- Real estate, cement, fertiliser, E&P and auto sectors are poised to show increased earnings growth in the near future
- Long-term valuations look promising; consult experts and assess holding power before making significant investments
Interview with Syed Ali Raza Bukhari — Founder, Rukab Technologies
PAGE:Â Tell me something about yourself, please:
Syed Ali Raza Bukhari: I have been associated with the financial services sector for more than two decades now spreading my experience into a diversified landscape of multiple domains like investment and financial advisory, distribution, marketing and sales, specialised product development, stock brokerage and operations. I have also ventured into the technology business, creating a marketplace concept for the integration of multiple services, all in one place, adding a vertical of deep technology experience to my profile.
PAGE:Â How would you comment on investment opportunities in Pakistan?
Syed Ali Raza Bukhari: Even though I am very positive about the future value of investments in Pakistan, however, the only way to move ahead under the prevalent circumstances is being extremely cautious. Dwindling foreign interest in Pakistan is a major indicator of the underlying economic and political turmoil in the short-run that can only be addressed through a fundamental transformation of business policies and structures. Average inflation seems to have abated from a peak of nearly 24% last year, however, the brunt and pressure shall still persist and haunt the commoners against spending in totality. Interest rates have also gradually started to settle giving out a fragrant whiff of positivity, albeit not in the short-run. So, in my opinion, stay cautious in the short-run and plan already for the long run and start taking positions wherever you may find value. Talk to the experts and they will guide you about long-term investment opportunities in the market.
PAGE:Â Which sectors of the economy are lucrative in terms of foreign and local investments?
Syed Ali Raza Bukhari: As I suggested, it is wiser to practice caution in the prevalent circumstances and choose investment avenues wisely in the short run. However, based on long-term valuations, there are ample investment opportunities in the market that may offer very promising returns and may easily be kept in the portfolio for long-term value addition, whoever may opt to do so keeping one’s holding power in mind.
To start with, real estate is one undermined sector that may be looked into as a long-term investment avenue showing huge valuation potential from where it currently is. Besides other sectors, like cement, fertiliser, E&P and auto are also poised to show increased earnings growth in the near future based on multiple factors like an economic revival, lowering interest rates, sustainable inflation figures, stabilising foreign reserves and so forth. However, I am not really certain about the foreign investments showing any inclination towards flowing in unless economic and political stability is ascertained by the investors who are keeping our markets under watch from outside. It may take some time before foreign investments starts flowing in at multiple levels of our improving economy.
PAGE:Â What is your take on the taxation measures when it comes to investments?
Syed Ali Raza Bukhari: There has to be a balancing figure and act of taxation that not only creates an enabling environment for investments but also provides ample room for the growth of the economy and its people. The current taxation measures may not be as enabling, but the evil that has actually eaten away the residual income is inflation. Tight taxation measures may add burden to the ongoing pressures of making ends meet for any and all active entities of the economy, however, nothing damages the capacity and ability to save and invest as much as inflation does.
So, in my opinion, I would carry a neutral view on taxation measures effecting investments, however, the more important element and adversely effecting factor is inflation that has hampered investments under the prevalent circumstances. When a commoner starts to struggle for keeping up with basic necessities, eradicating the need for saving and investments, it’s not just taxation to be blamed but inflation too.
In my opinion, even under current taxation measures amid lowering inflation pressures ahead, the markets shall start to witness higher participation and liquidity flow of local investors. But in turn, as I stated, taxation policies also have to be enabling than detrimental, even to curtail or contain inflation.
PAGE:Â What is your standpoint on investment opportunities five years down the line?
Syed Ali Raza Bukhari: As I have advocated that long-term valuations and opportunities are very attractive and seem to have no other view but positivity towards it. I personally feel that it is the right time to start taking long-term positions in promising sectors of the economy. One should always rely on discussing investment opportunities with the experts of the industry. It is very imperative that the investors should weigh their holding power before taking any long positions. If you look at the stock market data also you will see that the index has nearly more than doubled in a five years term.
All sectors may be independently studied and you will discover that it reflects the same trend across the board. Again, I would reiterate that before taking any long-term positions, I would urge all investors to speak to the experts of the investment management industry and weigh all pros and cons before taking such investment positions in the long run.