Investments in Pakistan

Society Business and Career
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Is it the right time to make investments in Pakistan… valuation wise yes..!!!
How safe they are… I would say pretty safe..!!!
Let’s analyse:

1) Fixed Deposits with the Banks:

Pakistani banks are paying about 13/14 percent rate of interest on fixed deposits for one year. Down side is the devaluation of Pak Rupee. Still in my opinion it is well worth to keep your fixed deposits in Pakistan. Dubai banks are giving you 1.5% on fixed dirham deposits, you get practically nothing on dollar fixed deposits.

As far as security of keeping money with Pakistani banks is concerned, Pakistani banks are well audited and regulated by State Bank of Pakistan. Majority of Pakistani Banks are financially very sound. Never in the 63 year history of Pakistan any one has lost a single penny in the Pakistani Banking Channels.

So if you are looking for a risk free investment in Pakistan, you can make a fixed deposit portfolio in one of the reputed Banks in Pakistan…

2) Stocks:

Never in the history of the country you could find such bargains as now in the equity market. You can get good quality shares at dirt cheap prices in Pakistan. Good companies are selling at prices where if you can hold on to your portfolio in the long term there is big chance that you will make a windfall profit on your equities.

Take for example MCB shares. With 27 rupee earning per annum this share was selling for Rs. 500 in 2007/8.. Today with the same earning the same share is selling for Rs 180/190..

EFUG, the largest insurance company in pakistan, is selling for 30/35, in 2007/8 was selling at over Rs. 800/..

Now these companies and many others, are good companies with growing business and good profitability. ICI/Indus/OGDC/PPL/POL/HBL/UBL/NBP/Lucky/DGKC/Engro/FEBL and many other shares are worth looking at with these prices.

Some of the more riskier share for a part of port folio where you should buy and forget is NIB bank selling for under Rs.3/

Make a long term portfolio in Pakistani equity market, you can not go too much wrong with these prices/valuations.. now is the time to invest in the capital market..!!!

3) Real State/Property:

I think this sector should be avoided by expatriate Pakistanis as you need a lot of local knowledge to invest in this sector. This is the biggest mistake expatriates make when they think about investing in Pakistan. The first sector they invest is the real state sector. It’s not a bad idea to make your summer house in Pakistan.. but other than that unless you have a lot of local knowledge you should avoid this sector..

For local investors, it’s a good time to invest in real state with these valuation. However be careful as the supply is too much, and it might take sometime before you start seeing your investments growing. All in all it’s buying time, and one should avoid selling unless absolutely necessary…

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Re: Investments in Pakistan

fascinating. thanks for the ideas and especially for focusing on valuation. that MCB seems like a real deal at 6-7x earnings. hmm... so why did it come down all the way from 20x? is that 27 rupees in EPS sustainable? any ideas how expats can buy some of these stocks and especially how to manage currency risk?

btw, do you work in finance? sorry for all the questions. but excellent, excellent thread. thanks for posting it.

never looked at Pakistani companies or the KSE in detail. but now I think I will.

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Re: Investments in Pakistan

^^^
If you look at the economic indicators of pakistan you can see after having one time huge devaluation in 2007 we are averaging 5% for last two years. The projected exchange rate at the end of next year is Rs 89/=.. so you have to take that in consideration when you invest in Pakistan at the moment.

The best way to operate in Pakistani equity market is to open an online trading account. Several Banks/brokerage firms like KASB/IGI/AKDS/AHS are offering this service. You can trade in the equities directly from your computer terminal if you have an account with these companies. Do remember to talk to a financial consultant to brief you about the laws in Pakistan. If you are an expatriate pakistani have a foreign currency trading account which will facilitate you in repatriating you profits.

Yes, several of these EPS are sustainable with a good prospect of increase. If you look at last 10 year record of MCB, the EPS has grown from under Rs. 10/... Take for instance the insurance sector. The business growth is about 15 percent per annum YOY for last ten years. Adamjee/EFUG are two main companies with over 70% of Pakistan's insurance business.. both these shares are selling at big discounts.

Why the valuations have come to this level. The biggest reason is lack of liquidity, followed by the sentiment and lack of leverage products. I am sure the situation will not remain the same forever. A lot of these companies are very well managed companies with great business. So if you invest intelligently there is a big likelihood of capital gains.

As for my personal details please respect my privacy. I can only inform you that I am actively involved in these sectors with day to day contact with several very important decision makers in financial/banking circles.

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Re: Investments in Pakistan

Hello guys!

Thanks for sharing the valubalr information about the pakistan market and For the time being investment only in arms and ammunition.

Insurance reviews

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Re: Investments in Pakistan

I have real estate (agricultural property near Chishtian, Punjab) to sell. Someone in Canada wishing to buy can contact me. I would like to be paid here in Canada in canadian dollars. It would save me the hassle of bringing the money over, which I hear is a pain in the proverbial **s. Please write to [EMAIL="[email protected]"][email protected] if anyone is interested.

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Re: Investments in Pakistan

There is no point in investing in current situation unless this government is replaced.

majority of medium businesses have been destroyed in the past three years, there is massive unemployment. Salaried class are being burdened with more and more taxes. Last year, this gov. managed to bring down GDP growth rate to around 2% and next year the growth will be negative.

The rupee can go on a free fall any moment. Those who have money, are looking to take it away from Pakistan. Such is the level of confidence of people living in Pakistan in their own country.

Even if you have are planning to start a business that you are 100% sure will be successful, you will have to heavily bribe the entire government hierarchy that is related to your business.

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Re: Investments in Pakistan

err... traditionally, all great investors try to invest when the public sentiment is down in the dump... and people don't feel good about the future. that is what sensible investing is all about. that's how you buy low and sell high.

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Re: Investments in Pakistan

I think the best investment will be with property market.

Property to rent in uk

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Re: Investments in Pakistan

Is this the reason why these Pipliyas (PPP walas) bring down public sentiment to rock bottom and make them hopeless about future whenever they are in power? :hehe:

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Re: Investments in Pakistan

This government has made sure no one dares to invest in Pakistan.