Smart Money to Follow China's $46 Billion Investment in Pakistan
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Shotgunner51
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Thanks bro, but I am just an ordinary i-banker, not expert of any kind (except ). And very Chinese (当然是中国), and very Shanghainese (阿拉上海宁)!
Back to topic, China has a vision of what the world will be like, and hence devise a series of action plans of which one of them is "One Belt On Route" to build infrastructures.
Vision on the Global South
Long story short, China knows the neo-con warhawks in Washington is the ultimate threat and will maintain a balanced "frenemy" relationship with the lone superpower, which has some handy tools that China can't match yet. Russia is the key partner to build an Eurasian economic bloc, which includes central Asia, Pakistan, Iran, CEE, as core of the loop, and in the broader picture will integrate with ASEAN, MENA, Sub-Saharan Africa. Latin America has own set of geopolitical complexity and has to be dealt with separately given its importance in the world economy, lots of opportunities to explore. Finally the two wings of US hegemony - East Asia & West Europe - are also undergoing geopolitical changes, future directions of Tokyo-Seoul and Berlin will be critical to how the world evolves, especially Japan, the "silent superpower".
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The Indian stock market, as reflected by the S&P BSE Sensex, has fallen by at least 2,100 points or 7.1% from its highs and is adjusting to the reality of subdued earnings. Company results for the January-March 2015 quarter, so far, have not been encouraging, though analysts expect things to improve by the second half of the current financial year. The street expects earnings to get better with the improvement in business environment and pick-up in economic activity. Put differently, in the medium term, market movement will largely depend on the pace of expansion in the economy, which, to a large extent, will be determined by government action and implementation of ideas such as increasing capital expenditure.
Interestingly, even as some investors are getting edgy and expect quick government action on various fronts, observations from some of the international institutions that came in this month were largely optimistic about the future of the Indian economy. Encouraged by the recent policy action, rating agency Moody’s, while affirming its Baa3 rating on India, changed its outlook to positive from stable. It said in a statement: “…recent measures to address inflation, keep external balances in check, simplify the regulatory regime for investors, increase foreign direct investment, and facilitate infrastructure development will reduce some of India’s sovereign credit constraints.”
The government’s intent to improve the economic environment and action taken in this regard is being recognized. “Growth will benefit from recent policy reforms, a consequent pick-up in investment, and lower oil prices. Lower oil prices will raise real disposable incomes, particularly among poorer households, and help drive down inflation,” said the latest World Economic Outlook (April 2015) of the International Monetary Fund (IMF). Growth in India, according to the IMF, will be higher than that in China in 2015 and 2016, making it the fastest growing large economy in the world. It expects India to grow at 7.5% in both 2015 and 2016. Meanwhile, the Chinese economy is expected to expand at an annual pace of 6.8% and 6.3%, respectively.
The World Bank had similar observations about the Indian economy. In its South Asia Economic Focus (Spring 2015) report, it noted, “India’s economy is poised to accelerate on the back of an ambitious reform agenda, and faster growth is expected to further drive down poverty.” The acceleration in growth, according to the World Bank, will be led by investment, which is expected to grow at an average rate of 12% between 2015 and 2017.
However, not all are equally enthused. A recent report (India’s Fiscal Roadblocks Could Stall Infrastructure Progress) by Standard & Poor’s presented a different picture. “India’s public finances are less than rock solid due to long-standing cracks in its budgetary system. While the country’s budgetary performances have strengthened in recent years, its hard-won fiscal improvements could yet unwind because of a financial or commodity shock,” the report said. It also highlighted that further reforms will be required on the fiscal front to be able to sustain higher investment spending. Efficient subsidy spending, which can free up resources for capital spending, is necessary to attain and maintain higher growth in the medium to long term. Both markets and policymakers will do well by paying attention to Standard & Poor’s observations. In fact, a financial or commodity shock can not only affect the progress made on the fiscal front, but also the wider economy.
Global perception and local challenges of the Indian economy - Livemint
Interestingly, even as some investors are getting edgy and expect quick government action on various fronts, observations from some of the international institutions that came in this month were largely optimistic about the future of the Indian economy. Encouraged by the recent policy action, rating agency Moody’s, while affirming its Baa3 rating on India, changed its outlook to positive from stable. It said in a statement: “…recent measures to address inflation, keep external balances in check, simplify the regulatory regime for investors, increase foreign direct investment, and facilitate infrastructure development will reduce some of India’s sovereign credit constraints.”
The government’s intent to improve the economic environment and action taken in this regard is being recognized. “Growth will benefit from recent policy reforms, a consequent pick-up in investment, and lower oil prices. Lower oil prices will raise real disposable incomes, particularly among poorer households, and help drive down inflation,” said the latest World Economic Outlook (April 2015) of the International Monetary Fund (IMF). Growth in India, according to the IMF, will be higher than that in China in 2015 and 2016, making it the fastest growing large economy in the world. It expects India to grow at 7.5% in both 2015 and 2016. Meanwhile, the Chinese economy is expected to expand at an annual pace of 6.8% and 6.3%, respectively.
The World Bank had similar observations about the Indian economy. In its South Asia Economic Focus (Spring 2015) report, it noted, “India’s economy is poised to accelerate on the back of an ambitious reform agenda, and faster growth is expected to further drive down poverty.” The acceleration in growth, according to the World Bank, will be led by investment, which is expected to grow at an average rate of 12% between 2015 and 2017.
However, not all are equally enthused. A recent report (India’s Fiscal Roadblocks Could Stall Infrastructure Progress) by Standard & Poor’s presented a different picture. “India’s public finances are less than rock solid due to long-standing cracks in its budgetary system. While the country’s budgetary performances have strengthened in recent years, its hard-won fiscal improvements could yet unwind because of a financial or commodity shock,” the report said. It also highlighted that further reforms will be required on the fiscal front to be able to sustain higher investment spending. Efficient subsidy spending, which can free up resources for capital spending, is necessary to attain and maintain higher growth in the medium to long term. Both markets and policymakers will do well by paying attention to Standard & Poor’s observations. In fact, a financial or commodity shock can not only affect the progress made on the fiscal front, but also the wider economy.
Global perception and local challenges of the Indian economy - Livemint
If enacted, that (Pak-China Corridor) plan would enable China’s naval vessels and merchants to bypass the Malacca Strait, long a haven for pirates and militants who prey on unsuspecting ships. The CPEC would allow the government and banks in the mainland to lend to Chinese companies operating in Pakistan, facilitating construction along the route. Some of the other line items in the deal aim to fix Pakistan’s failing energy infrastructure: the CPEC calls for $15.5 billion in investments ranging from coal to solar and hydroelectric power, scheduled to become part of Pakistan’s national electricity mix in 2017. That will follow a fiber optic cable linking Xinjiang and Rawalpindi, which will come at the cost of $44 million.
China has plenty of incentive to unleash a spigot of investment, despite fears that Pakistani radicals are stoking violence in Xinjiang among the 10 million Uyghur Muslims that live there. Beijing has already pushed heavily for other projects in the region, including the 1,240 km Karachi-Lahore motorway, a six-lane, high speed corridor expected to be completed in the fall of 2017, and orchestrating upgrades to public transportation, including metro and bus service, in six cities, including Lahore, Karachi, and Rawalpindi. Modernizing the Karakoram highway, which runs 1,300 km from Kashgar, the ancient silk road crossing in Xinjiang, all the way into the heart of the Punjab, Pakistan’s biggest province, will also prove critical.
All of that leads to Gwadar, which China hopes to transform into a free-trade zone on the order of a Singapore or a Hong Kong, another major focus for Chinese investors. That carries geopolitical weight. China’s aid to Pakistan now exceeds American spending, which has totaled $31 billion since 2002. Washington’s investments have slowed since counterterrorism funding authorized by Congress during the Afghan surge has dried up.
It’s not as though China isn’t interested in military issues. President Xi also used the occasion to finalize a deal to send eight submarines to Pakistan, in a long-promised deal. They’re also working to get on shared ideological ground: the Research and Development International think tank (RANDI), will be chaired by Pakistani and Chinese leaders. That unfortunate acronym became the butt of plenty of Twitter jokes on Monday. But the group could wield serious influence, especially in thinking up plans to help Pakistan fight terror and potentially determining the role of mediators in talks with the Taliban in neighboring Afghanistan.
China’s grand plan for Pakistan’s infrastructure has taken shape over the course of President Xi’s visit. It will have a major impact on what the future holds for Islamabad, and the entire Indian Ocean basin.
China’s Grand Plan for Pakistan’s Infrastructure | The Diplomat
China has plenty of incentive to unleash a spigot of investment, despite fears that Pakistani radicals are stoking violence in Xinjiang among the 10 million Uyghur Muslims that live there. Beijing has already pushed heavily for other projects in the region, including the 1,240 km Karachi-Lahore motorway, a six-lane, high speed corridor expected to be completed in the fall of 2017, and orchestrating upgrades to public transportation, including metro and bus service, in six cities, including Lahore, Karachi, and Rawalpindi. Modernizing the Karakoram highway, which runs 1,300 km from Kashgar, the ancient silk road crossing in Xinjiang, all the way into the heart of the Punjab, Pakistan’s biggest province, will also prove critical.
All of that leads to Gwadar, which China hopes to transform into a free-trade zone on the order of a Singapore or a Hong Kong, another major focus for Chinese investors. That carries geopolitical weight. China’s aid to Pakistan now exceeds American spending, which has totaled $31 billion since 2002. Washington’s investments have slowed since counterterrorism funding authorized by Congress during the Afghan surge has dried up.
It’s not as though China isn’t interested in military issues. President Xi also used the occasion to finalize a deal to send eight submarines to Pakistan, in a long-promised deal. They’re also working to get on shared ideological ground: the Research and Development International think tank (RANDI), will be chaired by Pakistani and Chinese leaders. That unfortunate acronym became the butt of plenty of Twitter jokes on Monday. But the group could wield serious influence, especially in thinking up plans to help Pakistan fight terror and potentially determining the role of mediators in talks with the Taliban in neighboring Afghanistan.
China’s grand plan for Pakistan’s infrastructure has taken shape over the course of President Xi’s visit. It will have a major impact on what the future holds for Islamabad, and the entire Indian Ocean basin.
China’s Grand Plan for Pakistan’s Infrastructure | The Diplomat
black-hawk_101
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I am sure that within days it would become operational and soon start building a complete 21st century port. Also, they will going to invest heavily on real estate too which would allow many people from all the major cities from Pakistan to build their very own home in Gwadar.
I am sure this would be quite helpful in cutting the debts and Pakistan will soon be able to become very stable country with no debts and with $50-70 Billions in reserves.
#Pakistan’s Biggest IPO planned in 8 Years. Steelmaker to raise 4 billion rupees. Sharif’s Growth Push Spurs Pakistan’s Biggest IPO in 8 Years - Bloomberg Business via @Business #CPEC
Pakistan Prime Minister Nawaz Sharif’s push to build power plants, roads and rail links is prompting a local steelmaker to expand by selling shares in the nation’s biggest initial public offering in eight years.
Amreli Steels Ltd., the South Asian country’s biggest maker of steel bars used in construction, plans to raise as much as 4 billion rupees ($39 million) next month from the sale of 70 million new shares. The proceeds will help more than double its capacity to 450,000 tons from 200,000 tons, Amreli’s director Hadi Akberali said in an interview.
The steelmaker is betting on a potential boom in demand for the alloy as the $232 billion economy expands at the fastest pace in eight years, fueled by higher remittances and consumer spending. Last month, China signed deals for $28 billion of investments in Pakistan as part of a planned $45 billion economic corridor that includes power plants and dams.
“When your GDP is growing, your steel demand grows in multiples,” Akberali said. “If the Pakistan-China economic corridor takes off, even if we double or triple our capacity, I think it still won’t be enough.”
Second Best
Amreli’s share offer also comes amid gains in the benchmark Karachi 100 Index, which, according to data compiled by Bloomberg, is the world’s second-best performer in the past six years. The gauge may rally 52 percent in the next two to three years, Stockholm-based Tundra Fonder AB fund manager Shamoon Tariq predicted in an April interview.
The benchmark index fell 0.3 percent to 32,749 as of 11:36 a.m. in Karachi. This year, it has climbed 2 percent.
The company will raise between 2 billion rupees and 4 billion rupees, depending on the final price, Akberali said, adding he expects strong demand. AKD Securities Ltd. and Bank Alfalah Ltd. will be the advisers on the transaction.
A 4 billion-rupee IPO would be the biggest in Pakistan since Habib Bank Ltd. raised 8.1 billion rupees in 2007, according to data compiled by Bloomberg. The number of initial share offerings rose to five in 2014, the most in six years, according to data compiled by Bloomberg.
“This clearly shows companies have the confidence to raise funds through the equity market,” said Muhammad Imran, a fund manager at NBP Fullerton Asset Management, which oversees 57 billion rupees in stocks and bonds in Karachi. “A new listing will also improve the depth of the market and choices.”
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“We are looking at big infrastructure spending,” Akberali said. “Steel is very strongly linked to economic growth.”
Pakistan Prime Minister Nawaz Sharif’s push to build power plants, roads and rail links is prompting a local steelmaker to expand by selling shares in the nation’s biggest initial public offering in eight years.
Amreli Steels Ltd., the South Asian country’s biggest maker of steel bars used in construction, plans to raise as much as 4 billion rupees ($39 million) next month from the sale of 70 million new shares. The proceeds will help more than double its capacity to 450,000 tons from 200,000 tons, Amreli’s director Hadi Akberali said in an interview.
The steelmaker is betting on a potential boom in demand for the alloy as the $232 billion economy expands at the fastest pace in eight years, fueled by higher remittances and consumer spending. Last month, China signed deals for $28 billion of investments in Pakistan as part of a planned $45 billion economic corridor that includes power plants and dams.
“When your GDP is growing, your steel demand grows in multiples,” Akberali said. “If the Pakistan-China economic corridor takes off, even if we double or triple our capacity, I think it still won’t be enough.”
Second Best
Amreli’s share offer also comes amid gains in the benchmark Karachi 100 Index, which, according to data compiled by Bloomberg, is the world’s second-best performer in the past six years. The gauge may rally 52 percent in the next two to three years, Stockholm-based Tundra Fonder AB fund manager Shamoon Tariq predicted in an April interview.
The benchmark index fell 0.3 percent to 32,749 as of 11:36 a.m. in Karachi. This year, it has climbed 2 percent.
The company will raise between 2 billion rupees and 4 billion rupees, depending on the final price, Akberali said, adding he expects strong demand. AKD Securities Ltd. and Bank Alfalah Ltd. will be the advisers on the transaction.
A 4 billion-rupee IPO would be the biggest in Pakistan since Habib Bank Ltd. raised 8.1 billion rupees in 2007, according to data compiled by Bloomberg. The number of initial share offerings rose to five in 2014, the most in six years, according to data compiled by Bloomberg.
“This clearly shows companies have the confidence to raise funds through the equity market,” said Muhammad Imran, a fund manager at NBP Fullerton Asset Management, which oversees 57 billion rupees in stocks and bonds in Karachi. “A new listing will also improve the depth of the market and choices.”
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“We are looking at big infrastructure spending,” Akberali said. “Steel is very strongly linked to economic growth.”
Shotgunner51
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Biggest IPO from steel sector, good news! The seed investment of infrastructure at PCEC is pulling money in.
Is there any pre-IPO round by strategic investors? I might suggest a second listing in Hong Kong, and bring in strategic investors to boost valuation.
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http://www.nytimes.com/2009/07/21/business/global/21inside.html?pagewanted=all&_r=0
Why China Will Keep Investing Abroad
Why China Will Keep Investing Abroad
black-hawk_101
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But Pakistan should request its own people whether within and in other countries to invest in this Mega Dig in Pakistan. Also, Pakistan should work on gaining Oil and Gas pipelines from Turkmenistan and IRAN as KSA and Qatar is looking more or less like a bit less friendlier now! 
For Privatization, its really a good move but companies should be sold to Pakistanis not to others which includes Middle Eastern countries as they keep their interest first rather than of Pakistan.
For Privatization, its really a good move but companies should be sold to Pakistanis not to others which includes Middle Eastern countries as they keep their interest first rather than of Pakistan.
Lavrentiy
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Are you asking about book building? Yes, in the last two years almost all IPOs in Karachi Stock Exchange had a book building using Dutch Auction method before the general public offer. According to our laws, 75% of the offer can be made through the book building method and 25% of the offer has to be made to the general public.
High Net Worth individuals and Institutional investors take part in the book building process.
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