Portfolio Management Team

Habib Bank Zurich AG


For some, the mention of Pakistan may prompt images of a country wracked with political instability and poverty wedged between emerging Asian economic power India to the east, war-torn Afghanistan to the north, and oil-rich but insular Iran to its west. But for investors, Pakistan is a frontier market with a compelling growth story and offers an attractive investment opportunity. The WIOF Pakistan Performance Fund gives investors access to a country with great untapped potential. It is ideal for experienced investors familiar with the characteristics of specialised capital markets, and no well-diversified portfolio should be without it.



Pakistan’s economic environment has undergone a series of significant changes in recent years that have enriched the investor environment. There have been key changes to the market and deregulation and privatisation have become dominant economic themes. Among the most significant changes are:

  • The government has promoted private sector investment by making a gradual exit from commercial businesses while at the same time the Central Bank and other financial institutions have been strengthened.
  • The capital markets have also seen important change as the government has implemented various structural and regulatory reforms to encourage private sector investment.
  • Billions of USD have been invested into different sectors, with banking, oil and gas and telecoms seeing important financial inflows. The wider economy is also growing positively: employment is expanding rapidly, and with it the country’s middle income group.


SECTOR BREAKDOWN as of 31.5.2011

Unlike other emerging and frontier economies, Pakistan has removed fiscal imbalances by removing subsidies. In the long-term this allows the government to control trade and fiscal deficits while at the same time creating a cushion against abnormal price rises as consumer demand adjusts accordingly and the risk of a credit bubble falls. Importantly, Pakistan also has a young workforce – out of a population of 160 million, 60% are under the age of 30.

However, despite an accommodative monetary policy, growing domestic demand and fiscal discipline, the market is still trading at a discount to its regional peers because of on-going concerns over law and order and security.



The performance of the Fund has mirrored these encouraging changes and its positive performance can be attributed to sector selection, stock picking and proactive thinking. Initially-selected stocks in the energy, power generation, fertilizer/chemicals, commercial banks, building materials, textiles and telecommunication sectors have already strengthened the portfolio’s base by delivering handsome dividends and outperforming their respective sectors and the overall market. In the near future inflation remains in focus. The central bank has been hawkish in its monetary stance, citing external inflationary pressures. The CPI has been in double figures at various points this year following the removal of subsidies and government moves to a market pricing structure in almost all sectors. Commodity prices have also started rising globally on the back of improving markets and more risk-taking. Meanwhile, the government is still working out how to tackle the issue of the remaining portion of triangular debt, which has had an impact on the performance of the power generation and refining sector.

Despite trading volumes having been affected by one-off taxes and the introduction of the Margin Trading System failing to improve them, the KSE100 index is expected to continue its recent positive progress. And on the valuation side, the market looks attractive with the top 25 stocks trading at a good discount to their consensus values.


KSE 100 Index (USD)



The WIOF Pakistan Performance Fund is managed by Habib Bank AG Zurich (HBZ), which was incorporated in Switzerland in 1967 and operates on four continents. HBZ operates in Pakistan through its subsidiary and has built an extensive network over the years, allowing it to use local expertise to maximum effect in investments. HBZ Private Banking provides financial advisory services on a discretionary and non-discretionary basis to private investors and also specializes in asset management services for investors seeking exposure to South Asian capital markets.



This report has been prepared for information only, and it does not represent an offer to purchase or subscribe to shares. World Investment Opportunities Funds (“WIOF”) is registered on the official list of collective investment undertakings pursuant to part I of the Luxembourg law of 20th December 2002 on collective investment undertakings as an open-ended investment company. WIOF believes that the information is correct at the date of production while obtained from carefully selected sources considered to be reliable. No warranty or representation is given to this effect and no liability can be assumed for the correctness or accuracy of the given information which may be subject to change at any time, without notice. Past performance provides neither a guarantee, nor an indication of future performance. Value of the shares and return they generate can fall as well as rise. Currency fluctuations, either up or down, may also affect value of the investment. Due to continuing market volatility and exchange rate fluctuations, the performance may be subject to significant changes over a short-term period. Investors should be aware that shares in the financial instruments entail investment risks, including the possible loss of the invested capital. Performance is usually calculated on the basis of the relevant NAV unless stated otherwise. 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. WIOF prospectus is available and may be obtained through www.1cornhill.com. Before investing in any WIOF Sub-fund(s) investors should contact their financial adviser / legal adviser / tax adviser and refer to all relevant documents relating to the WIOF and its particular Sub-fund(s), such as the latest annual report and prospectus that specify the particular risks associated with the Sub-fund, together with any specific restrictions applying, and the basis of dealing. In the event investors choose not to seek advice from a financial adviser / legal adviser / tax adviser, they should consider whether the WIOF is a suitable investment for them.