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Showing posts from January, 2011

Will Foreign Capital Inflows Buoy KSE-100 in 2011?

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"The bottom line is that Pakistan is not going to go away. We want to buy stocks that look cheap as prices come down as a result of the flood."
Mark Mobius, Head, Templeton Asset Management Ltd


Pakistan's main shares index KSE-100 rose 28% (26% in US dollar terms) in year 2010, as profits registered 14% growth and dividend yields of 5.2% in the companies making up the index.

The market gains were driven by significant foreign buying, particularly by insitutional investors after the massive summer floods in KP, Punjab and Sindh provinces. Foreign institutional investors bought $1.2 billion worth of shares, and sold about $687 million, with the net FII capital inflow of $522 million during the year. One example of renewed foreign institutional buying after the post-floods market is Mark Mobius of the Templeton Asset Management Ltd, as reported by Businessweek. “There will be an impact on growth but company valuations are very, very attractive now and therefore we continue to…

High Food Prices Boost Pakistan's Rural Economy

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Since taking the reins of power almost three years ago, the coalition government in Islamabad, which is led by the Pakistan Peoples' Party, has been increasing the support prices of wheat and other agricultural commodities every year. This policy has had the following effects:

1. It is transferring the additional new income of about Rs. 300 billion in the current fiscal year alone to the ruling party's power base of landowners in small towns and villages, from those working in the urban industrial and service sectors.

2. It has driven up food prices dramatically for all Pakistanis, particularly hurting the poor people the most.

3. It has reduced government tax revenues because the agricultural income is not taxed by either the federal or the provincial governments, and resulted in growing budget deficits.

4. It has significantly increased demand for consumer and industrial goods and services in the rural areas.

5. It has forced the State Bank of Pakistan to maintain a tight …

Pakistan's Silver Lining in Rising Exports, Remittances

In addition to significant foreign institutional investments (FII) in Karachi shares last year, the reports of surging remittances by overseas Pakistanis and the nation's growing exports are the only two other pieces of good news amidst an avalance of bad news on the economic front in Pakistan in 2010.

The State Bank of Pakistan has reported that overseas Pakistanis sent home $5.291 billion during July-Dec, 2010, an increase of $761 million or 17 per cent year over year, according to Pakistan's Dawn newspaper.

Remittances of $863 million were sent by overseas Pakistanis last month, up 23.72 per cent or $165 million compared to December, 2009.

Exports in the July-December 2010 touched almost $11 billion – $1.8 billion, or 20.6per cent, higher than last year’s exports in the corresponding period. Meanwhile, imports stood at $19.2 billion, marking a growth of 19.6 per cent, or $3.2 billion, in the first half, according to the Express Tribune.

Pakistani government has been relying …

Mining Rights for Gold, Copper and Rare Earths in Pakistan

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The sale of Reko Diq mining rights is currently being reviewed by Pakistan Supreme Court in response to allegations of lack of transprarency. The entire discussion in the courtroom is primarily centered on valuations and estimates of traditional metals like gold and copper. The second topic of discussion in the apex court is about the absence of any contract provisions for development of downstream job-creating industries to extract these metals.

What is conspicuously absent from the debate is the potential for extraction at Reko Diq of rare earth elements that are even more precious and in much greater and growing demand for the latest high-tech equipment and batteries for all-electric autos, communications, and other applications than traditional precious metals like gold and silver. It is the estimates of these rare earths at Reqo Diq that could put the value of the contract at considerably more than the current best estimates of $500 billion for copper and gold.

Recent trade dis…

Can India Sustain Economic Growth Amidst Exploding Population and Depleting Resources?

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India is expected to surpass China as the world's most populous nation by 2025. As the Indian population rises rapidly amidst its depleting land and water resources, the widespread hunger problem could grow worse unless serious steps are taken now to remedy the situation.





The International Food Policy Research Institute (IFPRI) reported last year that hunger in India has grown over the last three years.



IFPRI said India's hunger index score has worsened over the last three years from 23.7 to 23.9 to 24.1 and its ranking moved from 66 to 65 to 67 on a list of 84 nations....while Pakistan's hunger index score has improved over the same period reported since 2008 from 21.7 (2008) to 21.0 (2009) to 19.1 (2010) and its ranking has risen from 61 to 58 to 52.



In 2011, the situation in India is only getting worse with double-digit food inflation and growing shortages of basics like onions.

With the growing population and worsening water shortages, the prognosis for hunger in India i…

Pakistani-American's Vision to Revolutionanize User Interfaces

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Walking into the local Fry's stores in Silicon Valley during Christmas shopping season, I was fascinated by the latest Xbox 360 demo complete with excited kids dancing in front of a big screen wth a 3D sensor mounted on top of it.

Upon closer examination, I learned that Microsoft Xbox 360 has acquired a few new game-changing tricks thanks to the use of the amazing 3D gensture recognition technology from Canesta, a company co-founded in 2002 by my Pakistani-American friend Nazim Kareemi in Silicon Valley. Cyrus Bamji, an Indian-American, and Abbas Rafii, an Iranian-American, are the other members of the Canesta founding team.



Just before Christmas 2010, Microsoft started shipping Kinect, a $150 add-on for its Xbox gaming consoles, which uses gesture recognition to allow people to play games with body motions instead of controllers. Players work through menus with hand gestures and then move to make their on-screen avatars run, jump, duck, swing and dance. In fact, Microsoft CEO Ste…