INVESTMENT ANALYSIS!!

INVESTMENT !!“An asset or item that is purchased with the

hope that it will generate income or appreciated in the future”

COUNTRIES SNAPSHOT

TYPES OF INVESTMENT!!

There are two determinants of investment :

• Marginal Efficiency of Capital (MEC).

• Rate of interest.

INVESTMENT RESOURCES!!

• In a closed economy the major resources of investment is savings whether it is from individuals, firms or government.

• In open economy the major resource of investment is borrowings for necessities from neighboring countries

REASONS OF RISE AND FALL OF INVESTMENTS!!

Interest rate

Output prices

Taxes

WHY INVESTMENT RISES?

• Investment rises when country’s interest rate is low and economic situation is at sustain level.

• This tends to encourage investment spending into the circular flow of income.

• This leads to higher aggregate demand (AD) and economic growth.

INVESTMENT IN PAKISTAN??

INVESTMENT FROM 2000-2007From 2000 to 2007 Pakistan’s economy faced a roller

coaster experience.

• For the year 2000 to 2004 Pakistan’s economy moving steadily growth but agriculture sector faced significant downfall due to flood.

• Non-economic factors pulled investment and resulted in a net increase of 754 million rupees in its investment in 2004.

• Where as in 2005-2007 Pakistan’s economy was largely boomed due to the involvement of mega sector that is the telecommunication sector.

• From 2000 to 2013 Pakistan’s economy a roller coaster experience.

• For the year 2000 to 2004 Pakistan’s economy for moving steadily growth but agriculture sector faced significant downfall due to drought but …

• non-economic factors pulled investment and resulted in a net increase in of 754 million rupees in its investment from 2004.

• Where as in 2005-2007 Pakistan’s economy was largely boomed due to the involvement of mega sector that is the telecommunication sector.

INVESTMENT FROM 2008-2013

•The year 2008-09 has been a difficult Era for Pakistan’s economy, because investment rate was declined in this Era.

•In 2010-12 we lose investor in growth and investment sector, because of political situations.

•In 2012-13 Pakistan’s economy continued to face challenges like energy shortages, floods and rains, poor law and order situation.

•At the start of 2013, the country remains in a low growth mode.The reason behind this was , law and order situation of the country, and terrorism

FOREIGN DIRECT INVESTMENT!!

Foreign direct investment (FDI) generally refers to how a company decides to expand its operations to a foreign country by making either acquiring an existing business in the foreign country or by building a new subsidiary.

Example:- Japanese company ; Toyota has opened a plant in Karachi ; so Pakistan is consider as Foreign Direct Investment.

FDI Advantages:

Larger inflows of foreign investments are needed for the country

to achieve a sustainable high trajectory of economic growth.

Some Advantages of FDI:-

Advanced technologies

Employment opportunity

Increasing productivity

Fills trade gap

Innovation

Increasing Govt revenue.

568.1

465.1

156.8

88.4 87.4

241.5

0

100

200

300

400

500

600

Telecommunication Oil & Gas Financial business Chemicals Foods Other

FDI sector wise ($ in millions) in 2014

FDI FLOWS !!

IF WE DONOT INVEST, THEN?

If we do not invest, we can’t earn anything on cash

Second, the purchasing power of cash diminishes in inflation

This means that if savers do not invest their savings, they will not only lose possible return on their savings, but will also lose value of their money due to inflation

UNDERSTANDING THE INVESTMENT DECISION PROCESS!!

• The basis of all investment decisions is to earn

return and assume risk• By investing, investors expect to earn a return

(expected return)

FLUCTUATIONS !!!

PAKISTANI ECONOMY!!The reasons behind the enormous fluctuations in Pakistan economy are:

• Internal political dispute.

• Slow growth in economy.

• Worse law and order situation.

• And poor infrastructure.

HOW ECONOMY BOOST!!

Primarily Pakistan needs to the following:

• Stabilize the political instability

• Improve law and order situation.

• Improvise the infrastructure building highways etc.

• As it is said that Asia is the next century leader. Therefore, Pakistan should attract Asian investors more..

CONCLUSION!!

“TACKLE THE MACRO CHALLENGES”

Q &A (SESSION)