Investors’ fears about investment climate dissipate

KARACHI: Foreign investors’ fears about the investment climate in Pakistan have largely dissipated due to improved law and order situations and a healthier outlook on the political and economic fronts in the country, said an analyst at a brokerage house.
Analyst Shahbaz Ashraf at Arif Habib Limited, recounting his team’s recent participation at ‘MENA and Frontier Markets Conference,’ organised by Bank of America Merrill Lynch, in Dubai, said overseas investors showed keen interest in finding out more about the ‘ground realities’ in Pakistan, such as rural-urban migration, “which is paving the way for increasing consumerism in the country.”
“We had the privilege of facilitating meetings of Pakistani corporations with major international investors and were able to gather an insight of the international sentiment towards investment in Pakistan,” Ashraf said.
He said the opinions of international investors about Pakistan are being changed owing to several changes on the political and economic landscapes over the past two years.
“Most discussions between corporates and investors focused on the current investment climate with curiosity on the positive impact of China-Pakistan Economic Corridor (CPEC) on the nation’s economy and various sectors,” he added.
“As such, there were lengthy discussions on the consumer and healthcare segments, automobiles and bank financing. There were questions on how banks would further penetrate and the impact of factors, such as CPEC and auto financing, on the banking sector.”
Ashraf said investors had a clear idea of how the easing energy constraint would unlock the potential of production and exports.
“One area of concern was the recent trend of rupee depreciation,” he said. “While investors were mainly positive on the country’s outlook, the rupee losing against the US Dollar in recent months was also a topic of discussion.”
However, he added that they agreed that with forex reserves building up and after CPEC inflows, the International Monetary Fund’s repayments could be met with a relative ease without causing an undue burden on reserves.
“Massive investments as a result of CPEC in energy sector should also help ease the power bottleneck and aid in increasing exports, which would ultimately help the rupee in regaining lost ground against the greenback,” Ashraf said.
He said corporations that represented Pakistan at the event included UBL, Bank Al-Falah, Lucky Cement, DG Khan Cement, Engro, Engro Fertilizer, Fatima Fertilizer, K-Electric, Hubco and Engro Foods.