FOR the first time in years, corporate Pakistan mirrors an image of growth and prosperity, and presents a brighter outlook. It is for this reason that top executives of various

big companies and bourses are seeking global investment.

The great bull run at the country’s stock market, which outperformed all regional and most global markets in 2012 with a whopping return of 43 per cent, has gathered momentum in the current year. It has already provided investors a 36.3 per cent gain to-date.

Big and blessed listed companies and the local bourses have thus been emboldened to aggressively market the country in major financial capitals of the world.

Pakistani entrepreneurs can now look in the eye of searching foreign investors and confidently answer what once were awkward questions. The smooth transition of power from one elected government to another suggests to the world that the country is no longer groping for a firm foothold in democracy.

In the past two eventful months, companies, in their individual capacities and in delegations, have traveled to far-off lands. Big businesses have been looking for fresh pastures.

On June 3 and 4 this year, the senior management of eight blue chip, publicly traded companies, which represent $20 billion in market capitalisation, traveled to New York. A local brokerage house, which had organised the event in collaboration with a US firm, said that the companies had discussed, in more than 200 one-on-one meetings with more than 50 of the largest US institutional funds, the progress and prospects of corporate Pakistan. Foreign investors were provided knowledge and research to identify the most compelling investment opportunities.

Quickly on the heels of this event, an investment road show was jointly organised by the Karachi Stock Exchange and the London Stock Exchange in London, on July 4 and 5. Barclays Bank was a major sponsor. Bourse officials say that the conference, Pakistan Capital Market Day, received ‘an overwhelmingly positive response from the international investor community’. More than 150 one-on-one meetings were held between Pakistani companies and international fund managers.

But after the incessant bull run that began in January 2013 and yet knows no end, the valuation of Pakistani equities have scaled to nearly 10 times the earnings. Is it then the perfect time to knock at the doors of foreign fund managers to sell stocks?

Nasim Beg, executive vice chairman of Arif Habib Investments, believes that the effort could scarcely be fruitless, for why else would the brokerages spend money on foreign trips? He recalled that the initiative of marketing Pakistan abroad was taken by former Securities and Exchange Commission of Pakistan Chairman Muhammad Ali, who had persuaded big brokerages to select a country of their choice and reach out to international fund managers there to explain the growth potential of Pakistani capital markets. Beg said that a delegation from his group plans to visit Gulf countries after Eid.

Foreign fund managers are allocating a fair share of their funds for portfolio investment in the Pakistani equity market. And the inflows are on the rise. “In the three months ending June 30, 2013, foreign investors bought equities worth $341 million, which puts into shade the investment of $227 million in the earlier nine-month period,” says an analyst.

But Sayem Ali, chief economist at the Standard Chartered Bank Pakistan, points out that in attracting foreign flows, the emerging markets were ahead of the frontier markets. Yet, in its place in the frontier markets, Pakistan has done well to convince foreign fund managers about the high growth and high returns of the country’s corporate sector and the stock exchanges.

Farrukh Khan at KASB Securities observes that based on their 20-odd meetings in four cities, the mood of foreign investors was one of cautious optimism. “The political change is almost unanimously being seen positively, even though it is early days [of the government], and reform implementation remains the key.”

In the minds of foreign investors, there is now a significant hope of a sustainable resolution of the energy crisis within the next two years. Pursuit of improved trade and investment relations with India and China is also thought to be a positive move. However, most overseas investors are still spooked by the law and order situation, which remains a big challenge.

Farrukh Khan believes that in order to attract larger foreign flows, corporate Pakistan is gearing up for the next investment cycle. A heartening development is the marked change in sentiments. Many companies are now seriously considering fresh investment in the form of expansion, acquisition or diversification. Even some traditionally risk-averse companies are willing to go for growth, in contrast to earlier approach of waiting on side-lines.

All knowledgeable market participants concur that the food and power sectors are the firm favourites in the overall investment theme, from the perspective of both incumbents and new entrants. Existing players are focusing on product innovation, but no competitive pricing pressures are yet visible. Within power, coal conversion is the most immediate investment opportunity that beckons investors. In cement, selective expansions are being mulled by a couple of companies, based on their own strategic objectives.