- Shariah-compliant sectors like textiles, IT, and consumer goods benefit from improved macro fundamentals
Interview with Ms. Tara Uzra Dawood, CEO 786 Investments Ltd
Profile:
Miss Tara Uzra Dawood currently sits on the boards of Pakistan Refinery Limited, PaySys, Flow Petroleum, and Dawood Family Takaful Limited, and previously served on the boards of Pakistan State Oil, Mutual Funds Association of Pakistan and Lahore Electric Supply Company (LESCO). She earlier served on the Energy Sub-Committee of Advisory Committee of the Planning Commission under Chairmanship of Asad Umar, Federal Minister for Planning, Development, Reforms and Special Initiatives (PD&SL). She is certified in Corporate Governance by Lahore University of Management Sciences (LUMS), Pakistan Institute of Corporate Governance (PICG) and Harvard Business School.
She holds a Doctorate in Judicial Science from Harvard Law School — where she specialized in Shariah law and finance, as well as mergers and acquisitions – and Bachelor of Arts Honors from Cornell University and Oxford University. She worked for law firms in New York, Toronto, Amsterdam, Brussels and California before launching 786 Investments Ltd. She has served on the Faculty at Danube University Krems (Austria) as recommended by The International Investment Funds Association and EBAMA.
She speaks globally at numerous international mutual fund and banking conferences as an authority on Shariah-compliant finance as well as finance for women, and most recently represented Pakistan at ALFI Rentree 2020, the annual Association of the Luxembourg Fund Industry, where she has previously been a speaker on Islamic finance in both 2013 and 2014. She also was invited to France to assist the Association Française de la Gestion Financière on the launching of their Shariah mutual funds industry. She is well known for her philanthropic work for women and children, in partnership with Facebook’s internet.org foundation and with the support of the World Bank, as well as distribution of emergency supplies during the SWAT earthquake and most recently, food rations during COVID-19/Sindh floods. Her current passion project is spearheading the distribution of 10,000 wheelchairs across Pakistan to hospitals and individuals in need.
PAGE: KSE-100 index crossed 136,000 points which is unprecedented. What is your standpoint in this regard?
Tara Uzra Dawood: The unprecedented rise of the KSE-100 index beyond 136,000 points reflects growing investor confidence, supported by improved macroeconomic indicators, political stability, and strong corporate earnings across key sectors. As a Shariah-compliant asset manager, we see this as an encouraging signal for the equity market, especially for investors who seek halal investment avenues with long-term value.
However, we urge investors to remain grounded. While market momentum is high, it’s important to remember that valuations in some sectors may now be stretched. Our focus remains on companies with strong fundamentals, ethical business practices, and compliance with Islamic investment principles. We are cautious of speculative bubbles and avoid businesses that engage in excessive debt, interest-based income, or impermissible activities. In light of this historic market movement, we continue to prioritize capital preservation, halal returns, and transparency for our investors. Diversification and due diligence remain at the heart of our strategy, even as opportunities grow in sectors like Islamic banking, infrastructure, technology, and consumer goods. We advise clients not to chase returns blindly but to invest with discipline and patience, in line with their long-term financial goals and Islamic values.
PAGE: What is your take on expectations of robust financial results and dividend payouts during the ongoing earnings season?
Tara Uzra Dawood: As we enter this earnings season, we’re cautiously optimistic. Several of our Shariah-compliant holdings are showing strong fundamentals and healthy cash flows, which could support solid dividend payouts. But we focus more on sustainability than short-term surprises. We’re not swayed by companies that inflate earnings just to pay dividends — real value comes from consistent free cash flow, not accounting tricks. As fiduciaries, we prioritize businesses that align with Islamic values, manage capital prudently, and distribute profits responsibly. For us, dividends are a sign of financial health — not a gimmick. We remain committed to investing where growth is backed by integrity, discipline, and long-term value for our investors.
PAGE: What is the role of falling inflation, monetary easing, a stable rupee, reserves exceeding $14 billion, and improved remittances and exports in the performance of PSX?
Tara Uzra Dawood: The recent macroeconomic improvements — including falling inflation, monetary easing, a stable rupee, higher foreign exchange reserves, and stronger remittances and exports — signal a supportive environment for the Pakistan Stock Exchange (PSX). Lower inflation enhances corporate margins and boosts real returns, making equities more attractive relative to fixed-income options. Monetary easing, by reducing the policy rate, supports higher equity valuations and encourages a shift away from Islamic deposits toward growth-oriented investments. A stable rupee reduces currency risk, particularly benefiting sectors reliant on imported inputs and reassuring both local and foreign investors. Meanwhile, reserves exceeding $14 billion reflect macro stability and reduce external vulnerability, encouraging greater investor confidence. Improved remittances lift domestic consumption, benefiting Shariah-compliant sectors such as FMCGs, construction, and consumer durables, while stronger exports support key Islamic holdings like textiles and IT. This macro backdrop justifies a strategic reallocation toward cyclical, export-driven, and consumption-focused equities, especially as many compliant firms are low in leverage and well-positioned to grow in a stable environment. Overall, the improving fundamentals offer a compelling case for re-risking portfolios and capturing upside in the PSX, particularly in sectors aligned with Shariah principles and benefiting from Pakistan’s economic recovery.
PAGE: Some analysts are anticipating index’s further upward movement. What is your perspective?
Tara Uzra Dawood: My perspective on the Pakistan Stock Exchange (PSX) index is cautiously optimistic. The recent rally in the index reflects improving macroeconomic fundamentals, such as falling inflation, monetary easing, a stable rupee, rising foreign exchange reserves, and stronger remittances and exports. These factors collectively support corporate earnings, reduce market volatility, and create a favorable environment for equities, particularly Shariah-compliant sectors like textiles, IT, cement, and consumer goods.
While some analysts anticipate further upward movement in the index, I view this as a plausible but selective opportunity. Broad-based index growth may continue, but the key lies in stock and sector selection. Shariah-compliant firms, often characterized by low leverage and export orientation, are well positioned to benefit from current trends. However, risks remain, including political uncertainty, fiscal pressures, and global commodity price volatility. For a smaller asset manager, risk management and disciplined exposure are critical. I would focus on high-quality, compliant names with resilient balance sheets and strong cash flows, rather than chasing momentum. In conclusion, I agree with the view of potential index upside, but prefer a measured approach, grounded in fundamental analysis and aligned with both Shariah principles and prudent portfolio management.