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Nadeem Naqvi

For the record
Science &
Drug resistant tuberculosis
Hearing voices on the internet
Nadeem Naqvi
SZABIST: A virtual institute of 21st century
Politics & Policy
Pakistan's economy under
different perspective

Nov 08 - 14, 1999

PAGE: What is your philosophy?

Nadeem: Contributing to society by giving myself. "You give but little when you give of your possession. It is when you give of yourself that you truly give." This is a saying of Khalil Gibran, which I try to follow in my real life. I also believe that giving is, in its true spirit, receiving. Whatever you are part of, whether an organization, a household, a neighbourhood, a nation or the entire humanity, you are at both the ends — receiving as well as imparting of your self for others' good. I believe the highest human achievement is to make a positive contribution to the society.

PAGE: How do you relate this with real life working?

Nadeem: I have been lucky to find my current professional career, which is investment management. When I am able to combine this personal philosophy with my professional life I get a feeling of accomplishment. At one level it is to seek out appropriate investment opportunities for my client given their investment objectives and constraints. At the same time, this very effort, if carried out diligently and professionally, allows investment to go into companies that are able to provide better return on capital. If this selection is appropriate, I feel that, in a small way, I am helping to enhance the overall productivity of the economy.

PAGE: How do you react when it backfires?

Nadeem: Obviously, the best-made plans in any endeavour are ultimately influenced by a host of external factors that may not be within one's control. These can be overall macro-economic environment, government and regulatory policies, corporate governance and behaviour of sponsors of the companies. To the extent permitted by my terms of reference in advising investors, and being very mindful of fiduciary responsibility that it entails, I have to take a conservative stance in an uncertain market like Pakistan. The investable universe I look at is fairly narrow — not more than 20 to 25 potential stocks out of more than 750 listed companies.

When things go awry, there are two levels where I take action. First is to attempt to at least match the performance of a benchmark index i.e. KSE-100 or IFCG Pakistan index. Second, wherever I have contacts, including corporate sector, government agencies or the media, attempt to highlight the shortcomings which in Pakistan are the source of disappointing economic and corporate performance.

PAGE: What is your perception of local and foreign investors?

Nadeem: It is quite fascinating to observe the different global view-points and investment philosophies of foreign investors and domestic players. By and large, foreign investors focus on the overall asset allocation decision as a major part of strategic investment policy. That is to say, they take 3 to 4 years view of the direction of the economy, political stability and quality of economic management. This is mapped on to industry and corporate fundamentals and expected earnings growth. Based on this, a trade-off is developed between the risk and returns of a particular market. Stock selection comes after this.

On the other hand, I have observed that domestic investors start off on a wrong foot by ignoring the asset allocation decision — how much to put in equities, fixed income and cash in the first place. Secondly there is a tendency to become emotional about their investments and not get rid of under-performing scrips. The result is when an opportunity arises, as for example, when the market (index) went below 800 points, they did not have cash to put into the market. Some who did, reaped a bonanza when the market went back up to over 1300 points within six months. This 65 per cent return is no insignificant amount given the level of uncertainty in the macro-economic environment.

PAGE: What is your message to our readers?

Nadeem: My message to readers is simple. Let us stop wishing for a messiah to come and solve our problems. Let us stop dependence on subsidies, special incentives or even support from outside agencies to help us succeed. Lasting success can only be achieved when each constituency making up the nation, from farmers to industrialists to professionals to traders to politicians and bureaucrats, throws away the crutches and learn to stand, compete and succeed on its own merit through competitive advantage based on knowledge, skills and quality output in its respective field.