By SHHABBIR H. KAZMI
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.