When one talks about investing in Pakistan, one thinks of a desolate country lodged between India to the south and the calamitous region of Afghanistan to the north. Yet Pakistan is a Frontier Market, making it an ideal investment opportunity with a compelling growth story. With this in mind WIOF has launched a fund which moves investment into Pakistan The WIOF Pakistan Performance Fund enables you as an investor to participate in an equity fund driven by a country which has much untapped potential and is still not yet significant in the global context.This market provides extended investment opportunities in the Asian region and should be part of a well-diversified portfolio.  


Macroeconomic overview

Pakistan’s economic recovery has been on track and it has shown signs of improvement. There has been impressive growth in tax revenues and wholesale inflation has largely remained under control for the last fiscal year averaging around 12%. The budget deficit was above target but was almost half of that reported last fiscal year. The external account has been controlled efficiently by increasing duties and levies on durable goods and providing incentives to industries, which are the main contributing to exports. External inflationary pressures have not been as strong as 2008 but the government is still removing subsidies from various sectors and moving to market based pricing.

Central bank and monetary policy

The central bank has been taking a cautious stand by not reducing the rates in a rush unlike other economies of the region. The policy is to keep the interest rate volatility low and cautiously watch global input price.

Political situation and security

The Pakistan Army’s relations with the government have been very accommodative. The co-ordination between the Pakistani security agencies and the Army has been excellent and has produced impressive results in last nine months. The Army Chief is widely expected to get an extension before his retirement later this year. The ruling party has also maintained smooth relations with main stream opposition parties.

Main Investment Theme

Deregulation and privatisation

Deregulation and privatisation have remained key market themes. Driven by its desire to get out of the business of doing business, and to promote private sector investment, the government has gradually exited from commercial businesses through the privatisation of state owned entities. The government has put in a strong regulatory structure in order to implement this scheme successfully. Over the past seven years, independent regulatory authorities have been set up and the Central Bank and the Securities Exchange Commission of Pakistan have also been strengthened. Unlike other emerging and frontier economies, Pakistan has removed fiscal imbalances by removing subsidies. In the short run it has created inflation but in the longer run it will allow the government to control trade and fiscal deficits.

 Why invest into Pakistan’s capital markets?

Reforming Pakistan

Since 2000, the government of Pakistan has implemented various structural and regulatory reforms. Important contributing sectors of the economy have been deregulated gradually to encourage investments by the private sector in order to decrease the country’s dependence on agriculture. The Foreign ownership level was increased to 100% from the previously 49% and restrictions were abolished on the repatriation of profits and dividends. As a result investments have been made in banking, oil & gas exploration, fertilizer, telecoms and durable goods sectors. Around USD 5bn has been invested in the textile sector itself in the last 7 years in order to improve productivity.


Labor market and work force

High job growth has expanded the middle income group and the adaptation of market based pricing has improved farmer incomes over last five years. A country of 160mn people, Pakistan has a young work force with 60% of the population under the age of 30.

Keeping the above positive developments in view, the market still keeps trading at a discount to its regional peers probably due to the law and order situation. Important contributing factors have been:

1. Accommodative monetary policy

2. Growing domestic demand

3. Fiscal discipline                                                                               


Pakistan’s Economic Outlook

Path of recovery

We expect Pakistan to remain on the path of recovery and to further improve economic conditions by achieving greater fiscal discipline even though the law and order situation remains volatile. Pakistan’s budget deficit at 5.8% although relatively high, is still much better than many eastern European economies.

Challenges and opportunities

The shortfall in power generation capacity is currently the biggest infrastructure challenge and is being tackled by the government by seeking private investments in the sector. The government is also rapidly finalizing start-up of mega dams and is in process of securing funding for these from international agencies and donors. An area around the Indus river delta has been designated as a corridor for generating wind power. The tariff structure has also been finalized for rental and solar power generation.

WIOF Pakistan Performance Fund = opportunity to dynamic emerging market economic growth

The WIOF Pakistan Performance Fund, managed by Habib Bank AG Zurich („HBZ“), focuses on gaining exposure to a portfolio of equities and equity related securities of companies in Pakistan in order to seek capital growth maximization and income generation in USD. The active investment approach uses fundamental analysis to identify those quoted companies with strong fundamentals and those shares that can be purchased at a substantially lower price than the Investment Manager’s estimation of the company’s intrinsic value. The Sub-Fund may also invest in fixed income securities and money market instruments. The Sub-Fund will try to achieve an absolute investment return per year, rather than being driven by an index or market capitalization.

Habib Bank AG Zurich („HBZ“) was incorporated in Switzerland in 1967 and operates on four continents with its head office in Zurich, Switzerland and branches in United Kingdom, United Arab Emirates and East Africa, and has further subsidiaries in Canada, South Africa and Pakistan. HBZ Private Banking provides financial advisory services to private investors and also specializes in asset management services for investors who seek exposure to the South Asian capital markets. HBZ operates in Pakistan through its subsidiary, where it has built an extensive network over the years.

Exposure to the Pakistan market belongs to each globally diversified investment portfolio. Should the investment risk be sufficiently spread, the WIOF Pakistan Performance Fund should not be missing from a client’s investment portfolio.

Legal Notice
This document is designed for the professional advisers only.
This document is not an invitation to subscribe for units or shares in the funds described herein and is by way of information only.
Past performance is not a guide to the future. The value of investments, and the income from them, can go down as well as up. You may not get back the amount you have invested. You should be aware that currency fluctuations, either up or down, may also affect the value of an investment. The mention of any specific shares should not be taken as a recommendation to deal. Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Yields are not guaranteed and can fluctuate. Net asset value information has been obtained from sources believed to be reliable but WIOF makes no representation to its accuracy, reliability or completeness and accepts no liability for any direct or indirect loss arising from its use.
WIOF and Cornhill Management International S.A. assume no liability for the correctness or accuracy of the given information and it may be subject to change at any time, without notice. Performance shown does not take account of any fees and costs associated with subscribing or redeeming shares. It is assumed that all dividends were reinvested.
Before investing in any WIOF Sub-fund(s) investors should contact their financial adviser and refer to all relevant documents relating to the particular Sub-fund(s), such as the latest annual or semi-annual report and/or simplified prospectus, which specify the particular risks associated with the Sub-fund, together with any specific restrictions applying, and the basis of dealing.