India to Borrow and Spend More in 2010-2011

[TechLahore]

This is what you called volatility lol

KSE Crashes Due to CJ’s Broken Toe

Karachi, Pakistan: The KSE-100 broke the 0 point psychological barrier today after rumors spread on the trading floor that Chief Justice Iftikhar Muhammad Chaudhry slipped and broke his foot while

This is one for the record books! Full points to you for failing to comprehend sarcasm, satire and wit...

You've quoted an article from a famous satirical blog - the Maila (aka Dirty) Times. Seriously, at least read through the article before quoting it! Are articles about India from The Onion fair game now?

 

[RiazHaq]

how so.. 11.66 for KSE vs 11.8 for BSE. But thats not the point. The point is that the 10 year period from now to 2000 shows no significant difference between returns from KSE vs BSE.

To begin with that dispels all your propoganda of stupendous performance.

Secondly please spend some time on the volatility index of KSE vs BSE. Now which intelligent investor would put money in a much more volatile and small market that shows no differentiation in terms of returns from a much more mature, large and stable market



And thats why I have not just taken those 2 year's data to prove a point but have taken a complete 10 year data for both countries which includes ups and downs for both countries..

BTW.. Had I just taken last 2 years (Mar 2008 to Mar 2010), KSE in USD terms has returned a CAGR of (-30% )and BSE of (-2%).. See what I mean by the volatility index of Pakistan..??

[/QUOTE]

During the last several years, BSE has been just as volatile as KSE, if not more so. It's been true of most markets around the world.

And BSE will see more of this volatility, like what it saw in 2007, 2008 and 2009 with global markets crashing and scandals like Satyam's which exposed big holes in India's regulatory oversight.

Haq's Musings: Is Bombay Bubble Bursting?

Haq's Musings: Satyam Scandal Hurts Confidence in India

If you use just two years worth of data to determine a ten year period, then you will find that all stock markets are a bad investment.

The fact is that KSE is seen by a lot of very smart investors to be good place to invest. That's why it continues to attract local and foreign investors in sufficient numbers in spite of all the bad news.

Regardless of what I say, it's clear that you will maintain your intransigent position and continue to argue that BSE is a better place to invest than KSE. If you are putting your money where your mouth is, then all I can do is wish you lots of luck. You'll really need it.

Here's a report from Dawn on KSE performance published last week:

Foreign investment in the staggering sum of $57 million in two weeks, an unusual phenomenon, is acknowledged by brokers and analysts as the engine that has driven the market to the height.

Broker-turned-industrialist Arif Habib said that foreign funds had recognised Pakistan as a lucrative destination because of improved corporate profitability; a respite in internal political feuds, attractive valuations and high yields.

“The Pakistani stocks give out a yield of 5.5 per cent and the shares of profitable companies are trading on price-to-earnings multiple of seven times the forward earnings. That compares well with the yield of two per cent and p/e ratio of 17 times in the regional markets including India,” Mr Habib said.

http://www.dawn.com/wps/wcm/connect...unds-propel-kse-index-above-10,000-points-330

 

[desiman]

This is one for the record books! Full points to you for failing to comprehend sarcasm, satire and wit...

You've quoted an article from a famous satirical blog - the Maila (aka Dirty) Times. Seriously, at least read through the article before quoting it! Are articles about India from The Onion fair game now?

Lol yes i know mr.TechLahore, please read the last line on the post, sarcasm is my speciality lol

 

[indian_warrior]

During the last several years, BSE has been just as volatile as KSE, if not more so. It's been true of most markets around the world.

And BSE will see more of this volatility, like what it saw in 2007, 2008 and 2009 with global markets crashing and scandals like Satyam's which exposed big holes in India's regulatory oversight.

Haq's Musings: Is Bombay Bubble Bursting?

Haq's Musings: Satyam Scandal Hurts Confidence in India

If you use just two years worth of data to determine a ten year period, then you will find that all stock markets are a bad investment.

The fact is that KSE is seen by a lot of very smart investors to be good place to invest. That's why it continues to attract local and foreign investors in sufficient numbers in spite of all the bad news.

Regardless of what I say, it's clear that you will maintain your intransigent position and continue to argue that BSE is a better place to invest than KSE. If you are putting your money where your mouth is, then all I can do is wish you lots of luck. You'll really need it.

Here's a report from Dawn on KSE performance published last week:

Foreign investment in the staggering sum of $57 million in two weeks, an unusual phenomenon, is acknowledged by brokers and analysts as the engine that has driven the market to the height.

Broker-turned-industrialist Arif Habib said that foreign funds had recognised Pakistan as a lucrative destination because of improved corporate profitability; a respite in internal political feuds, attractive valuations and high yields.

“The Pakistani stocks give out a yield of 5.5 per cent and the shares of profitable companies are trading on price-to-earnings multiple of seven times the forward earnings. That compares well with the yield of two per cent and p/e ratio of 17 times in the regional markets including India,” Mr Habib said.

DAWN.COM | Front Page | Foreign funds propel KSE index above 10,000 points[/QUOTE]

All the stocks of pakistan are penny stocks. People just invest throw away money. Is there any pakistan stock in nasdaq 100?

People/funds with couple of billion dollers can manipulate the market.

I guess NTWK netsol only stock listed in nasdaq as major sw company. But it is penny stock. Sometime you hit jackpot with penny stock like lottery ticket.

PS: I made money shorting NTWK.

 

[RiazHaq]

All the stocks of pakistan are penny stocks. People just invest throw away money. Is there any pakistan stock in nasdaq 100?

People/funds with couple of billion dollers can manipulate the market.

I guess NTWK netsol only stock listed in nasdaq as major sw company. But it is penny stock. Sometime you hit jackpot with penny stock like lottery ticket.

PS: I made money shorting NTWK.[/QUOTE]

It's clear you know nothing about stocks and stock markets, and your prejudice against Pakistan is motivated by other factors unrelated to investing.

Penny stocks are speculative actually priced in pennies and not listed on any major stock exchanges because they can't meet any of the basic regulatory requirements.

On the other hand, KSE-100 shares represent Pakistan's blue chips. They have an established track record of profits and earnings over a long period of time, and they are closely monitored by investors (local and foreign) and Pakistan's regulatory agencies.

Take for example KSE-100 components such as Muslim Commercial Bank (MCB) and Indus Motors that are Mark Mobius's favorites. The 73-year-old fund manager, who oversees $33 billion spread across 35 Franklin Templeton has been investing in Pakistan for years.

Haq's Musings: Emerging Markets Expert Investing in Pakistan

 

[indian_warrior]

All the stocks of pakistan are penny stocks. People just invest throw away money. Is there any pakistan stock in nasdaq 100?

People/funds with couple of billion dollers can manipulate the market.

I guess NTWK netsol only stock listed in nasdaq as major sw company. But it is penny stock. Sometime you hit jackpot with penny stock like lottery ticket.

PS: I made money shorting NTWK.

It's clear you know nothing about stocks and stock markets, and your prejudice against Pakistan is motivated by other factors unrelated to investing.

Penny stocks are speculative actually priced in pennies and not listed on any major stock exchanges because they can't meet any of the basic regulatory requirements.

On the other hand, KSE-100 shares represent Pakistan's blue chips. They have an established track record of profits and earnings over a long period of time, and they are closely monitored by investors (local and foreign) and Pakistan's regulatory agencies.

Take for example KSE-100 components such as Muslim Commercial Bank (MCB) and Indus Motors that are Mark Mobius's favorites. The 73-year-old fund manager, who oversees $33 billion spread across 35 Franklin Templeton has been investing in Pakistan for years.

Haq's Musings: Emerging Markets Expert Investing in Pakistan[/QUOTE]


Those stocks may be blue chip in pakistani standard. But are indeed penny stocks for all others fund managers and developed market investers.

Can you tell me how may pakistani stocks listed in US stock exchange?

Here is the example of penny stock

Many penny stocks do indeed have a share price of less than $1, but this informal designation now often includes stocks that are priced at $5 and below. ...

A low-priced, high risk common stock that has a short or erratic history of revenues and earnings. A penny stock usually sells for under one dollar and is highly volatile.

Stocks that trade under R1.00, they are usually high risk and investors can either make a small fortune or lose their shirts. ...

Speculative equity securities (excluding options and investment company shares) with prices under $5 per share

 

[RiazHaq]

Can you tell me how may pakistani stocks listed in US stock exchange?

Here is the example of penny stock

Many penny stocks do indeed have a share price of less than $1, but this informal designation now often includes stocks that are priced at $5 and below. ...

A low-priced, high risk common stock that has a short or erratic history of revenues and earnings. A penny stock usually sells for under one dollar and is highly volatile.

Stocks that trade under R1.00, they are usually high risk and investors can either make a small fortune or lose their shirts. ...

Speculative equity securities (excluding options and investment company shares) with prices under $5 per share[/B]

Who cares if any stocks are listed in US or not. It's irrelevant in today's global markets where fund managers and professional investors like Mark Mobius scout the whole world looking for the best investments. And these guys think that many Pakistani shares are blue chips. That' what counts.

MCB is good enough to have produced Pakistan's first "official" billionaire Mohammad Mansha who is on Forbes list of richest people this year.

 

[karan.1970]

During the last several years, BSE has been just as volatile as KSE, if not more so. It's been true of most markets around the world.

And BSE will see more of this volatility, like what it saw in 2007, 2008 and 2009 with global markets crashing and scandals like Satyam's which exposed big holes in India's regulatory oversight.

Now you are just grasping at straws.. You are implying that KSE is as volatile as rest of the world...c'mon dude.. we were having a decent converstation so far.. Lets stick to facts instead of broad statemnts and prediction of future..Draw the bollinger bands for both indices and you will get your answer..

If you use just two years worth of data to determine a ten year period, then you will find that all stock markets are a bad investment.

And thats why I did not use only the 2 year data and used the full 10 year data. I also showed how bad KSE would look if i just picked a 2 year window. Unlike you who picked up selective time periods in the 10 year window (Cherry picking??) to lend credibility to your arguement..

The fact is that KSE is seen by a lot of very smart investors to be good place to invest. That's why it continues to attract local and foreign investors in sufficient numbers in spite of all the bad news.

Then why is the foreign investment this year even lesser than last year (the worst year stability wise)?? 1.02 billion (in last 8 months) as against 1.85 billion (same period last year) ? Dude.. just speaking it multiple times will not make it happen..

Regardless of what I say, it's clear that you will maintain your intransigent position and continue to argue that BSE is a better place to invest than KSE. If you are putting your money where your mouth is, then all I can do is wish you lots of luck. You'll really need it.

Yes I will, because you are not backing up your arguements with anything but Haq's musings which are also your arguements..

Also, I would rather go with fund houses who are really putting their money where their mouth is instead of one who are just making statements and no major inflows. Do you know that FII investment in Indian capital market in 2009-2010 fiscal is almost equal to the complete market capitalization of the Karachi stock exchange...??


btw Thanks for your good luck.. I believe every stock investor anywhere inthe world needs it..

Here's a report from Dawn on KSE performance published last week:

Foreign investment in the staggering sum of $57 million in two weeks, an unusual phenomenon, is acknowledged by brokers and analysts as the engine that has driven the market to the height.

Broker-turned-industrialist Arif Habib said that foreign funds had recognised Pakistan as a lucrative destination because of improved corporate profitability; a respite in internal political feuds, attractive valuations and high yields.

“The Pakistani stocks give out a yield of 5.5 per cent and the shares of profitable companies are trading on price-to-earnings multiple of seven times the forward earnings. That compares well with the yield of two per cent and p/e ratio of 17 times in the regional markets including India,” Mr Habib said.

Again you are selectively picking up a couple of weeks period and extrapolating it to backup your statements.. Bad practise..

In my previous note, I have shared the links (Pakistani sources) for the whole fiscal year and Foreign investment in Pakistan..

 

[indian_warrior]

Who cares if any stocks are listed in US or not. It's irrelevant in today's global markets where fund managers and professional investors like Mark Mobius scout the whole world looking for the best investments. And these guys think that many Pakistani shares are blue chips. That' what counts.

MCB is good enough to have produced Pakistan's first "official" billionaire Mohammad Mansha who is on Forbes list of richest people this year.

Any company can't just list in Nasdaq or NYSE. They have to follow some financial and US accounting practice.

what % of fund Mark Mobius invested in pakistan? can you please let me know? may be some millions. As I said it is throw away money for fund size of 73 billion (per you previous post).

Can you please show me any pakistan market specif fund(mutual fund or ETF)

 

[RiazHaq]

Any company can't just list in Nasdaq or NYSE. They have to follow some financial and US accounting practice.

what % of fund Mark Mobius invested in pakistan? can you please let me know? may be some millions. As I said it is throw away money for fund size of 73 billion (per you previous post).

Can you please show me any pakistan market specif fund(mutual fund or ETF)

While you are hung up about listing in US as your gold standard, the fact is that there are many successful MNCs that do not choose to list in the US.

No money is throwaway money for a fund like Franklin Templeton. Unlike individual investors like you, these institutional investors attract money based on consistent performance which has to be disclosed on a regular basis along with details of their holdings.

I don't have to show you anything. I am not trying to convince you or any one else here to invest in Pakistan. The Pakistanis do not need my help, or your help for that matter...they are doing fine at KSE.

I am just looking at the back page of the Economist magazine, and it's telling me that KSE-100 is up 6.3% in rupee terms and 6.4% in dollar terms this year as of Mar 17, 2010. In contrast, BSE is up less than half, about 2.9% in dollar terms in the same period.

The KSE is doing well in spite of the daily bad news headlines, an indication of the resilience of the market in Karachi. Now you can imagine how much better it can get with even a small improvement in the political and security situation. That's why the smart money sees a lot of upside there.

 

[indian_warrior]

While you are hung up about listing in US as your gold standard, the fact is that there are many successful MNCs that do not choose to list in the US.

No money is throwaway money for a fund like Franklin Templeton. Unlike individual investors like you, these institutional investors attract money based on consistent performance which has to be disclosed on a regular basis along with details of their holdings.

I don't have to show you anything. I am not trying to convince you or any one else here to invest in Pakistan. The Pakistanis do not need my help, or your help for that matter...they are doing fine at KSE.

I am just looking at the back page of the Economist magazine, and it's telling me that KSE-100 is up 6.3% in rupee terms and 6.4% in dollar terms this year as of Mar 17, 2010. In contrast, BSE is up less than half, about 2.9% in dollar terms in the same period.

The KSE is doing well in spite of the daily bad news headlines, an indication of the resilience of the market in Karachi. Now you can imagine how much better it can get with even a small improvement in the political and security situation. That's why the smart money sees a lot of upside there.

If pakistan is performing so well then why there is no pakistan specific mutual fund or ETFs?

Thats is not smart money it is speculative throw away money from big funds. You have not given the amount franklin templeton invested in pakistan.

1-2 million dollers on 73 billion is only rounding error.

 

[Jade]

It's not the criteria, but the WEF assessor who is swayed by the news of the day.

As far for my knowledge goes World Economic Forum reports are much respected both by governments and by corporate.

As to investor flocking to KSE-100, it is continuing to climb, up 8% already in 2010 so far, well ahead of India's 4.88%.

One of the best models to predict the return and volatility of stock markets is Engle and Rangel (or Backer and Clement model). It uses SPLINE GARCH framework to predict. The model was already applied to S&P500 share index data and shows that macroeconomic variables have very strong affect on the return. It is no point arguing how macroeconomic variables don’t have much to do with returns/risk because they do.

If the KSE is not effected by Pakistan’s macroeconomics variables, then

1. KSE is not actually reflecting the general economic situations of Pakistan and operating in isolation.
2. KSE index is not taking into account the various sectors of Pakistan economy and only considering basket of stocks which have high growth potential.
3. The financial markets are not efficient.
4. There could be a lot of information asymmetricity, which is very dangerous as this would impede in correct valuation of assets in the Pakistan markets

Even if returns are high for KSE, what about the volatility? I am very sure KSE volatility would be high given the present political situation in Pakistan. International investors would invest based not only on returns but also on volatility. Moreover, volatility is much more important than returns. After all we human have a limited threshold for risk. If any investor is investing based only on returns and not taking into account the volatility, he is a gambler not an investor

 

[RiazHaq]

Riaz.. You yourself refered to this report to begin with and are now calling it biased...I just presented the right data from it...


Certainly a high risk high reward situation. That too when you selectively chose time periods... The investors who play in that field definitely have this opportunity in Pakistan...And a bunch of people have made money on the stocks like Citibank and Satyam Computers when they crashed recently. But again, they were high risk high reward punts.
Having said that.. I just pulled up a comparison of KSE 100 and BSE index between March 2000 and March 2010

BSE moved from 5500 to 17600 where as KSE moved from 2050 to 10131 giving a CAGR of 12.32% and 17.32% respectively for BSE and KSE. However in the same period, the Pakistani rupee declined in comparison to USD from 1/51.8 to 1/85. In comparison, the Indian Rupee stayed more or less stable and declined from 1/43.4 to 1/45.45. Now factoring this into the equation and taking the index values in USD terms, the CAGR of KSE drops to 11.66% as against the USD adjusted BSE CAGR of 11.8%

Now considering the volatility of Pakistan, the size of capital markets in Pakistan and other factors highlighted by World economic Forum (your choice of report) there is no doubt which way the smart money would go and that is visible in the FII inflows into India and Pakistan.

Foreign investments into Pakistani Capital markets is expected to decline by 45.9 % to $ 1.02 billion(8 month period ending Feb 10) as against an upswing of Foreign investments in India that just hit an all time high of $ 22 billion (11 month period ending March 10)

Pakistani foreign investment falls 45.9 pct | Reuters

FII inflows hit Rs 1 lakh crore - Yahoo! India News

On March 31, 2000, the KSE-100 closed around 2000 points, and then dipped, and did not return to 2000 level until Sept 30, 2002.

So it's clear you deliberately picked a one-day peak to make your point. And even then, it's not even a 10 year period as you assert. Because we are not yet at March 31 for this year. I have never seen any one randomly pick brief highs to make their point. There are rules imposed on investment firms just to avoid misleading investors.

What is normally done is that year-end closes are used for such performance calcs.

Using that, KSE-100 closed at 1408 on Dec 31, 1999. Then, exactly 10 years later on Dec 31, 2009, it closed at 9386. In between, it hit a peak of 15125 on March 31, 2008 around the time of the elections.

Using a 10-year window with year-end closes in 1999 and 2009, it comes to about 21% CAGR. If you discount it for Pak currency decline from 55 to 85 rupees to a dollar (most of which occurred since 2008), then the CAGR return is still a whopping 16% a year....clearly beating all of the BRIC nations' stock performance in this period.

If you insist on making KSE-100 look bad by using the March 31, 2000 peak (2000 points) at last week's close (on 10138 points), then 17.82% before currency discount, and 13% after it...still beating all of the BRICs.

 

[Jade]

Mr. Haq, An interesting reading for you

http://pakistaniat.com/2008/02/27/pakistan-stock-exchange-karachi-kse-100/comment-page-1/

KSE-100 Index Sets New Record: What is the Market Telling Us?

Adil Najam

On Tuesday the Karachi Stock Exchange’s (KSE’s) KSE-100 Index - Pakistan’s equivalent to the Dow Jones Index - broke the psychological barrier of 15,000 for the first time. At the time of writing this (on what is Wednesday morning in Pakistan) the Index remains well above that mark.

The rise of the stock market(s) in Pakistan in recent years has been phenomenal. Much of this matches the rise of emerging markets all over the world, but the rise over the last year is particularly phenomenal given just how depressed, depressing, uncertain and unclear the politics of the country has been.

My friends who work in the financial sector tell me that money can be made from bad news as much as from good news. I am sure they are right, though I am not sure if I understand all the nuances of how.
But it still intrigues me why and how the market in an economy like Pakistan - where the stock market itself is rather small in terms of size as well as participation - works in relation to what is happening in the society at large.

The charts, and news, clearly indicate that the stock exchange in Pakistan has not been oblivious to the political and socio-economic upheavals of the last many months. But the direction seems to have been clearly upwards and it is not clear just how much of those events are reflected in the market.

One is used in larger markets (USA, Europe, Japan) to seeing the happenings in society and politics to have deep and immediate impacts on the market fluctuations. Is it the same in Pakistan? Or is it that because so many fewer people are actually invested in stocks that the stock market’s rhythms are less intertwined with local happenings and more with global and international happenings (especially if much of the capital flow is from international investors)?

And, if, indeed, the stock market in Pakistan is as much of a barometer and reflection of what is happening in the country, then what is it that the market has been telling us all year, and is telling us now?

 

[karan.1970]

On March 31, 2000, the KSE-100 closed around 2000 points, and then dipped, and did not return to 2000 level until Sept 30, 2002.

So it's clear you deliberately picked a one-day peak to make your point. And even then, it's not even a 10 year period as you assert. Because we are not yet at March 31 for this year. I have never seen any one randomly pick brief highs to make their point. There are rules imposed on investment firms just to avoid misleading investors.

What a load of Cr ap.. Between 1 Mar 2000 and 30 Apr 2000, KSE closed over 2000 in 9 sessions..
^KSE: Historical Prices for - Yahoo! Finance


Anyway, I used the High of Mar 2000 and High of Mar 2010 (on the given date) for calculations..Your logic that I was misleading and cherry picking (as you normally do) would have held water had I not done the same for ^BSE. However, for BSE, unlike KSE, the high of March 2000 came back only in Dec 2003

What is normally done is that year-end closes are used for such performance calcs.

May be you havent heard the concept of trailing returns, but that is also normally used...

Using that, KSE-100 closed at 1408 on Dec 31, 1999. Then, exactly 10 years later on Dec 31, 2009, it closed at 9386. In between, it hit a peak of 15125 on March 31, 2008 around the time of the elections.

Using a 10-year window with year-end closes in 1999 and 2009, it comes to about 21% CAGR. If you discount it for Pak currency decline from 55 to 85 rupees to a dollar (most of which occurred since 2008), then the CAGR return is still a whopping 16% a year....clearly beating all of the BRIC nations' stock performance in this period.

If you insist on making KSE-100 look bad by using the March 31, 2000 peak (2000 points) at last week's close (on 10138 points), then 17.82% before currency discount, and 13% after it...still beating all of the BRICs.

KSE HIgh in Mar 2000 - 2073
KSE High in Mar 2010 - 10224

10 year CAGR - 17.3%

Currency movement - 1/52 to 1/84.5

In USD
KSE HIgh in Mar 2000 - 39.86
KSE High in Mar 2010 - 120.99

10 year CAGR - 11.74%


Even if I take the the dates that you provided (incidently the year close in India is March 31 and not Dec 31) still the currency adjusted variation between the 2 indices is 15% and 12.5%. And my previous arguement stands that the extra reward in KSE does not justify the excessive risk that set of stocks offer due to the small size of the capital markets and the turmoil in the country. This is specially visible if you take 2 year, 3 year and 5 year currency adjusted trailing returns (CAGR) for the 2 indices..

KSE :
2 yr: -30%
3 Yr: -14%
5 Yr: -7%

BSE
2 yr: -6%
3 Yr: +8%
5 Yr: +19%

This is what I meant by risk reward ratio...