If you were a smart investor, you would invest in a country with a track record of performance. Last year the stock market set many records and kept on going up. While many stock markets showed turbulence and weaknesses, the investors in Pakistan’s Stock Market kept on raking in the profits. After being stung by the Dubai Ports fiasco, many Middle Eastern and Asian investors have been heavily investing in the Pakistani infrastructure as well as the telecommunication industry. As others jump on the bandwagon, there are a lot of possibilities which need to be tapped into.
Agriculture remains a bed of great opportunity. Coal mining and generation of electricity is a huge opportunity for investors because Pakistan has the worlds 4th largest coal reserves. There is also great opportunity is setting up bullet trains and railway projects. Horticulture and agriculture profits are ripe for the picking. Investors can also take advantage of the booming Call Centers in Pakistan as well as off-shore factories in software. The Software industry in Pakistan is set to reach about 11 Billion Dollars in the next few years. Labor rates are low, and with China setting up 6 new industrial zones, manufacturing will take off. In the entertainment industry, there is a lot of local talent for movies as well as music which has been very successful.There are some exceptions to the gloom, particularly in “frontier” markets like Egypt and Pakistan that aren’t on the radar screen of the average investor. Shares in Egypt and Pakistan have risen 7.7% and 7.4%, respectively. Heidi Moore of the Wall Street Journal put a very unattractive picture in her article which is really disgusting. This shows the basic prejudice of the author.
Meet the World’s Best Performing Stock Market: Pakistan
Posted by Heidi Moore
If you were one of the legions of Wall Street Kool-Aid drinking emerging-markets speculators who bought into the promise of BRICs-Brazil, Russia, India and China-you would have lost a lot of money in the market thus far this year.
Instead, the only booming stock markets are those in the most emerging of emerging markets: Pakistan, Peru, and Chile. Those stocks markets have risen, respectively, 9.5%, 7.1%, and 6.6% this year, according to data provided to Deal Journal by FactSet Research Systems. Taiwan, it should be noted, posted a 7.5% rise for the first quarter.
As for the BRICs? Brazil is down 11%, Russia is down 13%, China is down 26% and India is down 40%. Overall, the average for all world markets this year to date is a loss of 11%, which makes the U.S., what, an outperformer with its decline of 9%.
Other risers include Thailand at 3% and Mexico at 1.5%; the biggest decliner after India is Turkey, down 35% since the year started.
There is the possibility that Brazil, Russia, India and China may have peaked because of all the foreign investment that has rushed into them so fast; more likely, they are now such an integrated part of the world economy that they caught the same bug that took down so many other economies. Andy Mukherjee of Bloomberg wrote in this column that a $428 billion stock glut of shares held by the government and strategic investors are coming out of lockup restrictions and will be traded soon in China.
In contrast, Pakistan, Taiwan, Peru and Chile still are flying a bit under the radar when it comes to global investment and deal making. This WSJ quarterly review article today nods at the success of such “frontier” markets.
Of course, one quarter’s success doesn’t an economy make. Investors will be watching to see if these countries, with their illiquid markets and sometimes tenuous political conditions, can grow when the world-wide competition is a bit more intense and not merely float on a rising tide.
