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International investors pile into Pakistan (German Media)

sab_tamasha_hai

Minister (2k+ posts)
International investors pile into Pakistan



Pakistan's sovereign bonds have never been a highly valued commodity, but global investors pumped $642.5 million into local currency bonds in November. The question is, how long will it last?

Pakistan's local debt market has rarely been a place even the least risk-averse investors have chosen to venture. But the Asian country's sovereign bonds are seeing unprecedented inflows of foreign money, with global investors buying up 1-year bonds worth $642 million (€580 million) in November alone. This is expected to reach a record $3 billion by the end of the fiscal year.

Foreign direct investment surged 200% in the first half of 2019, according to the financial adviser to the prime minister, Abdul Hafeez Shaikh, while stocks have also risen. The main Karachi stock index is up 13% over the past month, making it the best-performing stock exchange of 94 tracked by Bloomberg.

The central bank doubled the main benchmark interest rate to 13.25% this year, which is now the highest in Asia, as part of efforts to rein in inflation and show its willingness to reform public finances as a precursor to IMF support.

But the rupee is down almost 50% against the dollar this year and is one of the world's worst-performing currencies. This followed the central bank introducing more flexibility to the existing managed-float system. The lower real effective exchange rate, however, means foreigners can earn far higher returns on local currency bonds. And therein perhaps lies the rub.

Pakistanis feel the pinch of 'killing' inflation

A good bet for some

"A double-digit yield on a cheap currency is a good value trade in itself," Charles Robertson from Renaissance Capital told DW. "I would recommend investors keep buying Pakistan while it offers double-digit interest rates," he added.Even central bank rate cuts of a few percent would still make Pakistan interesting, Roberston went on. "The current policy choices of Pakistan offer the country the best chance of getting onto a sustainable growth path. Borrowing costs are lower thanks to foreign investors buying government debt."

Of 1-year papers bought in November, 55% were from the UK and 44% from the US, central bank data showed.
Pakistan also said recently it will issue $1 billion worth of so-called "panda bonds" in the first quarter of 2020 in the Chinese market for the first time in yuan, Habib Bank CEO Muhammad Aurangzeb said. A Panda bond is a Chinese renminbi-denominated bond from a non-Chinese issuer, sold in China.

IMF support: A double-edged sword

Such fast cash though usually comes with one or two caveats. The higher the yield, the greater the risk. Buttressed by International Monetary Fund (IMF) support, the government earlier this year embarked on a plan that has become familiar to many developing nations that agree to IMF terms in return for assistance: cuts in government expenditure, the "restoration" of fiscal discipline, "incentivization" of exports and cuts in the current account deficit.

The government also agreed to raise revenue by more than 40% in the fiscal year that began in July, a target many believe is unrealistic. Lowering electricity subsidies, another condition of the loan, threatens to further ignite oppositional ire.

The IMF program targets higher foreign exchange reserves and has unlocked external funding from partners including the Asian Development Bank and the World Bank.
Students Solidarity rally organized in Lahore by left-wing student organizations and parties in November



Will Imran's bond bubble burst?

On Monday, Moody's ratings agency raised Pakistan's credit outlook from negative to stable. "The rating affirmation reflects Pakistan's relatively large economy and robust long-term growth potential, coupled with ongoing institutional enhancements that raise policy credibility and effectiveness, albeit from a low starting point," Moodys said.

The agency said it expected Pakistan's current account deficit to narrow in this and next fiscal year (ending in June), averaging around 2.2% of GDP, from about 5% in 2019.

The embattled prime minister, Imran Khan, earlier this year backed a Chinese loan to help alleviate the country's economic problems, aware that the IMF conditions would be hard to meet politically and also as a way of bringing Beijing on board in its ongoing clash with India in Kashmir. The 1-year bond, some believe, reflects the expected longevity of Imran's fragile government.

There are concerns this is hot money which could dry up if the central bank cuts rates, though this is not expected until July 2020 at the earliest.

Pakistani PM Imran Khan seeks Chinese loan

"Pakistan has had something like 16 IMF programs, so yes, investors are rightly cautious about the long term in Pakistan," Robertson said. "There is obviously a risk of a social/political backlash against a government which won the election promising higher health and education spending,

and this is one reason why investors get such a high return on the bonds," he added.
High interest rates are also hitting investment by domestic companies and Moody's said the downsides were "structural constraints to economic and export competitiveness, low revenue generation capacity that weakens debt affordability, as well as political and still material external vulnerability risks."

Many eyes around the globe will be on secondary market in Pakistan's sovereign bonds should Imran's unwanted bold plans start to fray at the edges.

Source: https://www.dw.com/en/international-investors-pile-into-pakistan/a-51506141


برلن: ( روزنامہ دنیا) بین الاقوامی سرمایہ کاروں نے صرف نومبر میں 64 کروڑ 25 لاکھ ڈالر کے مقامی کرنسی بانڈز خرید لئے۔ جرمن میڈیا کے مطابق بین الاقوامی سرمایہ کار دھڑا دھڑ پاکستان آ رہے ہیں، اندازوں کے مطابق رواں مالی سال کے اختتام تک یہ سرمایہ کاری 3 ارب ڈالر تک پہنچ سکتی ہے۔

وزیر اعظم عمران خان کے مالیاتی مشیر عبدالحفیظ شیخ کے مطابق رواں برس کے پہلے چھ ماہ میں براہ راست غیر ملکی سرمایہ کاری میں دو سو فیصد اضافہ ہوا۔ کراچی کی مرکزی سٹاک مارکیٹ میں گزشتہ ماہ کے مقابلے میں 13 فیصد اضافہ نوٹ کیا گیا۔ بلومبرگ کے مطابق دنیا کی 94 سٹاک مارکیٹوں میں اس کی کارکردگی بہترین تھی۔ پاکستان کے مرکزی بینک نے شرح سود دوگنا کر دی اور یہ اس وقت 13.25 فیصد ہے۔ ایشیا میں یہ سب سے زیادہ شرح سود ہے۔ حکومت نے ایسا افراط زر کو لگام ڈالنے اور آئی ایم ایف کی شرائط کے تحت کیا۔ لیکن پاکستانی روپے کی قدر ڈالر کے مقابلے میں رواں برس تقریبا 50 فیصد کم ہو چکی ہے اور اس کا شمار دنیا کی بدترین کارکردگی دکھانے والی کرنسیوں میں ہونے لگا ہے۔

ریناسسنس کیپٹل سے تعلق رکھنے والے چارلس رابرٹسن کا کہنا تھا ایک سستی کرنسی پر ڈبل ڈجٹ منافع بذات خود تجارت کیلئے بہت فائدہ مند ہے، میں سرمایہ کاروں کو یہی کہوں گا کہ وہ پاکستانی بانڈز خریدتے رہیں کیونکہ اس پر شرح سود دوگنی ہے۔ پاکستان کے مرکزی بینک نے بھی فیسوں میں کمی کی ہے جو پاکستان کو سرمایہ کاروں کیلئے مزید پرکشش بنا دیتی ہے، پاکستان کی موجودہ پالیسیوں کا انتخاب اس ملک کو پائیدار ترقی کی راہ پر گامزن ہونے کا بہترین موقع فراہم کر رہا ہے۔ نومبر میں جو ایک سالہ بانڈز فروخت کیے گئے ان میں سے 55 فیصد برطانیہ اور 44 فیصد امریکا سے خریدے گئے ہیں۔

حبیب بینک کے سی ای او محمد اورنگزیب کا کہنا تھا پاکستان 2020 کی پہلی سہ ماہی میں ایک بلین ڈالر مالیت کے پانڈہ بانڈز بھی جاری کرے گا جو کہ چینی مارکیٹ کیلئے یوآن میں ہونگے۔

 
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knowledge88

Minister (2k+ posts)
On the first line it said. " international investors pile into Pakistan ".
On the second line it said " sab tamasha hay " .
I didn't have to read the thread because of this hint in the second line that , sab tamasha hay.
Thank you for letting us know about the authenticity of this news.
 

sab_tamasha_hai

Minister (2k+ posts)
On the first line it said. " international investors pile into Pakistan ".
On the second line it said " sab tamasha hay " .
I didn't have to read the thread because of this hint in the second line that , sab tamasha hay.
Thank you for letting us know about the authenticity of this news.
It might help if you read the source before spewing out whatever crap you think of. Now my username the second line is after your comment. So what does it makes you by your own flawed logic.
 

GreenMaple

Chief Minister (5k+ posts)
On the first line it said. " international investors pile into Pakistan ".
On the second line it said " sab tamasha hay " .
I didn't have to read the thread because of this hint in the second line that , sab tamasha hay.
Thank you for letting us know about the authenticity of this news.
Poori qaum hi tamash-been hey, to thorri tamash-bini aap bhi ker lo.
 

knowledge88

Minister (2k+ posts)
It might help if you read the source before spewing out whatever crap you think of. Now my username the second line is after your comment. So what does it makes you by your own flawed logic.
Bhai Sahab, title page per jahan all the threads kay title likhay hain, aap kay thread kay Neechay likhay hay " sab tamasha hay " toh is may mera Kiya qusoor? May Toh Aap ka shukriya ker raha hoon kay government Ki is news kah pole aap nay khool diya. Thank you.
 

aftab818

MPA (400+ posts)
Its ok for short term and with limit to cap it asap, as paying back 13.25% interest is way too much . Pakistan will be in real trouble after 2 to 3 years as it will struggle to pay that much interest then investors will withdraw their money . It actually failed in many countries and leads to artificial economy . We should invite investors to sectors where they directly shift technology and create direct jobs with skills development. That will be real investment. There is huge vaccum in IT , automotive, etc
 

OperationDabardoos

Minister (2k+ posts)
Imran Khan is honest and sincere leader. Economy is going in right direction. We faced hardship because of massive corruption of nawaz and Zardari
 

hassanattique

MPA (400+ posts)
Pakistan can chose to lower interest rate at any time and have to pay back accordingly.

Its ok for short term and with limit to cap it asap, as paying back 13.25% interest is way too much . Pakistan will be in real trouble after 2 to 3 years as it will struggle to pay that much interest then investors will withdraw their money . It actually failed in many countries and leads to artificial economy . We should invite investors to sectors where they directly shift technology and create direct jobs with skills development. That will be real investment. There is huge vaccum in IT , automotive, etc
 

Zaidi Qasim

Chief Minister (5k+ posts)
Its ok for short term and with limit to cap it asap, as paying back 13.25% interest is way too much . Pakistan will be in real trouble after 2 to 3 years as it will struggle to pay that much interest then investors will withdraw their money . It actually failed in many countries and leads to artificial economy . We should invite investors to sectors where they directly shift technology and create direct jobs with skills development. That will be real investment. There is huge vaccum in IT , automotive, etc
There is absolutely no real Capital being invested in local industry. This is a hot money being pursue and as you said, will create an artificial euphoria in the country. Continue to pay 13% or more on this capital for short term is going to kill any incentive local investor ever had.
 
The interest rate will surely be dropped in the next 6 months and I do agree that it has created a sort of bubble economy but at the same time it served a very useful purpose. This move has highlighted the Pakistani market to the world for its potential. A lot of these investors might have come for the high interest rate but in doing so they are being introduced to the Pakistani market which has tremendous potential. If the policies are improved and the enviroment is kept stable we should be able to attract the same investors for more even when the interest rates are lowered
 

Kashif Rafiq

Chief Minister (5k+ posts)

برلن: ( روزنامہ دنیا) بین الاقوامی سرمایہ کاروں نے صرف نومبر میں 64 کروڑ 25 لاکھ ڈالر کے مقامی کرنسی بانڈز خرید لئے۔ جرمن میڈیا کے مطابق بین الاقوامی سرمایہ کار دھڑا دھڑ پاکستان آ رہے ہیں، اندازوں کے مطابق رواں مالی سال کے اختتام تک یہ سرمایہ کاری 3 ارب ڈالر تک پہنچ سکتی ہے۔

وزیر اعظم عمران خان کے مالیاتی مشیر عبدالحفیظ شیخ کے مطابق رواں برس کے پہلے چھ ماہ میں براہ راست غیر ملکی سرمایہ کاری میں دو سو فیصد اضافہ ہوا۔ کراچی کی مرکزی سٹاک مارکیٹ میں گزشتہ ماہ کے مقابلے میں 13 فیصد اضافہ نوٹ کیا گیا۔ بلومبرگ کے مطابق دنیا کی 94 سٹاک مارکیٹوں میں اس کی کارکردگی بہترین تھی۔ پاکستان کے مرکزی بینک نے شرح سود دوگنا کر دی اور یہ اس وقت 13.25 فیصد ہے۔ ایشیا میں یہ سب سے زیادہ شرح سود ہے۔ حکومت نے ایسا افراط زر کو لگام ڈالنے اور آئی ایم ایف کی شرائط کے تحت کیا۔ لیکن پاکستانی روپے کی قدر ڈالر کے مقابلے میں رواں برس تقریبا 50 فیصد کم ہو چکی ہے اور اس کا شمار دنیا کی بدترین کارکردگی دکھانے والی کرنسیوں میں ہونے لگا ہے۔

ریناسسنس کیپٹل سے تعلق رکھنے والے چارلس رابرٹسن کا کہنا تھا ایک سستی کرنسی پر ڈبل ڈجٹ منافع بذات خود تجارت کیلئے بہت فائدہ مند ہے، میں سرمایہ کاروں کو یہی کہوں گا کہ وہ پاکستانی بانڈز خریدتے رہیں کیونکہ اس پر شرح سود دوگنی ہے۔ پاکستان کے مرکزی بینک نے بھی فیسوں میں کمی کی ہے جو پاکستان کو سرمایہ کاروں کیلئے مزید پرکشش بنا دیتی ہے، پاکستان کی موجودہ پالیسیوں کا انتخاب اس ملک کو پائیدار ترقی کی راہ پر گامزن ہونے کا بہترین موقع فراہم کر رہا ہے۔ نومبر میں جو ایک سالہ بانڈز فروخت کیے گئے ان میں سے 55 فیصد برطانیہ اور 44 فیصد امریکا سے خریدے گئے ہیں۔

حبیب بینک کے سی ای او محمد اورنگزیب کا کہنا تھا پاکستان 2020 کی پہلی سہ ماہی میں ایک بلین ڈالر مالیت کے پانڈہ بانڈز بھی جاری کرے گا جو کہ چینی مارکیٹ کیلئے یوآن میں ہونگے۔

 
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