How Did Pakistan Do in Year 2012?

[Riaz Haq]

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 $ terms) in 2012 to top all Asian and BRIC market indices.

4. Elected coalition government led by the Pakistan Peoples' Party is close to completing its term with a new prime minister.

5. Retired Justice Fakhruddin G. Ibrahim was appointed by consensus of all political parties as  an independent Chief Election Commissioner with broad powers under the 18th amendment.

6.  Fair Trials Bill (aka Patriot Act) passed the House. This anti-terror legislation is now pending approval by the Senate. Witness protection program is being planned for terrorism cases.

 7. The latest Pak Army doctrine named internal terrorism as the #1 threat. 

 8. Relations with US improved after the American apology over the Salala incident. The US aid and CSF funds flow resumed.

 9. Despite the backlash from the CIA-sponsored bogus vaccination campaign and more recent polio worker shootings, the polio cases significantly declined from 198 in 2011 to 57 in 2012.

10.  Domestic cement consumption, an important barometer of national economic activity, was up 8% in  2012, according to a research report compiled by a Credit Suisse analyst.

11.  Al-Twariqi Steel Mill in Karachi to produce 1.28 million tons of steel
per year and Byco refinery to refine 120,000 barrels of crude per day in
Balochistan were completed in 2012 for full production planned in early 2013.

12.  FFC and Zorlu Energy wind farms with combined 106 MW capacity were inaugurated in Jhimpir near Karachi in December 2012.

13.  Sharmeen Obaid-Chinoy, journalist and documentary filmmaker, won
Pakistan’s first Oscar for her documentary ‘Saving Face’ documenting the stories of resilience and courage of Pakistan’s acid attack survivors. Sharmeen was also featured on TIME’s 100 Most Influential Peoples list for 2012.

14.  Pakistan’s Muhammad Asif won
the World Amateur Snooker Championship in Sofia, Bulgaria.

15. Pakistanis set several records for the Guinness Book of World Records. Amongst them, 44,200 Pakistanis sang the national anthem together at the National Hockey Stadium to set a new world record
breaking India’s record of 15,243 people. Also, more
than 24,000 Pakistanis formed the world’s largest ‘human national flag’,
smashing a previous record set in Hong Kong.

Low-lights: 

 1. There was lack of clear political consensus on military action against the Taliban even as they tried to assassinate innocent civilians like Swat schoolgirl Malala Yousufzai.  She was shot in the head with the TTP claiming responsibility for the attack.

2. Energy crisis, particularly gas shortages, became more acute.

3. Civilian casualties in incidents of terrorism jumped from 2,738 in 2011 to 3,007 in 2012 as the Taliban went after soft targets, including minorities, school girls and aid workers.

4.
Karachi saw a dramatic increase in ethnic and sectarian violence claiming over 2000 lives. Bank robberies, extortion and kidnapping increased as the Taliban sought to fund their insurgency.

5. Public finances remained weak with no real progress in improving tax collection and enhancing tax-to-gdp ratio.

6.  Pakistani currency continued to decline nearing Rs. 100 to a US dollar exchange rate. The rupee  slid 7 percent versus US dollar in the past
year, with reserves down about 19 percent to $13.8 billion raising fears of another balance of payments crisis. 

7. Worsening energy crisis across the nation and increasing violence in Karachi, the economic hub of the country, present a very serious threat to Pakistan's fragile economy and democracy. 


Here's a video discussion on year 2012 in Pakistan:


Related Links:

Haq's Musings

Pakistan's GDP Grossly Underestimated, Shares Highly Undervalued

Investment Analysts Bullish on Pakistan

Precise Estimates of Pakistan's Informal Economy

Comparing Pakistan and Bangladesh in 2012

Pak Consumer Boom  Fuels Underground Economy

Rural Consumption Boom in Pakistan

Pakistan's Tax Evasion Fosters Aid Dependence

Poll Finds Pakistanis Happier Than Neighbors

Pakistan's Rural Economy Booming

Pakistan Car Sales Up 61%

Resilient Pakistan Defies Doomsayers

Land For Landless Women in Pakistan

Pakistan's Circular Debt and Load-shedding

Hypermart Pakistan

[Riaz Haq]

Here's Pakistan Mercantile Exchange Commodity Review report:

Despite a disappointing 2011, many commodities rebounded in a year that was tough for all asset classes. Among agricultural products, wheat and soybeans yielded the highest gains and coffee the biggest loss while in metals, gold's rally stretched to a 12th year whereas oil posted its first annual loss since 2008 as commodities ended 2012 focused on the U.S. fiscal crisis after riding through a blistering drought and Europe's debt debacle.

Stocks showed best performance in three years after posting the worst returns in 2011, beating bonds, commodities and the dollar. The major force behind stocks is central banks. The MSCI All-Country World Index of equities increased 16.9 percent in 2012. The Standard & Poor’s GSCI Total Return Index of 24 commodities rose 0.1 percent, while the U.S. Dollar Index (DXY) lost 0.5 percent. Bonds of all types returned 5.73 percent, on average, according to Bank of America Merrill Lynch’s Global Broad Market Index.

Despite a mixed price trend over the year, the FAO Food Price Index (FFPI) averaged 212 points in 2012, 7 percent (17 points) less than in 2011.

PMEX commodity index increased by 9.60 % during the year 2012 which is based on seven commodities Gold, Silver, Crude Oil, Rice, Sugar, wheat and Palm Olein.

http://www.mondovisione.com/media-and-resources/news/pakistan-merca...

[Riaz Haq]

Here's a ET report on new company registrations in Pakistan in December 2012:

The Securities and Exchange Commission of Pakistan (SECP) registered 332 companies in December 2012, a growth of 22% over the corresponding month of previous year.

Authorised and paid-up capital of these companies amounted to Rs1.7 billion and Rs745 million respectively.

The new incorporations included 302 private companies, 17 single-member companies, seven non-profit associations, four public unlisted companies and two foreign companies – one each from Turkey and Germany.

Nationals of Cyprus, Panama, China, Belgium and the Netherlands also made investment in five new local companies. These companies were associated with the areas of software development, construction and services.

The trading sector has the largest share in new incorporations with 44 companies, followed by services with 39 companies, tourism 37, information technology 19, food and beverages 15, broadcasting and telecasting 14, pharmaceutical, textile and construction 13 companies each, communications and corporate agricultural farming 12 companies each.

The Company Registration Office (CRO), Lahore registered the largest number of companies in December, at 108. It was followed by CROs of Islamabad and Karachi where 98 and 81 companies were registered respectively.

http://tribune.com.pk/story/489131/secp-registers-332-companies-in-...

[Riaz Haq]

Here's a Nation story of a Gallup poll on rising hopes for better economy in 2013 in Pakistan:

A global poll released on the eve of New Year conveys a hopeful message that economic gloom is subsiding world-wide and hopes about the economy have risen from -2pc to 7pc, a rise of 9pc points from a year ago.

The gloomy trend in West Europe appears to have been arrested while North America is slightly less gloomy than it was. There is a notable upsurge of economic hope in China and India. The global survey was carried out by the world’s largest independent network of opinion pollsters, WIN-Gallup International in 54 countries, among more than 55,817 men and women, covering vast majority of world population. The network has conducted this annual poll for 35 years since 1977.

A key question in the global survey asked: Compared to this year, in your opinion, will next year be a year of economic prosperity, economic difficulty or remain the same? According to the WIN-Gallup International global barometer of hope and happiness, 35pc of the world is hopeful about economic prospects in 2013, while 28pc expect it to be worse than the year which is just ending; 29pc expect no change from previous year while 8pc were unable to give an answer.

According to the poll, Pakistanis are rising on the global ladder of hope. Compared to a year ago, net hope rises by 17 percentage points from last year. Among those interviewed here, 32pc of Pakistanis are hopeful about economy, 27% believe it will be of economic difficulty while 30pc believe this year will be the same as last year. However, 12pc did not give a view.

http://www.nation.com.pk/pakistan-news-newspaper-daily-english-onli...

http://www.wingia.com/web/files/news/38/file/38.pdf

[Riaz Haq]

Here's Daily Times on Twariqi Steel Mill plant inauguration in Karachi:

KARACHI: Tuwairqi Steel Mills Limited (TSML) Pakistan’s first private sector integrated environment-friendly steel manufacturing complex of Al-Tuwairqi Holding (ATH)/ISPC of the Kingdom of Saudi Arabia inaugurated by Prime Minister Raja Pervez Ashraf at Port Qasim Karachi on Saturday.
The plant in its first phase has the capacity to produce up to 1.28 million tonnes of high quality Direct Reduced Iron (DRI), which is evidently steel’s most versatile metallic and a preferred raw material for quality steel making worldwide.
Raja Pervez Ashraf congratulated the entire team of TSML on the successful completion of the first phase and committed to extend all possible support from the government for the expansion plans of ATH and POSCO in Pakistan. He said, “It is a matter of great pride for us Pakistan has now started producing DRI, with the completion of the first phase of TSML. We are committed to transform our country into an industrial hub and for that we seek more projects-especially in the steel sector, since steel is the backbone of the industrial growth. TSML in poised to serve as a catalyst for the industrial growth of Pakistan.”
He was of the view currently Pakistan was among the countries that rely mostly on imports when it comes to heavy mechanical structures and engineering goods. By producing high quality steel within Pakistan we can manufacture such equipment locally by value addition with the help of downstream industries, he concluded.
He distributed shields among outstanding employees of TSML as a token of appreciation of their hard work and dedication to successfully complete the first phase.
The first phase has been completed with an investment of over $350 million. The plant spreads over an area of 220 acres at Bin Qasim Karachi and employs the world’s most advanced DRI technology of the MIDREX process owned by Kobe Steel of Japan. ATH/ISPC and POSCO have signed a memorandum of understanding (MoU) with the government of Pakistan for the backward and forward integration with an estimated investment 3 times higher than of the DRI plant. Forward integration would be a further value addition through a Melt Shop, producing world standard steel grades, while backward integration would be to the extent of exploring iron ore locally in Balochistan, its beneficiation and pelletisation as well.
Dr Hilal Hussain Al-Tuwairqi, Chairman Al-Tuwairqi Holding appreciated the efforts of TSML employees. He said Al-Tuwairqi’s vision was to participate in the development of national economy in order to have a long sustaining growth of Pakistan.
“We are looking forward to create for our younger generations, ample job opportunities to build a strong and prosperous nation on the face of this plant. Al-Tuwairqi sees Pakistan as a land of opportunities and we are very clear in our perception that Pakistan as a country has to grow and we are determined to play an instrumental role in its development, he remarked.
Joon Yang Chung Chairman and CEO POSCO of South Korea congratulated the entire team of TSML. He said it was heartening to learn that TSML has increased the production capacity of Pakistan by 1.28 million tonnes per annum, which would help meet the ever growing demands of steel in Pakistan.
Zaigham Adil Rizvi Director (Projects) TSML said TSML has massive expansion and modernisation plans not only to enhance production capacity at an exponential rate but also to improve productivity and efficiency, matching the highest global standards. Pakistan’s current per capita steel consumption is only 40 kilogramme, which is exuberantly low, when compared with the global average of 215 kilogramme. This establishes a dire need increased emphasis on achieving international benchmarks to become a modern and an efficient economy.

http://www.dailytimes.com.pk/default.asp?page=2013\01\13\story_13-1-2013_pg5_2

[Riaz Haq]

Here's Daily Times on fiscal deficit in 1H of 2012-13:

The country’s budget deficit for the first half (July to December) period of the ongoing fiscal year 2012-13 has been estimated provisionally on the lower side at 2.4 percent of the gross domestic product (GDP), mainly because of Coalition Support Fund (CSF) arrears released by the United States otherwise it would have been at 3.0 or 3.1 percent of the GDP, a senior official informed
on Saturday.
The revenue shortfall owing to political uncertainties, power subsidies over and above budgetary allocation and gas and power shortages in the country with increased election-related expenditure are likely to take the budget deficit to around 6.3 percent of the GDP by the end of the ongoing fiscal year, in case the Public Sector Development Programme was not slashed to adjust the extra expenditures, experts believe.
However, uncertainties on federal tax collection and power subsidies are the main areas of concern for the economic managers of the country as the federal tax collection is witnessing a shortfall and annual budgetary allocation for power subsides have been consumed in just six months of ongoing fiscal year.
The authorities have estimated that budget deficit for the entire fiscal year would increase by 0.6 percent of the GDP in case the federal tax collection falls short of the annual tax collection target. Similarly, the budgetary allocation of power subsidies which was Rs 170 billion have already been consumed in just six months and subsidies to be required to finance the tariff differential of the second half (January to June) period of the ongoing fiscal year 2013 would increase the budget deficit by around 1.0 percent of the GDP, economic experts in the private sector believe.
The Ministry of Finance has paid Rs 117 billion to Water and Power Development Authority (WAPDA) and Rs 22 billion to Karachi Electric Supply Company (KESC) to subsidise their tariffs for the consumers during July to November period and Rs 23 billion has also been paid to power sector as subsidy during the month of December. This subsidy is mainly financing the gap between generation cost and power tariff charged by the power companies from the consumers. At present the difference between power tariff is determined by the regulator and power tariff charged by the power companies.
According to the estimates, tax collection of the federal government, which has been set at Rs 2.381 trillion is also going to be missed and collection to end up at around Rs 2.1 trillion, as per the International Monetary Fund (IMF) estimates under the prevailing political, geo-strategic and energy crisis situation.
However, the sources informed that Ministry of Finance has its own view on tax collection and it strongly feels that tax collection would be around Rs 2.231 trillion against the annual tax collection projection of Rs 2.381 trillion, and expected shortfall of Rs 150 billion in this fiscal. The sources further informed that efforts are there to take tax collection near to its budgetary target with enforcement of tax amnesty scheme for whitening undisclosed and undeclared assets and money.
The official at Ministry of Finance informed that the ministry has not slashed its annual tax collection target downwards as this would relax the tax authorities in putting up of their maximum efforts for increasing tax collection. The ministry has no authority to slash the annual tax collection target downwards as it is approved the federal cabinet and is only authorised to do so. The ministry has sent no summary to the cabinet for revision in tax collection target so far, added the official.
....

http://www.dailytimes.com.pk/default.asp?page=2013\01\13\story_13-1-2013_pg5_1

[Riaz Haq]

Here's PakistanToday on expansion of re4fining capacity to 18 million tons:

Karachi - country’s largest oil refinery at Mouza Kund, District Lasbella, Balochistan. At present the refinery is in a state of pre-commissioning and preparatory activities wherein different plants, equipment and instrumentation are being put to confirmatory checks and tests.

The cold circulation of crude oil has already been established and sustained. Also furnaces of different process units have been test fired. The refinery is ready for hot commissioning and start up.

This newly-commissioned petroleum refinery would have an installed refining capacity of 120, 000 barrels per day.

Combined with existing and fully operative smaller refinery, the cumulative capacity shall be over 155,000 barrels per day which is 55% higher than the existing largest refinery in Pakistan.

Thus it would enhance overall crude oil refining capacity in the country from existing 12.25 to 18 million tons per year and would significantly contribute in reducing import of deficit refined petroleum products in the country.

This refinery can be further expanded up to 180,000 bpd.

“This milestone, for sure, has been made possible with sheer hard work of our Employees and support & cooperation of all our valued contractors. Upon commissioning this Refinery, with the blessings of the Almighty, will become the single largest in the country,” said Qaiser Jamal CEO Byco Oil Pakistan while declaring the completion.

Along with this new Refinery, the Country’s first isomerisation plant is being commissioned, he said.

The introduction of isomerisation technology in Pakistan would not only enable this refinery to produce higher volumes of motor gasoline to meet the country’s demand but this will be the first environment friendly motor gasoline, with almost nil content of Benzene.

The first parcel of crude oil for this refinery will be brought to the country’s first single point mooring installed 10km into the Arabian Sea for direct discharge to the Refinery storage tanks. This facility can discharge tankers carrying over 100,000 metric tons of crude oil.

With an investment of significantly over $600 million and rising, Byco also operates as a fast growing petroleum marketing business network comprising of 222 retail outlets.

Amir Abbassciy, CEO of Byco Industries Incorporated, parent company of Byco’s operating companies in the country said: “These are the first significant steps toward achieving our aim to be in integrated oil to chemicals and related infrastructure businesses.”

http://www.pakistantoday.com.pk/2012/12/19/news/profit/bycos-larges...

[Riaz Haq]

Here's a Nation newspaper report on power projects under way in Pakistan:

ISLAMABAD - Ministry of Water and Power is managing portfolio of 37 Independent Power Producers (IPPs) through Private Power and Infrastructure Board (PPIB) with a cumulative capacity of 11,771MW for solution of energy shortage problem in the country.

These projects, being managed on the basis of water, coal, gas and oil resources, are at various stages of implementation and will be commissioned this year through 2019. An official source on Monday said in addition to this there are numerous Hydro Power Producers (HPP) projects under construction for a cumulative capacity of 6054 MW which are also due to be commissioned from 2016-19.

He said the Ministry of Water and Power has been working on war footing to overcome the energy crises and was undertaking different projects under its two pronged strategy both in public and private sectors to meet the demand. It is pertinent to mention here that six IPPs, having cumulative capacity of 2530 MW have been commissioned through private sector since 2008.

Moreover, he said, the Ministry is determined to enhance production of existing power plants through GENCO rehabilitation projects and addition of new power plants like 747 MW combined cycle power plant at Guddu is underway for addition in the system. Under conservation measures, the official said in pursuance of Cabinet Decision two holidays were announced per week for all government offices which have resulted in conservation of approximately 250 MW.

Steps have been taken to minimize the load of unnecessary lights and hoardings while concerned departments have been requested to replace the street lighting with LEDs and use of solar energization to reduce load. He said a replacement of agricultural tubewell motors with efficient motors in MEPCO and IESCO are in progress which will also result in conservation of up to 60 MW electricity. A project of distributing 30 million CFLs to domestic consumers has been initiated which will ultimately result in conservation of 1000MW, recently a bill has been placed before National Assembly for introducing penalties to individuals involved in electricity theft which will result in reducing theft and increasing receivables in circular debt and line losses of the system.

He said an improvements in the system are underway by introduction of Advance Metering System (AMR) which will also help to reduce line losses and ultimate reduction in load while rehabilitation of transmission lines in collaboration with international funding agencies is also being implemented to improve the efficiency of the system.

http://www.nation.com.pk/pakistan-news-newspaper-daily-english-onli...

[Riaz Haq]

Here's PakistanToday on record remittances from Pak diaspora:

KARACHI - Economic observers expect the inflow of ever-increasing worker remittances to the country rise to a historic $ 16 billion by the end of this financial year.
“Home remittances continue to remain upbeat reaching the level of USD 7.1 billion during the first six months of FY13,” said analysts at InvestCap Research.
Terming it as one of the major supporting tools for the current deficit, the remittances from expatriates, they said, continued its upward trajectory.
During the first half of FY13, remittances posted a colossal growth of 12.5% YoY to USD 7.12 billion, in absolute terms increasing by USD 791 million.
However, on a monthly basis, the head registered a growth of 11% reaching USD 1.13billion in December 2012.
Such increase was however misleading, emanating from a low base effect of November, 2012, rather than depicting an actual increasing trend.
“The country witnessed a huge influx of remittances, touching USD 1.37 b, in October, 2012, due to the Eid factor,” viewed Abdul Azeem at the InvestCap Research.
Following this, the analyst said, remittances in November, 2012, remained extraordinarily depressed at the level of USD 1.02 billion thus leading to a low base effect in December, 2012.
The huge chunk of remittances received from the Middle East continued to play a significant role in the overall inflows into the country.
Within this region, the major oil economy, Saudi Arabia remained the key contributor with 28% weight in total remittances; remittances from Saudi Arabia posted a growth of 18% YoY to USD 1.96 billion during the first half of FY13. One of the strongest economies of the world, Saudi Arabia continued to import employees from Pakistan, therefore, a positive impact was observed in remittances from this country.
Another region of the Middle East, United Arab Emirates also remained a key source of remittances as it maintained 21% weight in total remittances from where the over all remittances increased by 3% YoY to USD 1.46 billion in the first half of FY13.
Amongst the Western countries, USA was the most important contributor, accounting for 16% share in the total home remittances although the growth was flat (0.5% YoY) but inflow of USD 1.16 billion was witnessed during the first six months of FY13. Furthermore, remittances coming in from the UK experienced massive growth of 38% YoY during the same period. UK ranked second amongst the major contributors to increase in remittances in the first six months of FY 13.
“We expect the consistent upward trend in remittances to provide support to the current account (C/A) during the remaining period of FY13,” Azeem said.
However, he warned, IMF payments were likely to exert pressure on the current account deficit, as the country has to pay USD 1.7billion during the second half of FY13.
Although, lower imports and rising exports continue supporting the trade deficit, in the latter half of FY13, we expect a significant draw back to be evident in the form of shortage of gas, absorbing any such positives. We foresee such shortage to injure exports of the country, mainly the textile sector, being a major contributor to the country’s exports.

http://www.pakistantoday.com.pk/2013/01/14/news/profit/remittances-...

[Riaz Haq]

Here's NY Times on a huge protest march in Islamabad:

An enigmatic preacher is camped before the gates of Parliament with thousands of followers, demanding the government’s immediate ouster. The top court on Tuesday suddenly ordered the arrest of the prime minister. Violence is surging, with militants stepping up deadly attacks against both government forces and religious minorities. And relations with India have dipped, after ill-tempered border skirmishes in which soldiers on both sides were killed.

As it is all unfolding, the country’s powerful military command, long at odds with the government of President Asif Ali Zardari, is in sphinx mode. The army chief, Gen. Ashfaq Parvez Kayani, and his commanders have maintained a cool distance from the unfolding political chaos, their silence stoking speculation about whether the military’s days of political intervention are really, as it claims, over.

“It’s the silence of the legions that is unnerving,” said Ayaz Amir, an opposition member of Parliament.

-----------
“There’s a sense that things are snowballing — hard to predict in any way,” said Cyril Almeida, a senior writer at Dawn newspaper.

---

A giant rally in Lahore last month signaled the start of Mr. Qadri’s assault on Pakistan’s political classes, which he derides as incompetent and irredeemably corrupt — a resonant message in a country of high unemployment and crippling electricity shortages. He drove home his message with an intensive television advertising campaign, paid for with generous amounts of money, the origins of which he has not fully explained.

On Monday evening, he stepped up the attack, leading tens of thousands of followers into the heart of Islamabad, where he renewed demands that Mr. Zardari resign immediately. The crowd fell short of the promised “million-man march,” but was enough to spook the government: by Tuesday morning, he had pushed forward to a square in front of the Parliament.

“There is no Parliament; there is a group of looters, thieves and dacoits” — bandits — he said in a thundering voice, pointing to the building behind him. “Our lawmakers are the lawbreakers.”

The dramatic climax of that speech, however, came not from the preacher himself, but from the marble-walled Supreme Court about 200 yards up the street.

As Mr. Qadri spoke, news broke that Chief Justice Iftikhar Muhammad Chaudhry had issued an order for the arrest of the prime minister, Raja Pervez Ashraf. The report visibly thrilled the crowd, prompting loud cheers and a sense that the promised “revolution” was going their way.

---------
The difference with Egypt, of course, is that Pakistan has no dictator to overthrow. And while Mr. Zardari’s government has faced criticism as having governed poorly in many respects, it has made considerable strides in anchoring the country’s democratic structures.

Through a series of constitutional amendments, all of them approved by the opposition, Mr. Zardari has gradually devolved power to the provinces, reduced his presidential powers and made the electoral process more transparent. Now, advisers say, he is intent on completing the government’s term in March — the first time in Pakistan’s history that a civilian government would have seen out its five-year term.

But first that government must make it through the coming days.

---
Having shut down the center of Islamabad, and dominated the news cycle, Mr. Qadri is unlikely to surrender the limelight easily. His well-organized supporters insist they will not budge until their demands are met, and are encouraging other Pakistanis to join them.

If that happens, the government may have little option but to break up the protest by force. And it would be at that point that the army, sitting quietly on the fence, would be most likely to step in.

www.nytimes.com/2013/01/16/world/asia/pakistan-high-court-orders-ar...

[Riaz Haq]

Here's Bloomberg on Pak stock market outlook:

Muddassar Malik, chief executive officer of BMA Funds, who oversees the equivalent of $120 million in stocks and bonds, comments on his outlook for Pakistan’s stock market after the benchmark Karachi Stock Exchange 100 index sank 3.2 percent to 16,107.89 yesterday, its steepest drop since Aug. 9, 2011.

Stocks fell after the country’s Supreme Court ordered the arrest of Prime Minister Raja Pervez Ashraf in a corruption case involving rental power projects. Prior to that announcement, Tahir-ul-Qadri, a popular cleric, rallied thousands of protesters in the capital Islamabad, calling for the government to be dismissed. Malik spoke in a phone interview from London late yesterday.

On the impact of the court order:

“The events are very significant, disruptive events for Pakistan’s political landscape. But I feel this is not the end, perhaps it’s the beginning. I believe the likelihood is that these events will be driving the position into positive territory.

“The structural and the fundamental story in Pakistan remains unimpaired; high population, a country with significant demand driven by domestic consumers and located in one of the fastest growing regions in the world. What is missing is a set of economic and political policies which create the right environment for investment and I think the disruption can bring about that change in confidence. There is a certain degree of optimism that we have to look forward to.”

On investors’ fears:

“There are concerns about the future direction post- elections. Investors are looking for clarity. In the last four or five years, Pakistan has been through a very difficult and challenging period in terms of politics and economics as well as the war on terror. So investors see a landscape that is starving of investment, and I think people are hungry to get back into the game.”

On market sentiment:

“The unexpected announcement was obviously a jolt for the market and it caught the market unaware and wrong-footed in the context of the political demonstrations taking place in Islamabad. Market sentiment is 100 percent driven by politics at the moment and I think it’s unrealistic to assume that sentiment will change very quickly for the next week to fortnight.”

On BMA Fund’s index target for 2013:

“Our index target for the calendar year 2013 is 20,000, and we don’t feel that the current set of events will derail that target for the time being. With the market showing the declines it has done and also the declines it could do in the coming days, it will certainly set up some of the good high- quality stocks to give healthy returns in excess to 20 percent to 30 percent.”

http://mobile.bloomberg.com/news/2013-01-16/pakistan-stocks-to-rebo...