Corporates and high net-worth individuals have huge cash surpluses wondering how to put all the surplus money to profitable use.
“The economy is indeed flush with liquidity,” a senior economist associated with a foreign bank agreed. The State Bank of Pakistan’s recently released report, giving data for two-and-a-half months of the current fiscal year (July to mid-September) revealed that the private sector had retired debt instead of borrowing; the net borrowing by the sector during the period was negative Rs74bn.
Large-scale construction activity, mainly in major cities — manifested by the demand and earnings growth of cement companies — is all too clear. Yet big and mighty property investors prefer to take money out into projects in adjoining countries. Dubai has again emerged as the favourite destination.
“In the last 18 months, Pakistani investors have invested a whopping $2.6bn in the property market in the UAE; 90pc of it in Dubai,” says Muhammad Azam Khan, a stock broker and CEO of Sunrise Capital. He was a member of a delegation that recently visited Dubai. He stressed that all that money is recorded with the Dubai Chamber of Commerce and went through the central bank of Dubai.
Even K-Electric plans to invest $350m to improve its transmission and distribution network. And the celebrated sale of Lafarge Cement Company concluded on July 25 when Bestway Cement Limited paid $218m for a controlling 75.86pc stake to Lafarge’s French parent, Safimo SAS.