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Investor confidence in Pakistan in the aftermath of twin attacks on commercial capital Karachi’s airport is facing an immediate test with the government’s decision to go ahead with the sale of its remaining near-20% stake in United Bank Limited, one of the nation’s biggest banks.
The government will list 160 million shares in the bank, representing a 13.1% stake, with an option to sell its remaining 82 million shares if demand is strong enough. With a minimum bid set at 155 rupees—around $1.56—per share, the government stands to reap at least $250 million if the sale is successful.
Sunday evening’s assault on Karachi airport that left dozens dead and wounded and Tuesday’s thwarted attack have catapulted Pakistan back into the limelight, highlighting once again the security issues companies operating there are facing.
The government is counting on investors to look beyond the short-term headlines when they consider putting money into Pakistan. Jonathan Wood, a global analyst at risk consultancy Control Risks, believes they will do just that. “The attack on Karachi airport should have minimal impact on investors’ confidence in Pakistan,” Wood said. “You have long-term operators there who are used to this kind of event and they won’t be affected.”
Abhijit Kukreja, director for equity sales at Asian-frontier-markets-focused brokerage Decker & Co., says foreign fund flows to Pakistan show that investors are unshaken by the sporadic violence the country experiences. “Every now and then, when the government tries to shake the roots a bit, you’ll get some Taliban extremists doing this sort of thing but it doesn’t affect investment flows.”
According to Kukreja, average daily inflow volume has quadrupled over the past year.
Albert Yuen, a portfolio manager at New York based fund manager LR Global, says investors are no longer rattled by such events. “We’ve seen a lot of activity from the Taliban but the market has really shrugged it off,” he said.
The UBL stake sale will be seen as a litmus test for Pakistan’s markets. “This deal is an indicator of the confidence in the market and where this country is going,” said Yuen.
Kukreja believes the success—or otherwise—of the sale will have a much bigger impact on investor sentiment toward Pakistan than will the recent violence. “The government has laid out a game plan [for selling state-owned enterprises] and they executed it. What will really make the difference from here is how successful the government is in divesting those stakes.”
Write to Dan Keeler at dan.keeler@wsj.com.
Pakistan’s UBL Sale Tests Investor Confidence After Airport Attack - Frontier Markets News - Emerging & Growth Markets - WSJ
The government will list 160 million shares in the bank, representing a 13.1% stake, with an option to sell its remaining 82 million shares if demand is strong enough. With a minimum bid set at 155 rupees—around $1.56—per share, the government stands to reap at least $250 million if the sale is successful.
Sunday evening’s assault on Karachi airport that left dozens dead and wounded and Tuesday’s thwarted attack have catapulted Pakistan back into the limelight, highlighting once again the security issues companies operating there are facing.
The government is counting on investors to look beyond the short-term headlines when they consider putting money into Pakistan. Jonathan Wood, a global analyst at risk consultancy Control Risks, believes they will do just that. “The attack on Karachi airport should have minimal impact on investors’ confidence in Pakistan,” Wood said. “You have long-term operators there who are used to this kind of event and they won’t be affected.”
Abhijit Kukreja, director for equity sales at Asian-frontier-markets-focused brokerage Decker & Co., says foreign fund flows to Pakistan show that investors are unshaken by the sporadic violence the country experiences. “Every now and then, when the government tries to shake the roots a bit, you’ll get some Taliban extremists doing this sort of thing but it doesn’t affect investment flows.”
According to Kukreja, average daily inflow volume has quadrupled over the past year.
Albert Yuen, a portfolio manager at New York based fund manager LR Global, says investors are no longer rattled by such events. “We’ve seen a lot of activity from the Taliban but the market has really shrugged it off,” he said.
The UBL stake sale will be seen as a litmus test for Pakistan’s markets. “This deal is an indicator of the confidence in the market and where this country is going,” said Yuen.
Kukreja believes the success—or otherwise—of the sale will have a much bigger impact on investor sentiment toward Pakistan than will the recent violence. “The government has laid out a game plan [for selling state-owned enterprises] and they executed it. What will really make the difference from here is how successful the government is in divesting those stakes.”
Write to Dan Keeler at dan.keeler@wsj.com.
Pakistan’s UBL Sale Tests Investor Confidence After Airport Attack - Frontier Markets News - Emerging & Growth Markets - WSJ
