source of...

Social media revolution is well underway in Pakistan. The new media are coming of age, and trumping the traditional commercial media. Many of the top journalists in the mainstream media knew about Arsalan's Iftikhar's massive corruption but it was through Youtube that the world first learned about it. The same pattern repeated itself when Duniya TV's incriminating off-air video footage found its way on Youtube.  Familygate or Arslangate: It has now been established that Malik Riaz Husain of Bahria Town approached a number of top TV talk show hosts in Pakistan and shared detailed information, videos and documentation about $3.7 million in illegal payments made to Arsalan Iftikhar , the son of Chief Justice Iftikhar Mohammad Chaudhry, over several years. Others, including Chaudhry Aitazaz Ahsan, knew about it and shared it with Justice Chaudhry a while ago. While rumors swirled among the Capital insiders, the public at large was kept in the dark until recently when a vi...

Since the middle of the 18th century, the Industrial Revolution has transformed the world. Energy-hungry machines are now doing more and more of the work at much higher levels of productivity than humans and animals who did it in pre-industrial era.  In recent years, the rapid growth in computers and mobile phones spawned by the Information  and Communications Technology (ICT) revolution has further increased demand for energy. Currently somewhere between 5-10% of  electrical consumption is for ICT and it's likely to continue to grow rapidly. Energy Consumption: Energy consumption in this day and age generally indicates a nation's level of industrialization, productivity and standards of living. Going by this yardstick, Pakistan's 14 million BTUs per capita consumption in 2009 indicates that the country has a long way to go to achieve levels comparable with the world average productivity signified by 71 million BTUs per capita as estimated by US Energy Information A...

Hundreds of Pakistani-American entrepreneurs met on Saturday, June 2, 2012 at Silicon Valley's Computer History Museum for this year's annual conference called OPEN Forum held each summer. It's organized by the Organization of Pakistani-American Entrepreneurs (OPEN) in Silicon Valley.  The conference had a large number of sponsors, including dozens of Silicon Valley companies founded or managed by Pakistani-Americans. Successful social entrepreneur Salman Khan of Khan Academy was the keynote speaker. There were also a number of parallel tracks on various topics of interest to the community. Panelists included venture capitalists, business executives, entrepreneurs, engineers, lawyers, scientists, editors and reporters. I am sharing with my readers some of the highlights of the key sessions that I personally found interesting. Photo by Ali Hasan Cemendtaur INVESTMENT CLIMATE IN PAKISTAN – DO THE RETURNS OFFSET THE PERCEIVED RISKS?  It was moderated by Stephen ...