A LETTER FROM KARACHI
Bomb Blasts and Stock Quotes

by Maliha Masood, Matrix Correspondent






















Picture this: A vibrant private sector creating jobs and improving productivity. A stock exchange index that has been rated as the world's best performing emerging market. A $500 million Eurobond issued to reclaim investor confidence. A geo-strategic port on the shores of the Arabian Sea.

Now picture this: Mullahs with big beards. Teenagers with Kalashnikovs. Cross border insurgencies. Clashes between the army and civil society. Death threats and blood baths perpetuating a vicious cycle of political unrest.

To call it schizophrenic would be an understatement. Then again, what can you say about a place that vacillates between extremes, showcasing two very different sides seemingly at odds with each other. Both are valid. But Pakistan's economic growth story is largely muffled out by global security concerns and perceptions of wide spread instability. Therein lies the Pakistani Achilles heel plaguing investors and policy makers. Positive factors undermined by negatives. It's not a syndrome unique to Pakistan, but so problematic is Pakistan's image abroad, that one would be hard pressed to reconcile how a country manufacturing bomb blasts has also been home to one of Asia's healthiest stock markets.

Of course, stock quotes were the furthest thing on my mind last week as I watched news headlines erupting across the internet and listened to anchor men and women announcing the assassination attempt on Pakistan's returning ex-Prime Minister Benazir Bhutto. Opinions at the family dinner table hovered around the history repeats itself, same old saga triteness. What can you expect from a savage country was the consensus of my father, who has more or less given up on contemporary Pakistan, a galaxy removed from what he knew and loved about the country. It was different for me when I went back to Karachi in the summer of 2004, after 21 years of being away from my birthplace. Let's just say that I went prepared to see some changes. But not the kind I was expecting.

For one thing, I was not expecting my first acquaintance in Pakistan to be a drop dead gorgeous executive banker whose acquaintances were mostly other posh bankers and analysts at Merrill Lynch. As we all got better acquainted, I learned about the bullish Karachi Stock Exchange (KSE) and how domestic liquidity was pouring into the market with divided yields in the 8 to 12 per cent range. Pakistan's burgeoning middle class was getting a taste of banking services and revolving credit facilities unheard of before, facilitating auto loans and other forms of consumer financing. Then there was talk of Norway's Telenor Mobile Communications being awarded a license for nearly $300 million to develop Pakistan's thriving telecom sector. At the same time, across the North West Frontier Province, the local government, dominated by the MMA Party, comprising a hodepodge of the disgruntled and religiously conservative, backed a new bill to introduce a stringent interpretation of Islamic laws. The bill prompted worries about the arrival of Talibanization in Pakistan and the viability of General Musharraf's policies in combatting the unruliness in the Tribal Areas.

Meanwhile, in Islamabad the country's Finance Minister, Shaukat Aziz repeatedly admonished the government to attract more foreign direct investment, as well as reduce the cost of doing business and the amount of red tape involved. To do so amidst encroaching extremist tendencies legitimizing Pakistan's pariah state reputation was no easy matter. My banker friends were convinced that only when people come to Pakistan do they get a huge change in perception that throws out the cliches of bearded fundamentalists in favor of smooth shaven, pin-striped suited financial wizards a la Wall Street walking a mile a minute in the gritty roadways of Karachi, and saying things you don’t hear on CNN.

Banker 1:
We are experiencing the best macroeconomic climate the country has ever seen.

Banker 2:
And we don't need the IMF when market discipline is keeping us on track.

Banker 1:
If only the investors would come and check this place out!

Banker 2:
Come on yaar! Don’t be such an idealist nincompoop. Why on earth would anyone come? Look at what we’re exporting abroad in our good name. Who gives a damn about the market when they’re worried about some fundo blowing off their brains?

Banker 1:
The market does not care about fundos.

Banker 2:
But the investors care. And without investors, there is no market to speak off. We need more privatization, surplas capital. Our foreign reserves are shamelessly low. And guess who’s to blame?

Banker 1:
You do have a point. So what’s the solution?

Banker 2:
It’s a fine balance. National security=economic sovereignty=impregnable defense=smooth political process.

Banker 1:
Dream on.

And so last night, Banker 2 had a dream. The ticker tape in Karachi was going bonkers, spewing all sorts of gibberish. It went like this.

Indeed so. Indeed so. Do come on over and see it for yourself. No wait. Please. Not now. Don't come now. It is too dangerous. You will be confused and frustrated. And also thrilled and surprised. There is a lot to discover here. We have our messes just like any other country. But we also have Opportunities. Now you should be the first to value that, coming as you do from the land of the great big O. It's all a waiting game for now. To find out the winners and losers. A bit of a joke really. But you have to play the game even if you don't know the rules. Now don't be afraid now. We'll take good care of you. Oh yes, we will. V.I.P treatment from the moment you arrive. What's that? Of course. Of course. We will cater to your every wish. We are known for our hospitable ways. Most of us anyway. OK, the very best of us then. And you are, after all, an honored guest who has come from such a faraway place. All because, how to say, of your inquiring nature? It is good to be this way. Good because we have no answers. Only we know how to ask many questions. And if you really want to know what this country is like, then you will have to make a visit. As for why and when, that is entirely up to you. But please, think something of this. Whether it was the chicken or the egg does not really matter in the end. Same same for us. Our politics and our markets live together. We cannot promise 100% safety. But it is not in our opinion a risk free business, what you call life. So we hope that you do come and see us. We will give you big Pakistani welcome. OK? With love and salaam, from KSE.

Maliha Masood was born in Karachi, Pakistan. She spent her childhood as a South Asian chameleon, strongly influenced by her mother's native Bombay, her father's South Indian heritage, a library of Enid Blyton books, and a Parsi all-girls school. Click here for her book Zataar Days, Henna Nights.

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