India Pakistan Comparison 2010

[RiazHaq]

Who lost the argument for market cap to gdp?

It is bs theory. I gave above three examples.

Do you know Palestine stock exchange has higher return than KSE. It has provided 20% return from inception.

Do you thing PSE is better than KSE? Even both countries run on AID.

BSE and KSE are in different category. They can't be compared.
As some one said reliance industry alone is worth more than entire KSE.

Valuation depends on future earnings and earning growth.

Of course, investors consider PE ratios, and market-cap to GDP ratios etc. Legendary investors like Warren Buffett look at both.

As Seeking Alpha post said last year, "Whenever Warren Buffett gives us insight on how he invests, we listen. One point Buffett made recently was to look at the total stock market capitalization compared to GDP. In recent years, the market has done better when this ratio is in the 80% range than when stocks are valued above GDP. This showed itself to be true most prominently during the dot com bubble." Using Market Capitalization / GDP as a Valuation Metric -- Seeking Alpha

As to comparing different markets, your response shows your desperation. In the global capital market, smart investors compare all options when investing. BRIC, N11, US, Europe, Middle East, Asia, etc, etc.

And don't pooh pooh the Palestinian people. In spite of the brutal Israeli occupation, Palestine also ranks much higher than India or Pakistan in human development. It shows the potential of the people if they are allowed to live as a free nation.

 

[karan.1970]

The US ratio of market cap to gdp is a little misleading because the US GDP is significantly underestimated, as I explained earlier. It's very different from the case for India where MNCs contribution to Indian GDP is insignificant.

But you did refer to US in another thread to highlight that markets get into bubble terrirotry beyond 100% GDP.

Anyway, my earlier point stands.. There is just no causation relation between GDP and MCap of publically listed companies as both of them dont refer to the same set of GDP producing entities. If a large part of Pakistan's companies are privately held or take an example of a socialist or communist country, this ratio will be excessively small no matter what kind of bubble gets created in the market for that country. So in absence of a ratio that shows the GDP contribution of all the listed companies of a country to total GDP, this ratio in my view does not hold much water for predicting Stock market direction..

 

[RiazHaq]

Don't bring buffet value investing philosopy in investing in KSE
. Buffet will not invest a penny in Pakistan market. Leave about Buffet even his distant relative will not touch Kse with 100ft pole.

I responded to your questioning of the market cap to gdp ratio by bringing Buffet's thinking to support the notion.

As to Buffett investing in KSE, it's not a litmus test. If you know anything about Buffett, he doesn't invest in high tech Si valley companies, either. Does that mean that Silicon Valley companies are not worthy of any one investing in them? Of course, not!

Why are you trying to distract from the issue of relevance of market cap to gdp ratio in investing by dissing Pakistan? Are you interested in debating the issue and understanding general investment criteria, or simply denigrating your neighbor?

 

[asq]

Dude dit it make your day by posting things saying Pak is better than India ?

We are very happy for your progress and development only thing we are worried about is your top export - Terrorism to India and rest of the world.

a clever ploy by an Indian to hide its own problems by blaming and dumping it on Pakistan.

In a world that is ever so small and smart, lies and exegerations will not work.

 

[asq]

Who lost the argument for market cap to gdp?

It is bs theory. I gave above three examples.

Do you know Palestine stock exchange has higher return than KSE. It has provided 20% return from inception.

Do you thing PSE is better than KSE? Even both countries run on AID.

BSE and KSE are in different category. They can't be compared.
As some one said reliance industry alone is worth more than entire KSE.

Valuation depends on future earnings and earning growth.

20% returns are a problamatic thing, Let me remind u of Mr. MADEOF, and u will know the truth about higher retruns.

 

[asq]

But you did refer to US in another thread to highlight that markets get into bubble terrirotry beyond 100% GDP.

Anyway, my earlier point stands.. There is just no causation relation between GDP and MCap of publically listed companies as both of them dont refer to the same set of GDP producing entities. If a large part of Pakistan's companies are privately held or take an example of a socialist or communist country, this ratio will be excessively small no matter what kind of bubble gets created in the market for that country. So in absence of a ratio that shows the GDP contribution of all the listed companies of a country to total GDP, this ratio in my view does not hold much water for predicting Stock market direction..

If GDP ratio sdoes not hold much in your openion than tell us what does.
simply disrergarding the set of standards used by U.N. nd all ountries of the world for their checks and balances cannot be simply abondoned because u say so.

Do u offer an alterrnative or just argue about it for the sake of argument. can u clarify and enlighten the readers.

 

[Agni 5]

I responded to your questioning of the market cap to gdp ratio by bringing Buffet's thinking to support the notion.

As to Buffett investing in KSE, it's not a litmus test. If you know anything about Buffett, he doesn't invest in high tech Si valley companies, either. Does that mean that Silicon Valley companies are not worthy of any one investing in them? Of course, not!

Why are you trying to distract from the issue of relevance of market cap to gdp ratio in investing by dissing Pakistan? Are you interested in debating the issue and understanding general investment criteria, or simply denigrating your neighbor?

I believe KSE has different companies. It has only one high tech company.

Now coming to the topic. Market cap to gdp discussion.

Give me 5 points how they are related and why they are overvalued for developing country like india. Don't quote persons words. like X said something.

 

[Agni 5]

20% returns are a problamatic thing, Let me remind u of Mr. MADEOF, and u will know thr truth about higher retruns.

Please check last couple of pages of the discussion. Mr haq is saying KSE is out performed BSE so it is better investment.

 

[karan.1970]

It is not my theory.

Stock Market Capitalization To GDP Ratio

In simplest terms, if you think of the mcap of the main national bourse as the "valuation" of the country, and the GDP as the revenue, analyzing ratio is as rational as arriving at corporate valuations as a multiple of revenue. There are other factors, of course, just as there are in corp valuations, but ceterus paribus, there is a correlation.

One disconnect with this theory is that the 2 numbers used in this ratio refer to different bases.. MCap refers to only those companies that are publically listed and GDP to total revenue generated, whether by a listed or unlisted company/individual.

Statistically this ratio is flawed since a country with underdeveloped secondary markets will never show this ratio as high despite the market getting into bubble territory

 

[karan.1970]

Perhaps some more information will help here:

This is not a good time for Pakistan's economy. However, compared to Pakistan's worst position in 10+ years, India still runs a larger budget deficit as a percentage of GDP.

Moreover, look at long term Gov bond yields. Even in Pakistan's weakened economic state, the GoI and GoP are offering the same incentive for long term borrowing.

The budget deficit of Pakistan is under control at this time only because of the bad state of economy which led to the IMF bailout and in turn, IMF linking payment of the bailout tranches to a implementaion of prudent fiscal policies. As a matter of fact, the budget deficit for Pakistan has been much better in last 2 years than a number of years preceeitng them..

 

[asq]

Please check last couple of pages of the discussion. Mr haq is saying KSE is out performed BSE so it is better investment.

My point is that paying higher than established institutions is trouble in the making and who so ever does it, is doing it wrong and is stealing from Paul and giving it to Peter.

 

[Agni 5]

My point is that paying higher than established institutions is trouble in the making and who so ever does it, is doing it wrong and is stealing from Paul and giving it to Peter.

Yes. you are absolutely right.

 

[asq]

Greek Bonds Approach Pakistan Levels on Debt Concern (Update2)

Greek Bonds Approach Pakistan Levels on Debt Concern (Update2) - BusinessWeek

April 23 (Bloomberg) -- Greece’s deficit crisis is pushing its bond yields closer to those of Pakistan, a junk-rated nation that is battling the Taliban

Pakistan is comparison benchmark for junk. Please exclude India from the Junk while discussing about growth and progress.

I have to show the real India as seen by Foriegners who lived in India, it is a repeat but since u r gung ho, I have to copy it for u here, watch and learn.

 

[Agni 5]

I have to show the real India as seen by Foriegners who lived in India, it is a repeat but since u r gung ho, I have to copy it for u here, watch and learn.

YouTube - IQ2 Discussion "Pakistan: what next?" (8 of 12)

BTW , who is that guy?

Infact senator Mcain said pakistan is failed state. Do you want the youtube video link for it?

 

[Hutchroy]

The budget deficit of Pakistan is under control at this time only because of the bad state of economy which led to the IMF bailout and in turn, IMF linking payment of the bailout tranches to a implementaion of prudent fiscal policies. As a matter of fact, the budget deficit for Pakistan has been much better in last 2 years than a number of years preceeitng them..

Thank you for replying on my behalf.

The problem with our interlocutors is that they will see Individual Items – like trade Imbalance – and are not prepared to see the “Phinal Phigure” i.e. the OVERALL BALANCE.

Also they fail to understand that India MOST DEFINITELY HAS A BUDGET DEFICIT.

However, what matters – in the end – is that India does not go begging to all and sundry for more and more Aid on one pretext or the other.

One should also note that India has, as on 31-12-2009 - a Foreign Debt of USD 221.1 Billion while it had a Foreign Exchange Reserves of USD 283.5 Billion. All these Reserves are held by the Reserve Bank of India and does not take into account the Foreign Exchange held by Commercial Banks in India.

In Comparison on the same date Pakistan had an External Debt of USD 55.675 Billion whereas the Foreign Exchange Reserves were USD 12.005 Billion. All these Foreign Exchange Reserves are held by the State Bank of Pakistan.

However the Figure Bandied about is USD 15.0699 which figure also includes USD 3.7870 Billion being held by “Private Investors” in Commercial Banks. People will remember that Nawaz Sharrif "Took Over" the Foreign Exchange Accounts of Private Individuals who held "Foreign Exchange Accounts" in Pakistan therby causing endless misery to the Good and Honest People of Pakistan.

Thus in real terms, on 31.12.2009, the Net Pakistani Foreign Debt is USD 55.675 Billion less USD 12.005 Billion which equates to USD 43.670 Billion and India’s has a Net Foreign Exchange Reserves of USD 62.4 Billion. This is the reason for the Indian Rupee being about 85% Stronger than the Pakistani Rupee.

There ends the lesson!