Upward Mobility in Pakistan on 66th Independence Day

[VCheng]

I really dont know what this Euphoria is all about in terms of KSE

If I look at last 5 years of trailing returns, they are under 2% (KSE was close to 14K in Nov 2007)

And if I factor in the currency depreciation for PKR, KSE has actually given a CAGR of -6% in last 5 years

What am I missing here ??

Currency depreciation is the hidden multiplier that forms the basis of exaggerated optimism as far as the KSE is concerned.

 

[karan.1970]

Easy on, Karan - What Euphoria? It's only a perspective that is being discussed - that perspective argues that there may be more to Pakistan than doom and gloom - no reason to panic

sir, first of all, economic growth of Pakistan is never an issue of panic for a sane Indian (actually its the reverse). My comment was more around the all roses and no thorns pictures painted by our eminent resident economist

 

[RiazHaq]

Currency depreciation is the hidden multiplier that forms the basis of exaggerated optimism as far as the KSE is concerned.

It's clear that you don't understand anything about share valuations....and markets in general.

KSE-100 is up 32% in US dollar terms this year and still trading at a P-E ratio of just 7...well below historical ratios and other regional markets.

It has nothing to do with the figment of your very limited imagination that "hidden multiplier that forms the basis of exaggerated optimism as far as the KSE is concerned".

It's the attractive valuations of highly profitable and rapidly growing companies which are the focus of investor interest.

Haq's Musings: Pakistan's GDP Grossly Underestimated, Stocks Highly Undervalued

 

[RiazHaq]

I really dont know what this Euphoria is all about in terms of KSE

If I look at last 5 years of trailing returns, they are under 2% (KSE was close to 14K in Nov 2007)

And if I factor in the currency depreciation for PKR, KSE has actually given a CAGR of -6% in last 5 years

What am I missing here ??

Haq's Musings: Strong Earnings Propel Pak Shares Index to 4 Years High

 

[karan.1970]

Haq's Musings: Strong Earnings Propel Pak Shares Index to 4 Years High

Oh! so your point is that KSE performed better than India.. Not that it performed well over all.. Gotcha... YOu remind me of Pakistan's olymic hockey coach

 

[VCheng]

It's clear that you don't understand anything about share valuations....and markets in general.

KSE-100 is up 32% in US dollar terms this year and still trading at a P-E ratio of just 7...well below historical ratios and other regional markets.

It has nothing to do with the figment of your very limited imagination that "hidden multiplier that forms the basis of exaggerated optimism as far as the KSE is concerned".

It's the attractive valuations of highly profitable and rapidly growing companies which are the focus of investor interest.

Haq's Musings: Pakistan's GDP Grossly Underestimated, Stocks Highly Undervalued

Of course. I am no economist.

But I do recognize a blatant twisting of facts based on a flag-waving agenda when I see one.

The entire economy of Pakistan, including the KSE with its huge returns and wonderful P:E ratios, is best described as a turd floating in the bowl just waiting for a flush.

I hope that is not too technical a description.

 

[RiazHaq]

Oh! so your point is that KSE performed better than India.. Not that it performed well over all.. Gotcha... YOu remind me of Pakistan's olymic hockey coach

Here's more to make and keep you even more "excited":

KSE-100 shares offer top RISKLESS returns, according to Bloomberg.

The KSE 100 Index, the benchmark for Pakistan’s $43 billion equity market, rose 7.3 percent in the past three years when adjusted for price swings, the top gain among 72 markets worldwide, according to the BLOOMBERG RISKLESS RETURN RANKING. Pakistan had lower stock volatility than 82 percent of the nations including the U.S. (SPX) Over five years, Pakistan’s risk- adjusted returns ranked eighth.

Consumer spending in Pakistan has increased at a 26 percent average pace the past three years, compared with 7.7 percent for Asia, according to data compiled by Euromonitor International, a consumer research firm. While the growth in Pakistan may slow to 6.6 percent in 2012, it will still exceed the 5.3 percent pace in Asia, according to Euromonitor estimates.

Engro Foods Ltd. (EFOODS), a Karachi-based seller of dairy products, reported a 214 percent jump in net income for the third quarter, while Unilever Pakistan Ltd. (ULEVER), a unit of the world’s second- biggest consumer-goods company, had a 36 percent gain, according to data compiled by Bloomberg.

Dividends in Pakistan have also climbed at the fastest pace in the region. Payouts increased 49 percent in the past 12 months, giving the KSE 100 index a dividend yield of 6.6 percent, double the 3.3 percent average in Asia, Bloomberg data show.

Pakistan Stocks Best as Violence Ignored: Riskless Return - Bloomberg

Haq's Musings: Pakistan's GDP Grossly Underestimated, Stocks Highly Undervalued

 

[karan.1970]

^^ still, -6 % rolling returns (in dollar value) over last 5 years.. Hardly a basket someone would put their eggs in, specially considering that it doesnt even have the size to absorb large investments

 

[eddie01]

ohh cm'n if it is so then why pakistan is considered as a failed economy . Rising middle class in pakistan is a sheer joke. pakistan is a worse performing economy even worse than Bangladesh.

 

[eddie01]

^Indians follow Zaid Hamid more than us Pakistanis.

yeah ! because he is also a contributor to your so called rising/upward economic mobility.

 

[RiazHaq]

^^ still, -6 % rolling returns (in dollar value) over last 5 years.. Hardly a basket someone would put their eggs in, specially considering that it doesnt even have the size to absorb large investments

It's obvious that you lack basic compression of what I posted.

So let me help you understand what RISKLESS RETURNS means.

The risk-adjusted return, which isn’t annualized, is calculated by dividing total return by volatility, or the degree of daily price variation, giving a measure of income per unit of risk. A higher volatility means the price of an asset can swing dramatically in a short period, increasing the potential for unexpected losses.

And Pakistan's KSE-100 offers top gain among 72 markets worldwide, according to the BLOOMBERG RISKLESS RETURN RANKING. Pakistan had lower stock volatility than 82 percent of the nations including the U.S. (SPX) Over five years, Pakistan’s risk- adjusted returns ranked eighth.

Pakistan Stocks Best as Violence Ignored: Riskless Return - Bloomberg

 

[VCheng]

Bottom Line: Anybody who does not understand the bombastic claims being made is simply too stupid. Argue at your own risk!

Forgive me, but color me a deep shade of skeptical.

 

[RiazHaq]

ohh cm'n if it is so then why pakistan is considered as a failed economy . Rising middle class in pakistan is a sheer joke. pakistan is a worse performing economy even worse than Bangladesh.

What you heard and read in Indian media is WRONG!

Failed economies do not produce rising disposable incomes!

Talking about household disposable incomes in South Asia, there were 1.8 million Pakistani households (7.55% of all households) and 7.9 million Indian households (3.61% of all households) in 2009 with disposable incomes of $10,001 or more, according to Euromonitor.

This translates into 282% increase (vs 232% in India) from 1995-2009 in households with disposable incomes of $10,001 or more.

http://www.just-style.com/store/samples/2011_Euromonitor_WCIEP_Sample.pdf

 

[VCheng]

What you heard and read in Indian media is WRONG!

Failed economies do not produce rising disposable incomes!

Talking about household disposable incomes in South Asia, there were 1.8 million Pakistani households (7.55% of all households) and 7.9 million Indian households (3.61% of all households) in 2009 with disposable incomes of $10,001 or more, according to Euromonitor.

This translates into 282% increase (vs 232% in India) from 1995-2009 in households with disposable incomes of $10,001 or more.

http://www.just-style.com/store/samples/2011_Euromonitor_WCIEP_Sample.pdf

Please do not forget to mention this from your quoted source as well:

Page 3: Gross earnings per capita: Growth from 1995 to 2009: Pakistan 81.5%, India 177.2%

================================

Sorry for the lost formatting, but here is the complete table 6.3. The last figure in each country's line is the growth rate from 1995 to 2009:

Gross earnings per capita 1990/1995/2002-2009
US$ per capita, at current prices/% change
% growth
1990 1995 2002 2003 2004 2005 2006 2007 2008 2009 1995-2009
Algeria 1,404.6 698.5 772.2 784.4 896.5 908.2 905.1 1,000.3 1,093.1 1,045.6 49.7
Argentina 3,028.2 3,933.3 1,356.8 1,735.8 2,055.2 2,404.2 2,690.9 3,240.7 3,967.2 3,643.6 -7.4
Australia 13,015.2 15,024.6 14,588.0 17,807.7 21,399.0 23,591.9 24,466.0 29,015.0 30,652.4 28,924.5 92.5
Austria 15,321.4 21,659.1 18,136.1 22,411.7 25,299.0 26,183.4 27,652.6 31,491.0 35,199.7 33,016.8 52.4
Azerbaijan 160.8 318.2 359.2 426.9 566.4 672.2 873.0 1,230.8 1,282.4 697.4
Belarus 742.4 693.8 798.8 966.8 1,191.1 1,561.5 1,901.3 2,393.2 3,247.6 2,793.2 302.6
Belgium 11,466.2 12,530.4 11,082.5 13,615.9 14,963.4 15,251.9 16,067.3 18,391.6 20,570.4 19,195.9 53.2
Bolivia 593.3 691.4 679.2 650.3 641.9 648.6 702.2 776.7 924.7 977.2 41.3
Brazil 1,577.8 2,547.0 1,624.3 1,756.0 2,010.1 2,628.2 3,261.1 4,069.8 4,848.2 4,678.4 83.7
Bulgaria 1,436.7 989.1 864.5 1,125.4 1,344.4 1,374.2 1,393.2 1,658.8 1,977.6 1,797.2 81.7
Canada 14,474.6 12,918.6 15,375.2 18,070.0 20,438.1 23,123.8 25,829.8 28,615.6 29,781.0 27,291.0 111.3
Chile 973.1 2,032.8 1,853.5 2,005.5 2,382.2 2,827.9 3,235.1 3,609.6 3,975.8 3,608.7 77.5
China 197.1 321.9 532.7 577.7 721.0 853.2 999.1 1,221.7 1,538.4 1,677.9 421.2
Colombia 1,088.9 1,898.2 1,217.7 1,199.5 1,390.6 1,705.4 1,863.5 2,348.0 2,678.7 2,511.5 32.3
Croatia 2,949.1 2,251.1 3,006.1 3,784.4 4,501.7 4,947.2 5,396.9 6,441.7 7,520.5 6,700.3 197.6
Czech Republic 1,643.5 2,834.3 3,835.0 4,603.5 5,493.1 6,236.4 7,097.0 8,581.7 10,753.3 9,401.4 231.7
Denmark 13,413.8 17,019.5 15,593.8 18,792.0 21,931.0 23,015.8 24,266.1 27,372.3 29,774.6 27,164.8 59.6
Ecuador 613.9 1,002.7 1,102.3 1,253.0 1,375.2 1,523.0 1,651.8 1,769.1 1,969.4 2,038.4 103.3
Egypt 400.7 677.0 826.9 703.4 758.0 874.6 949.1 1,134.8 1,541.7 1,780.7 163.0
Estonia 1,486.8 2,549.4 3,348.3 3,950.1 4,440.2 5,292.8 6,915.2 7,419.0 5,784.6 289.1
Finland 13,885.7 14,787.8 14,428.9 17,963.1 20,357.4 20,942.6 21,967.3 25,287.6 28,306.8 26,400.8 78.5
France 14,489.7 17,486.3 14,987.7 18,556.8 20,924.5 21,508.8 22,589.9 25,680.0 28,043.9 25,993.0 48.6
Germany 13,372.6 17,557.3 13,980.6 17,040.7 19,114.5 19,409.1 20,153.3 22,285.4 24,400.0 22,870.8 30.3
Greece 3,031.3 5,850.6 6,581.4 8,393.7 9,900.5 11,226.5 12,242.4 14,043.5 15,868.1 14,933.5 155.2
Hong Kong, China 8,749.5 15,718.9 15,285.9 15,128.5 15,880.4 16,584.8 17,777.7 19,554.9 20,590.8 19,947.8 26.9
Hungary 1,423.1 1,834.8 3,211.7 3,807.7 4,823.6 5,304.1 5,365.8 6,494.1 7,255.1 6,027.2 228.5
India 261.3 257.5 333.5 385.6 424.3 486.4 535.7 722.4 778.8 713.8 177.2
Indonesia 308.7 539.5 407.0 568.8 556.8 587.7 762.1 942.6 1,079.8 1,071.6 98.7
Ireland 8,181.7 11,275.3 14,388.1 18,090.8 20,055.7 20,878.4 22,173.1 25,507.5 26,913.9 23,745.5 110.6
Israel 7,663.8 10,431.5 10,478.4 10,631.0 11,325.2 11,748.1 12,453.1 14,400.1 17,666.1 16,327.6 56.5
Italy 8,588.3 10,808.3 10,041.9 12,148.9 13,773.0 14,120.3 14,735.7 16,537.2 18,048.9 16,815.8 55.6
Japan 16,237.5 28,704.6 20,732.5 21,811.8 23,455.5 23,261.1 22,206.6 22,205.4 25,252.9 26,751.8 -6.8
Jordan 759.5 763.5 1,041.7 1,074.6 1,195.5 1,328.4 1,427.1 1,600.7 1,925.2 1,922.7 151.8
Kazakhstan 830.4 810.5 1,095.4 1,778.0 1,963.1 2,401.7 3,198.1 3,816.7 3,310.1 298.6
Kuwait 5,368.7 7,542.2 8,565.4 8,995.7 9,268.4 10,204.8 10,779.7 12,127.9 13,867.9 12,770.9 69.3
Latvia 1,595.5 1,240.8 2,139.8 2,589.4 3,276.7 3,640.5 4,467.0 6,138.0 6,768.2 5,287.8 326.1
Lithuania 1,108.4 956.3 2,185.7 2,827.4 3,426.9 3,940.5 4,634.2 6,001.8 7,328.5 5,993.8 526.8
Malaysia 1,627.2 2,652.2 2,337.3 2,477.7 2,720.5 3,014.5 3,362.5 4,023.6 4,663.0 4,348.7 64.0
Mexico 1,577.5 1,486.1 3,369.7 3,304.8 3,424.0 3,813.0 4,156.3 4,465.5 4,639.3 3,848.4 159.0
Morocco 660.3 729.9 750.9 834.6 966.6 993.6 1,074.6 1,231.9 1,525.7 1,519.1 108.1
Netherlands 11,864.3 15,312.7 15,291.6 18,701.8 20,925.6 21,456.9 22,286.3 25,625.4 28,590.2 26,224.4 71.3
New Zealand 7,710.8 9,620.9 8,311.0 10,614.8 12,708.9 14,109.3 13,856.0 16,456.9 17,171.1 15,542.2 61.5
Nigeria 150.0 158.3 261.8 303.4 352.9 448.1 455.8 489.2 558.4 493.9 212.1
Norway 15,754.8 18,912.3 22,583.0 26,712.8 29,579.5 33,009.2 32,637.4 37,981.4 41,010.7 37,066.9 96.0
Pakistan 277.0 376.6 344.8 378.6 427.3 482.0 542.2 603.0 595.2 683.6 81.5
Peru 741.6 1,127.6 1,248.8 1,220.8 1,389.8 1,520.0 1,598.2 1,791.9 2,167.6 2,150.2 90.7
Philippines 446.2 669.9 598.4 609.6 650.1 727.6 850.9 1,008.7 1,160.9 1,129.1 68.5
Poland 988.2 2,403.9 2,998.1 3,189.0 3,561.8 4,246.5 4,667.0 5,674.3 7,087.3 5,635.4 134.4
Portugal 4,503.3 7,443.6 8,297.1 10,095.8 11,560.4 12,079.3 12,567.7 14,270.4 15,754.8 14,623.3 96.5
Romania 1,086.2 969.8 1,288.5 1,492.8 2,021.6 2,617.4 3,073.1 4,084.7 4,724.9 3,536.4 264.6
Russia 2,152.9 1,642.0 1,331.6 1,662.6 2,236.7 2,790.5 3,584.1 4,705.2 6,030.4 4,917.7 199.5
Saudi Arabia 2,295.0 3,166.9 2,818.3 2,847.8 2,951.0 3,180.1 3,525.4 4,082.6 4,565.0 4,828.2 52.5
Singapore 6,632.5 10,637.5 12,893.7 12,769.9 14,532.5 15,496.8 16,655.6 18,800.3 21,335.2 20,158.5 89.5
Slovakia 2,853.1 4,112.1 5,213.6 6,320.0 6,998.0 7,804.0 9,546.9 11,332.6 10,893.5 281.8
Slovenia 308.5 3,488.5 6,334.4 8,019.5 9,428.8 9,906.6 10,607.4 12,557.9 14,624.2 13,583.2 289.4
South Africa 1,677.5 2,144.5 1,312.7 1,967.5 2,564.3 2,855.2 2,975.0 3,196.4 3,034.8 2,998.4 39.8
South Korea 3,734.0 7,159.5 7,503.2 8,105.9 8,853.6 10,566.7 12,073.9 13,255.8 11,657.2 10,077.7 40.8
Spain 5,144.4 8,802.1 10,859.1 13,340.6 16,047.6 17,527.7 18,979.4 21,856.7 24,118.6 21,740.2 147.0
Sweden 17,605.5 16,909.4 17,869.6 21,996.2 24,983.0 25,452.6 26,305.9 29,248.4 30,466.0 26,649.1 57.6
Switzerland 20,239.0 26,503.9 22,814.2 25,553.1 28,086.5 28,847.5 30,038.8 32,232.0 36,984.5 37,149.1 40.2
Taiwan 5,073.7 8,276.7 9,573.3 9,754.3 10,376.0 11,053.0 11,012.3 11,165.5 11,703.0 11,147.6 34.7
Thailand 927.6 1,606.5 1,213.6 1,340.3 1,515.5 1,661.2 1,902.8 2,169.4 2,465.2 2,376.0 47.9
Tunisia 1,010.3 1,428.9 1,572.2 1,788.2 2,012.7 2,054.1 2,169.5 2,430.9 2,732.5 2,595.2 81.6
Turkey 1,636.9 1,699.7 2,045.7 2,740.2 3,545.6 4,372.8 4,651.8 5,633.9 6,144.7 5,082.7 199.0
Turkmenistan 244.5 607.7 935.4 1,155.3 1,186.5 1,800.0 2,106.1 1,130.1 876.3 258.4
Ukraine 505.6 559.0 620.6 869.4 1,304.7 1,622.9 2,130.7 2,784.0 1,873.8 270.6
United Arab Emirates 9,829.1 8,542.9 10,761.6 12,488.5 14,572.0 18,813.5 22,419.6 26,786.8 32,992.4 27,009.1 216.2
United Kingdom 11,214.9 12,664.4 17,253.6 19,936.5 22,927.6 23,958.1 25,362.8 28,227.0 26,797.5 22,425.7 77.1
USA 15,206.6 17,849.7 24,956.9 25,714.9 27,159.5 28,689.1 30,019.2 31,017.5 32,092.7 32,133.7 80.0
Venezuela 894.4 1,408.7 1,178.5 1,079.4 1,308.8 1,567.2 2,036.4 2,845.3 5,825.3 7,182.2 409.8
Vietnam 90.5 238.4 338.2 380.7 422.6 477.6 538.5 633.5 712.2 776.2 225.5
Source: Euromonitor International from national statistics

 

[karan.1970]

It's obvious that you lack basic compression of what I posted.

So let me help you understand what RISKLESS RETURNS means.

The risk-adjusted return, which isn’t annualized, is calculated by dividing total return by volatility, or the degree of daily price variation, giving a measure of income per unit of risk. A higher volatility means the price of an asset can swing dramatically in a short period, increasing the potential for unexpected losses.

And Pakistan's KSE-100 offers top gain among 72 markets worldwide, according to the BLOOMBERG RISKLESS RETURN RANKING. Pakistan had lower stock volatility than 82 percent of the nations including the U.S. (SPX) Over five years, Pakistan’s risk- adjusted returns ranked eighth.

Pakistan Stocks Best as Violence Ignored: Riskless Return - Bloomberg

Personal attack and the drivel that followed it aside, it still doesnt negate the fact that in dollar terms, if I invested in KSE exactly 5 years back a sum of $ 100 usd, I would have been left with only $ 74 today (a loss of 26%)... A loss much greater than what I would have borne, if I invested in the S&P 500 index (which would have been just under 7%).. And you folks have been sounding the death music for American economy for all of those 5 years