Smart Money to Follow China's $46 Billion Investment in Pakistan

[RiazHaq]

Haq's Musings: Smart Money to Follow China's Massive Investment in Pakistan

This (China's $46 billion investment in Pakistan) can not be purely politically driven. Beijing is commercial: CEO’s, not think tank intellectuals, travel with politicians. Barron's Asia
Spurred by Chinese investment, the smart money is taking notice of Pakistan as an attractive investment destination. The investors are looking at the fact that Pakistani stocks have been outperforming both emerging and frontier markets for several years. The benchmark index of the Karachi Stock Exchange (KSE100) is up more than 20% in the last 12 months, according to NASDAQ.com.

Pakistani Shares in 2015:

After a dismal March, MSCI Pakistan rebounded strongly this month, returning 9.1% so far. In April, the iShares MSCI Frontier 100 ETF (FM) rose 4.3%, the WisdomTree India Earnings Fund (EPI) dropped 1.2%, the iShares MSCI India ETF (INDA) fell 1.9%, according to Barron's Asia.


Source: Economist Magazine
KSE-100 Performance:
In 2014, the KSE-100 Index gained 6,870 points thereby generating a handsome return of 27% (31% return in US$ terms), making Pakistan's KSE world's third best performing market. Total offerings in the year 2014 reached 9 as compared to 3 in the year 2013. After a gap of seven years, Rs 73 billion were raised through offerings in 2014 as compared to a meager Rs 4 billion raised in 2013. Foreign investors, that hold US$ 6.1 billion worth of Pakistani shares -which is 33% of the free-float (9% of market capitalization)-remained net buyers in 2014.
Pakistani Shares Valuation:
Even after outperforming both emerging and frontier market indices, Pakistani shares can be bought at deep discounts which make them very attractive, according to Renaissance Capital’s chief economist Charles Robertson. MSCI (Morgan Stanley Composite Index) Pakistan trades at only 8.4 times forward earnings, a 17% discount to MSCI Frontier Markets. For comparison purposes, fellow frontier south Asia markets Sri Lanka and Bangladesh trade at 13.4x and 21.4x respectively. India, included in the emerging market index, trades at 16.8 times.

Key Sectors:

Chinese investment in energy and infrastructure will help stimulate all sectors of Pakistani economy. But the sectors benefiting most from the $46 billion investment will likely include banks, energy and building materials, the sectors which are the favorites of Pakistani billionaire investor Mian Mohammad Mansha.

Being close to the ruling Sharif family makes him the ultimate insider. Beyond his investments in banking, cement, energy and textiles, Mansha is also starting to invest in consumer products sector benefiting from rising incomes, growing middle class and increasing jobs created in Pakistan by the massive Chinese investment. Mansha owns a big chunk of Muslim Commercial Bank (MCB) share. He has recently been pumping more money into energy, cement and dairy businesses. Mansha's DG Khan Cements has announced plans to build a $300 million cement plant near Karachi. In additions, his Nishat Dairies has imported thousands of dairy cows for a dairy farm in Lahore.

Summary:

The $46 billion Chinese investment in energy and infrastructure has brought attention to tremendous investment opportunities in Pakistan, a nation of nearly 200 million people with rising middle class and growing consumption. Pakistani military's recent successes against the terrorists and China's massive investment commitments are expected to boost investor confidence in the country. Higher confidence will help draw other significant investors to invest in Pakistan over the next several years.
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Haq's Musings: Smart Money to Follow China's Massive Investment in Pakistan

 

[Chinese-Dragon]

And smart people will follow the smart money.

(Yes I'm talking about @Armstrong).

 

[Shotgunner51]

Infrastructure (actually energy belongs to this category) is the platform on which economic activities can be carried out, and should be strategically led by the state in planning, investment, and control. With a good platform, the private sector i.e. "smart money" will then become the key driver of economy. Put it simply, set the stage, let the artists perform.

 

[black-hawk_101]

I am sure that Gwadar and Jiwani will become world class cities with just 5-7 years time and local investors would be investing along with the Chinese there in.

 

[Lucid Thoughts]

Great news!!!

 

[lukaer007]

And smart people will follow the smart money.

(Yes I'm talking about @Armstrong).

可以加QQ吗，咨询点问题

 

[Viola]

My dear Pakistani friends, as Chinese I just want to express our gratitude for your support when China was isolated by the rest of the world, I heard Pakistan was the only country that helped us and recognized us at that time. Chinese people treasure our genuine friendship，and I think it's unbreakable whatever those people with ulterior motive say, right? :）
I hope President Xi’s visit and these investment plans will boost Pakistan‘s development，you deserve better life.
Welcome to China~

 

[Shotgunner51]

My dear Pakistani friends, as Chinese I just want to express our gratitude for your support when China was isolated by the rest of the world, I heard Pakistan was the only country that helped us and recognized us at that time. Chinese people treasure our genuine friendship，and I think it's unbreakable whatever those people with ulterior motive say, right? :）
I hope President Xi’s visit and these investment plans will boost Pakistan‘s development，you deserve better life.
Welcome to China~

New member? Welcome bro

Back to topic, other than opportunities along the 3000 km of PCEC, there are also over 8000 km of opportunities within China as part of the greater plan.

Infrastructures along these corridors are already well developed, now awaits CPEC to commence operation.

 

[Viola]

New member? Welcome bro

Back to topic, other than opportunities along the 3000 km of PCEC, there are also over 8000 km of opportunities within China as part of the greater plan.

View attachment 216843 View attachment 216844

Infrastructures along these corridors are already well developed, now awaits CPEC to commence operation.

Sorry bro，I’m not quite knowledgeable about these plans, they are parts of “一带一路”， right? I see 一带一路 as the biggest plans along with series of FTA since reform and opening-up policy in 1979.
What‘s your opinion？

 

[chinapk]

Sorry bro，I’m not quite knowledgeable about these plans, they are parts of “一带一路”， right? I see 一带一路 as the biggest plans along with series of FTA since reform and opening-up policy in 1979.
What‘s your opinion？

It is different from FTA. FTA is established by signing the aggreement between countris.一带一路 is an Initiative to cooperation.

 

[Viola]

It is different from FTA. FTA is established by signing the aggreement between countris.一带一路 is an Initiative to cooperation.

I know, I am just saying that FTA and 一带一路 are both China's biggest reform and development strategy since 1979.
30 years ago ,we are just capital demander, but now we are capital supplier, I am looking forward to Pakistan‘s future.

 

[Shotgunner51]

Sorry bro，I’m not quite knowledgeable about these plans, they are parts of “一带一路”， right? I see 一带一路 as the biggest plans along with series of FTA since reform and opening-up policy in 1979.
What‘s your opinion？

Yes bro, these are part of the "One Belt One Route (一带一路)" initiative, which is an infrastructure plan, nothing to do with trade agreement e.g. FTA.

To be exact, these are corridors within continental China as part of the Eurasian Economic Belt (一带), and which have been developed (and still fast developing) for domestic economy e.g. freight rail, HSR, expressways, airports, reservoirs/dams, power generation, power/communications grid, pipe-lines and other forms of infrastructures.

PCEC is part of the Eurasian Economic Belt (一带), about 3000 km, within Pakistan. Other parts will involve Russia, the central Asian countries (current SCO members), Afghanistan, Iran, Turkey, Central-Eastern Europe (CEE).

About the Maritime Silk Route (一路), that will involve ASEAN, Bangladesh, Sri Lanka, southern Pakistan, Iran, eastern Africa countries, southern Europe.

 

[Viola]

Yes bro, these are part of the "One Belt One Route (一带一路)" initiative, which is an infrastructure plan, nothing to do with trade agreement e.g. FTA.

To be exact, these are corridors within continental China as part of the Eurasian Economic Belt (一带), and which have been developed (and still fast developing) for domestic economy e.g. freight rail, HSR, expressways, airports, reservoirs/dams, power generation, power/communications grid, pipe-lines and other forms of infrastructures.

PCEC is part of the Eurasian Economic Belt (一带), about 3000 km, within Pakistan. Other parts will involve Russia, the central Asian countries (SCO countries), Afghanistan, Iran, Turkey, Eastern Europe.

About the Maritime Silk Route (一路), that will involve ASEAN, Bangladesh, Sri Lanka, southern Pakistan, Iran, eastern Africa countries, southern Europe.

Wow, it sounds great. There's a common Chinese proverb “要致富，先修路”，which means “to be rich，infrastructure should be put in the first place”. China’s development over these years is due to large amount of infrastructure construction.
Pakistan deserves a better future. Maybe some world class cities will emerge here，and private sector investment will come in with these infrastructure. Pakistani People will be richer and richer. :）

 

[Dalit]

I am sure that Gwadar and Jiwani will become world class cities with just 5-7 years time and local investors would be investing along with the Chinese there in.

Now is the time to invest and acquire property I guess...

 

[Shotgunner51]

Wow, it sounds great. There's a common Chinese proverb “要致富，先修路”，which means “to be rich，infrastructure should be put in the first place”. China’s development over these years is due to large amount of infrastructure construction.
Pakistan deserves a better future. Maybe some world class cities will emerge here，and private sector investment will come in with these infrastructure. Pakistani People will be richer and richer. :）

Well said bro!

1. Also check the full name of AIIB, the "I", infrastructure is the key word. The timing is just perfect for "One Belt One Route" initiative. (see thread: “Dear President, how can we help your country?” - AIIB | Page 4 )
   
2. China is gradually off-loading US treasuries and increase RMB settlement/clearing centers overseas, it's time to further promote intra-Eurasian trade without constraint of a third party currency.
   
3. The timing of Iran be relieved from UN imposed sanctions is perfect, even if it's a "coincidence". Like Pakistan, Iran is expected to grow enormously by integration into world economy.
4. Without infrastructure, there is no foundation for economy to build. China tops the world in domestic infrastructure, and have been gradually increase exporting it. "One Belt One Route" is a cross-country infrastructure plan. PCEC is part of it.
   
5. While China is expanding from industry 1.0, 2.0, 3.0 to include 4.0, an integrated and cross-border supply chain will be formed.
6. Through a series of domestic social policy and fiscal system reform, China is gradually increasing services GDP, and consumption, creating a consumption market big enough for other countries to co-prosper in the network.

Hope this give you a brief picture of the progress.