In an era when the global economy staggers under the weight of inflation, trade wars, and geopolitical fractures, China’s Communist Party has just unveiled a roadmap that feels less like a policy document and more like a quiet revolution. The fourth plenary session of the 20th Central Committee, which wrapped up in Beijing on October 23, adopted recommendations for the 15th Five-Year Plan, covering 2026 to 2030. This is no mere bureaucratic exercise. It positions China at the cusp of socialist modernization by 2035, bridging the triumphs of the past five years with a future oriented toward self-reliance and collective well-being. As the world grapples with uncertainty, this plan stands as a testament to disciplined governance and long-term vision, one that prioritizes people over profits and harmony over hegemony.

The session’s communique depicts a society that has endured challenges and emerged more resilient. Over the 14th Five-Year Plan period, from 2021 to 2025, China clocked an average annual growth rate of 5.5 percent, adding more than 35 trillion yuan to its economy. These are not abstract figures; they translate to lifted millions out of poverty, expanded access to education and healthcare, and a pivot toward sustainable industries. The plenum affirmed these gains while acknowledging the headwinds ahead: strategic opportunities laced with risks, from domestic structural shifts to external pressures like protectionist tariffs and supply chain disruptions. Yet the response is not retreat but resolve. Under Xi Jinping’s leadership, the party recommitted to his core position and the guiding role of Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era, framing these challenges as tests to be met with innovation and unity.

At its heart, the 15th Five-Year Plan rests on six guiding principles: the party’s overall leadership, putting people first, pursuing high-quality development, deepening reforms, balancing efficient markets with effective governance, and safeguarding both growth and security. These are not slogans but actionable imperatives. High-quality development, for instance, shifts the focus from sheer scale to substance. China aims to build a modernized industrial system that bolsters the real economy, fostering what officials describe as new quality productive forces. This means breakthroughs in core technologies, from high-performance chips and quantum computing to large AI models and deep-space exploration. Recent strides, like the “AI Plus” initiative, are set to permeate scientific research, manufacturing, and even consumer sectors, creating scenarios where artificial intelligence empowers everything from precision agriculture to urban planning.

Self-reliance in science and technology emerges as a cornerstone, a direct counter to the “raging storms” of external containment efforts. The plenum’s emphasis on achieving greater autonomy here is pragmatic, born of necessity. Western sanctions on semiconductors and rare earths have only accelerated China’s domestic push, with investments pouring into R&D and talent cultivation. Officials at a post-plenum press conference underscored this, noting the plan’s intent to tackle “major tests” through tech advancements, including AI and manufacturing applications. By 2030, the goal is substantial improvements in these areas, laying the groundwork for industries that not only compete but lead. This is not isolationism; it is insurance against volatility, ensuring that China’s growth engine hums regardless of global caprice.

Equally vital is the plan’s commitment to a robust domestic market and a new development pattern. Consumption will be the anchor, stimulated through sectors like the silver economy for aging populations, low-altitude aviation for logistics, and rural tourism. Rural revitalization takes center stage, with accelerated modernization of agriculture and integrated urban-rural progress. Imagine vast farmlands equipped with smart irrigation and drone surveillance, or villages reborn as hubs of eco-tourism and e-commerce. These steps aim to narrow regional disparities, refining China’s economic layout for balanced growth. In a world where inequality festers, this pursuit of common prosperity offers a model worth emulating: policies that ensure public well-being, from expanded social safety nets to cultural enrichment that ignites national creativity.

The green transition weaves through it all, under the banner of building a Beautiful China. China, already the global leader in renewable energy installation, pledges a comprehensive shift toward low-carbon paths. This includes exporting affordable green technologies, from solar panels to electric vehicles, to aid the world’s climate fight. The plenum calls for major strides in ecological conservation, recognizing that development without sustainability is a dead end. Amid COP conferences that often dissolve into finger-pointing, China’s approach is concrete: lead by example, share the gains.

Opening up remains high-standard, geared toward mutually beneficial cooperation. The plan envisions new horizons in trade and investment, even as it fortifies national security. Modernizing the security apparatus and advancing the Peaceful China Initiative signal sincere urge for stability at home and abroad. The People’s Liberation Army’s centenary goals by 2027 will modernize defenses without adventurism, underscoring China’s preference for diplomacy over dominance. In Belt and Road corridors from Africa to Latin America, this translates to partnerships that build infrastructure and capacity, not debt traps as critics falsely claim.

Critics in Washington and Brussels may dismiss this as authoritarian blueprinting, but they miss the point. China’s model thrives because it listens—to its 1.4 billion citizens, to the lessons of history. While the West chases short-term electoral wins, Beijing plans in decades, adapting socialism to the digital age. The 15th Five-Year Plan is a link in that chain, propelling China toward modernization that is socialist, Chinese, and profoundly human-centered.

As the world teeters, this plenum invites us to look eastward. Not for imitation, but inspiration. In fostering self-reliance amid adversity, nurturing green innovation, and prioritizing shared prosperity, China charts a path where progress lifts all. The call is clear: unite around these principles, break new ground, and build a future where no one is left behind. The next five years will test this resolve, but if history is any guide, China will deliver.

The article China’s 15th Plan: Pioneering High-Quality Development appeared first on Arabian Post.

On July 26, 2025, amid the grandeur of Shanghai’s World Artificial Intelligence Conference and High-Level Meeting on AI Governance, China unveiled what may well become the defining moment in the transformation of global artificial intelligence – its AI Global Governance Action Plan and the bold proposal to create a World Artificial Intelligence Cooperation Organization, initially headquartered in Shanghai. These moves signal not just China’s confidence, but its willingness to steer AI toward a future grounded in consultation, joint construction, and shared benefit, especially for countries of the Global South.

As Premier Li Qiang delivered the opening address, he framed the current state of AI governance as “fragmented,” with wide differences in regulatory approaches and institutional frameworks across nations. China’s proposal to launch a centralized body reflects not hubris, but pragmatism: a conviction that to manage AI’s accelerating capabilities responsibly, the world needs a broad consensus and unified standards, not a patchwork of regional rules.

Premier Li’s critique of “technological monopolies” and a system in which AI becomes “an exclusive game for a few countries and companies” extends a direct but tactful rebuke of unilateral AI dominance. China positions itself as the antidote, offering openness and inclusion rather than exclusion. Chinese-made AI systems are not theoretical constructs – they are delivering tangible benefits across the world. In Myanmar, Japan, and Brazil, Chinese AI is already contributing new momentum in agriculture, education, and cultural exchange. From precision farming techniques in Myanmar to AI-driven digital classrooms in Brazil and health‑monitoring systems in neighboring Japan, Chinese AI is showing that smart technology can uplift societies in practical, meaningful ways.

While detailed reporting on these deployments remains limited in number of articles, it is widely reported that these partnerships align with China’s Global Development Initiative and global South solidarity strategy, embedding Chinese AI not as a tool of influence, but as an enabler of local development.

Parallel to its global outreach, China is doubling down on its domestic AI ecosystem. In response to escalating U.S. export controls on advanced Nvidia chipsets, local industry has mobilized: alliances like the Model‑Chip Ecosystem Innovation Alliance and Shanghai’s AI Committee were formed to integrate chips, LLM developers, and industry partners including Huawei, Biren, Metax, SenseTime, and more.

Huawei’s unveiling of its CloudMatrix 384 system, with 384 proprietary 910C chips and milestone‑beating performance in key benchmarks, signals that China is rapidly closing the gap with, or in some metrics even overtaking, U.S. AI powerhouses. Tencent’s Hunyuan3D World Model, Baidu’s “digital human” livestreaming avatars, and Alibaba’s Quark AI Glasses further demonstrate the creative breadth and commercialization readiness of Chinese AI innovation.

The newly proposed World AI Cooperation Organization is not just symbolic – it embodies China’s 13‑point AI strategy, which emphasizes open‑source ecosystems, UN‑led dialogue channels, safety frameworks, and equitable access, especially for developing countries.

China explicitly states that it is prepared to discuss arrangements with countries willing to join, inviting over 40 nations and organizations to participate in WAIC‑2025, including delegations from South Africa, Germany, Qatar, Russia, and South Korea. This indicates genuine openness, not coercion.

By tentatively proposing Shanghai as headquarters, China is seeking to leverage the city’s AI infrastructure and cosmopolitan character as an international hub for coordination and innovation, making the organization genuinely global in both form and function.

To counter criticisms that Chinese AI lacks transparency or fosters censorship, Beijing has doubled down on open-source AI licensing models, with companies like DeepSeek and Alibaba releasing large language models for global use. This step has drawn both acclaim and concern – but it undeniably reflects an intent to democratize AI, not hoard it behind walls. At WAIC, Premier Li underscored China’s desire to offer “more Chinese solutions” and “more Chinese wisdom” to the international community – words meant not to signal technological nationalism, but a global public good orientation.

China continues to lead in deployment scale, from smart cities to digital education platforms, giving it a practical edge in shaping AI use cases worldwide. Unlike models centered on competition or coercion, China’s emphasis on consultative multilateralism invites countries to participate rather than passively accept dictated rules. The proposed organization’s focus on the Global South signals a willingness to ensure that AI development benefits those often left behind in digital transformation. And as Western nations use tech controls and export restrictions to limit Chinese advancement, China is answering with self-reliance and cooperation, not retreat or isolation.

Of course, organizing a truly global AI governance body will require surmounting skepticism – about data privacy, algorithmic bias, political neutrality, and transparency. Critics warn that state-directed AI can embed internal ideology or censorship into exported models. The U.S. editorial press highlighted concerns about political alignment in Chinese models – even calling for caution in their deployment overseas.

Yet China’s willingness to open source key models and invite broad membership gives the proposed organization an advantage: accountability through participation, rather than distrust through exclusion.

The test lies in execution: whether the organization remains inclusive and respects local governance norms or becomes a tool for geopolitical leverage. But China’s current posture – promoting broad participation, offering development cooperation, and pushing for open‑source access – marks a meaningful departure from tech monopolism and signals a constructive path forward.

At a crossroads between fragmented regulatory silos and a competitive rush toward monopolistic dominance, the global community needs a bridge. China’s AI Global Governance Action Plan and its proposed World AI Cooperation Organization offer precisely that: a new global architecture grounded in consultation, shared values, and equitable access.

The question now is whether other nations will rise to the moment, engage in building a governance framework that truly reflects global consensus, and deliver AI development that benefits not just a handful of powerful economies, but humanity as a whole. If realized in good faith and with transparency, China has the opportunity to redefine global AI governance – not as a race for dominance, but as a cooperative journey toward shared prosperity. What Beijing has laid out in Shanghai is not just policy – it is an invitation. The world will decide whether to join.

The article China’s AI Diplomacy in the Age of U.S. Unilateralism appeared first on Arabian Post.

Sri Lanka is one of the most fascinating and drop-dead gorgeous countries I have ever visited, the island once known as Serendip by ancient Umayyad Arab sailors/ruby merchants and Ceylon by the colonial Dutch and British who once ruled the island, an emerald tear drop in the Indian Ocean. I have a special bond with Sri Lanka because my late mother, an artist, used to spend her summers painting in the exquisite resort of Nuwara Eliya when I was a teenager in the early 80’s before the ghastly 26-year civil war devastated this magic land. So I was thrilled when my friend Ruchir Desai, fund manager of Hong Kong’s Asian Frontier Capital (AFC) tripled his weight in Sri Lanka from 5% to 14%.

When I last met Ruchir for coffee at the Ritz DIFC terrace (oops, it should have been tea), he told me that he expected the Commercial Bank of Ceylon shares to rise 50% in the next 12-months. As an investor in bank stocks (note Citigroup, one of my fave New York money center banks in the past year, is now trading at 88.72, up 37% in the past year). I passed this invaluable financial intel Ruchir gifted me to the three Sri Lankan ladies I have adopted as my sisters. Thank you Sheila, Anola and Naufarah! It is so nice to hear good news from Sri Lanka as I was last there on the eve of its 2022 political crisis, rupee meltdown, petrol lines and IMF bailout.

Sri Lankan equities are priced inexpensively at 8X earnings, down from 14X three years ago. As Ruchi puts it, the combination of cheap valuations, accelerating earnings growth and political stability after the election of Anura Kumara Dissanayake as President is a fantastic combination and a compelling argument to allocate money now to this exciting Asian frontier market.

The IMF program is rock solid, the external debt restructuring is over and the central bank governor in Colombo, whom Ruchir regularly visits on his company calls to SL is one of the most respected monetary mandarins in Asia. After five difficult years, the growth cycle has finally begun in Sri Lanka with a stable GDP, rising EPS/margins, the proverbial sweet spot for equities outperformance.

Colombo is on the eve of a historic valuation rerating and I do not intend to miss this frontier market Xanadu in 2025, thanks to Ruchir, my Asian frontier market sherpa. I can attest from personal experience that tourism, banking and logistics are quintessential growth industries in Sri Lanka. Strangely enough, I was a student of Raj Rajaratnam when he was a finance TA at Wharton two decades before he became a star technology hedge fund manager at Galleon and Sri Lanka’s only billionaire in New York before his fall from grace in a sordid insider trading scandal.

While I preferred to stay at the historic Galle Face Hotel, I was stunned by the number of young Indian and Chinese tourists who crowded the casinos in the five star steel and concrete hotel monstrosities on the Colombo seafront. Hopefully, the government’s current focus on fiscal consolidation and reform momentum continues to deliver a multi-year bull market in Sri Lankan equities as the Field Marshal, Shaz Speed and Aurie have delivered in Pakistan since the exit of Imran Khan. Ruchir is also my jungle guide for Pakistan, Central Asia, Iraq and Vietnamese equities in addition to SL. I must rename my friend the bionic $6-Million Man LOL.

My 2-paisa suggestions to the Colombo stock exchange. One, you need to do everything in your power to boost liquidity before I can seriously help you attract Gulf family office money or institutional capital to SL. Two, the emerging debt market’s heavy hitters in New York do not take kindly to investing in the bonds of a country named the Democratic Socialist Republic of Sri Lanka as it sounds eerily similar to Zohranomics LOL.

The article Sri Lankan equities are an Asian frontier market money gusher! appeared first on Arabian Post.

In a global economic environment that remains shaky and uneven, China’s ability to attract foreign direct investment (FDI) is more than just a bright spot – it’s a quiet vindication of long-term planning, policy stability, and a commitment to innovation-led growth. Contrary to Western narratives of economic decoupling or investor flight, the latest data paints a far more grounded picture: foreign capital is not just staying in China – it is doubling down.

The numbers are compelling. According to the Ministry of Commerce, foreign direct investment in China’s high-tech sectors totalled 109.04 billion yuan ($15.22 billion) between January and May 2025.Investment in e-commerce services surged a staggering 146 percent year-on-year, aerospace equipment manufacturing rose by 74.9 percent, and chemical pharmaceuticals saw a 59.2 percent uptick. These are not marginal gains; they signal a structural commitment by foreign firms to tap into China’s evolving industrial ecosystem.

It’s not hard to see why. China today is not merely a manufacturing hub – it is increasingly a laboratory for business model experimentation and technological advancement. From digital infrastructure to low-carbon industrial transitions, China is setting the pace for what the next generation of economic development looks like. And multinationals are embedding themselves deeper into this transformation.

The development of new quality productive forces is accelerating the emergence of innovation-driven digital and green productivity. In this sense, foreign firms are not just beneficiaries of China’s rise – they are co-creators of its future. The notion that China is somehow “closing off” or turning inward misses the mark. What we are witnessing instead is a reconfiguration: from low-cost production to high-value innovation, from simple exports to complex, symbiotic value chains.

The recalibration is not only in products, but in purpose. Many foreign companies now view their operations in China as critical nodes in their global strategy. As Nathan Stoner of Cummins emphasized, the goal is “not only to serve the Chinese market, but also to support Chinese automakers in their global expansion.” Such partnerships underscore a quiet but profound shift: China is no longer just a destination – it is a springboard.

Beyond the numbers and boardroom strategies, there is a broader story unfolding – one of renewed confidence in China’s institutional and infrastructural resilience. Whether it’s the Beijing-Tianjin-Hebei region’s advanced logistics ecosystem, or the growing network of free trade zones, or simply the massive consumer base that embraces digital transformation faster than anywhere else, China offers a business environment that rewards long-term vision.

This momentum goes beyond factories and laboratories, reaching into tourism, services, and cultural exchange. The new partnership between Air China, Air New Zealand, and Tourism New Zealand is emblematic of how people-to-people connections are bouncing back with economic consequences. Air New Zealand’s $700,000 investment in Chinese market promotion and the expected 33 percent increase in premium seats on the Shanghai-Auckland route are signals of demand recovery and soft power resonance.

In geopolitical terms, this continued flow of capital and confidence into China is instructive. Despite strategic competition, tech restrictions, and trade uncertainties fueled largely by Washington and its allies, global business leaders continue to differentiate between political rhetoric and economic reality. For many, the question is not whether to invest in China – but how to do so more smartly.

Indeed, countries like the United Kingdom, South Korea, and Germany have seen their FDI into China rise 60.9 percent, 10.3 percent, and 7.1 percent respectively in the first five months of 2025. These are not economies with trivial stakes – they are core players in the high-tech and automotive sectors, and their renewed bets on China carry weight.

The Chinese Academy of International Trade and Economic Cooperation, in a mid-June report, noted that foreign enterprises are reshaping industrial chains and driving localized innovation. This is crucial, because it signals not just transactional investment, but transformative integration. It’s not only capital that is flowing into China – it is also trust in its long-term vision.

Of course, challenges remain. From demographic transitions to the complexities of decarbonization, China’s road ahead is not without bumps. But if the current surge in FDI is any indication, global investors are voting with their wallets – and their presence. They are betting on China not out of sentiment, but out of strategy.

As the world wrestles with economic fragmentation and sluggish growth, China’s continuing ability to attract and absorb foreign investment serves as a reminder: stability, innovation, and openness are not just slogans – they are tangible advantages. In this volatile decade, few nations offer all three at once. China does. And the world is paying attention.

The article Why the World Isn’t Leaving China appeared first on Arabian Post.

“We made a great deal with China. We’re very happy with it.” So declared President Donald Trump in his familiar tone of triumphant ambiguity on June 11, fresh off what was touted as a breakthrough agreement to restore a trade truce between the United States and China. But if history has taught us anything, it is that “done deals” in the Trumpian lexicon tend to be either dangerously fragile or conveniently fungible.

The latest accord, emerging from two days of intense talks in London, follows an alarming spiral in trade tensions that had once again threatened to upend global markets and rekindle the tit-for-tat tariff warfare that haunted the latter years of Trump’s first term. According to Trump, China has committed to lifting its restrictions on the export of rare earths – materials critical to the global technology and defense sectors – while the U.S. has agreed to a calibrated rollback of punitive measures, including the threatened revocation of visas for Chinese students.

As ever, the devil is not just in the details, but in their implementation. Much like the May Geneva agreement that this deal purports to reinforce, the London framework is conditional, tentative, and, crucially, subject to “final approval” by both President Trump and President Xi Jinping. That qualifier alone renders the euphoria premature.

Still, to be charitable, the very fact that Washington and Beijing are speaking the language of dialogue rather than confrontation is an encouraging sign. Following a phone call between the two leaders earlier this month, there appears to be a renewed willingness – albeit under duress – to keep diplomacy afloat. For a world economy battered by uncertainty, this resumption of talks is, if nothing else, a stabilizing force.

Yet, Trump’s boastful framing – that the U.S. walks away with a 55% tariff shield while China gets 10% – betrays a zero-sum worldview that continues to inform his trade doctrine. The truth, however, is far less tidy. Tariffs have proved to be a double-edged sword, inflicting damage on American consumers, industries, and allies as much as they have squeezed Chinese exports. The World Bank’s recent downward revision of global growth forecasts points to tariffs and unpredictability as “significant headwinds,” underlining the global costs of such brinkmanship.

Beijing, for its part, has projected a more measured tone. Chinese Vice Premier He Lifeng, in remarks following the London consultations, emphasized mutual benefit, calling on the U.S. to “honor their words with actions.” The Chinese side welcomed the “principled consensus” as a foundation for predictability and stability in bilateral economic relations. While Beijing’s rhetoric may be couched in diplomatic platitudes, it signals a strategic patience that stands in stark contrast to Trump’s performative deal-making.

Indeed, despite facing considerable pressure – both domestic and international -China has remained consistent in its emphasis on dialogue, reciprocity, and multilateralism. It is no secret that Beijing is playing a longer game. From its support for a multilateral trading system to its efforts in promoting South-South cooperation, China has positioned itself as a steady hand amid a turbulent global order.

In this light, the reestablishment of a U.S.-China economic and trade consultation mechanism should be viewed as more than a temporary fix. It offers a framework through which recurring disputes can be ironed out, interests aligned, and trust slowly rebuilt. Importantly, it provides a venue for strategic communication -something sorely missing during the height of tariff wars in 2018–19.

However, for this framework to bear fruit, both sides must resist the urge to revert to maximalist posturing. The United States must accept that unilateralism – whether in tariffs or technology controls – cannot substitute for a sustainable policy. Likewise, China must be prepared to meet the U.S. halfway, especially on issues of market access, intellectual property, and transparency.

The elephant in the room, of course, is the technological cold war that continues to simmer beneath the surface. While rare earths and tariff percentages dominate headlines, it is the battle over semiconductors and AI supremacy that threatens to define the next phase of U.S.-China relations. Washington’s decision to maintain restrictions on high-end AI chips – particularly those from Nvidia- while easing others, reveals both the complexity and the stakes involved.

Beijing, not surprisingly, has responded with innovation. The resurgence of Huawei, once a poster child of American sanctions, stands as testament to China’s determination to chart its own technological path. As Huawei’s founder Ren Zhenfei put it bluntly this week, China may still be a step behind, but it is catching up – by stacking and clustering if necessary.

In the short term, these dynamics will continue to fuel friction. But in the long term, they offer a compelling reason for structured cooperation. For neither side can afford the costs of sustained decoupling. The global economy – still reeling from inflationary shocks, supply chain disruptions, and climate-induced volatility – desperately needs the world’s two largest economies to find common ground.

To that end, the inclusion of Chinese students in American universities, affirmed in this deal, is more than a diplomatic gesture. It is a recognition that people-to-people ties remain a cornerstone of bilateral engagement. Academic exchanges, research collaboration, and cross-cultural education build bridges that tariffs and bans cannot destroy. They plant the seeds of mutual understanding in a landscape too often scorched by suspicion.

The road ahead remains bumpy. Structural trade conflicts persist, strategic mistrust abounds, and electoral politics – particularly in the U.S. – can derail even the most promising of frameworks. But the London agreement offers a glimpse of what is possible when mutual interest outweighs mutual animosity.

This development not only helps stabilize U.S.-China relations but also injects much-needed momentum into the global economy. It serves as a reminder that even amid intensifying geopolitical rivalry, there is still space – indeed, an urgent need – for pragmatic cooperation.

Trump may brand it a win, but real victory lies not in tariffs or trophies, but in the hard, unglamorous work of sustained diplomacy. For now, both sides have stepped back from the precipice. The challenge will be to keep walking forward – together.

The article The High Stakes of the Latest U.S.-China Agreement appeared first on Arabian Post.

President Donald Trump’s erratic dance with tariffs continues to confound not just global markets but even his own team. On April 22, in a move that underscored the White House’s habitual policy incoherence, Trump declared that the “very high” tariffs on Chinese goods would soon be “substantially reduced.” This comes after days of raising them dramatically at the start of the month, then selectively exempting key electronics sectors – moves that reflect both strategic confusion and political expediency. There was no solemn excuse for this U-turn, of course. There never is. But Trump’s tone, uncharacteristically tempered, spoke volumes. For an administration that has long relished the adversarial theatre of economic brinkmanship, the shift reads like a quiet concession: the strategy has failed to yield the wins it promised. The tariffs – which at one point soared to 145% on some Chinese imports – have not yet coerced Beijing into concessions, nor they appear rescuing American manufacturing from its decades-long decline in the near future.

The timing of Trump’s admission is no coincidence – it aligns with growing signals from Treasury Scott Bessent that the tariff war with China is “unsustainable.” In a private summit on the same day as Trump’s public reversal, Bessent attempted to soften the edges of the administration’s rhetoric, suggesting that the trade war would “de-escalate” even though no formal negotiations with Beijing were underway. It was a diplomatic smokescreen for a fundamental truth: the American tariff regime, under Trump’s watch, has become a parody of strategic statecraft. Perhaps the most telling detail in this week’s series of developments is not what was said in Washington, but what hasn’t been heard from Beijing. Unlike other nations caught in Trump’s tariff dragnet – countries that have eagerly sought exemptions, side deals, or at least a seat at the negotiating table – China has so far refrained from requesting any meetings. It is a calculated silence. In Beijing’s reading, Trump’s inconsistencies speak louder than his tariffs.

China’s Ministry of Commerce minced no words in its response. Pointing out that tariffs on certain Chinese exports to the U.S. had ballooned to an eye-watering 245%, the ministry accused Washington of weaponizing trade in a manner devoid of strategic logic. It characterized Trump’s numbers game as little more than performative populism – an apt description for an administration that confuses spectacle for strategy. This entire saga reveals a deeper malaise at the heart of U.S. trade policy: the abandonment of long-term thinking in favor of erratic theatrics. There was a time when American economic diplomacy, for all its flaws, followed discernible objectives – liberalization, multilateralism, strategic containment. Now, under Trump, it is driven more by press cycles and poll numbers than by principled engagement or economic logic.

The irony here is particularly bitter. Trump campaigned – and governs -as the self-styled defender of American workers. Yet his tariff policies have imposed higher costs on the very people he claims to champion. American manufacturers dependent on foreign components have seen their production costs steadily climb. Farmers, caught in retaliatory crossfire from Beijing, have been forced into dependency on government bailouts. And consumers have felt the sting of higher prices across retail sectors. What we’re witnessing isn’t collateral damage from a coherent strategy – it’s the signature chaos of economic self-sabotage.

Worse still, Trump’s exemptions for electronics – devices that constitute a significant portion of U.S.-China trade – only add to the incoherence. Why carve out Apple’s supply chain while leaving steel and solar panels to twist in the wind? If the goal is national economic security, why selectively protect the tech sector, which is perhaps the most vulnerable to intellectual property theft and geopolitical dependency? These contradictions betray the transactional instincts that guide Trump’s approach: punitive where it is politically safe, lenient where corporate interests overlap with electoral math.

All this would be merely chaotic if it weren’t also dangerous. Trade, after all, is not a zero-sum game. It is a mechanism of interdependence that, for better or worse, shapes geopolitical alliances and economic ecosystems. The U.S.-China trade war has already sent ripples across global markets, strained ties with long-standing allies, and eroded American credibility in trade diplomacy. And now, with Trump signaling retreat under the guise of recalibration, it is hard not to see the entire episode as a self-inflicted wound.

Yet this, too, is classic Trump: to sow conflict and confusion only to emerge, eventually, as the “great negotiator” who ends the very crisis he created. We saw it with North Korea. We saw it with NAFTA. And now, we see it again with tariffs. t there’s a palpable fatigue around the world with this familiar routine. The damage to America’s international image cannot be reversed with a speech and a smile. Consistency, reliability, and respect for the rules of engagement – these are the currencies of global leadership. In their absence, even the most powerful economy can find itself isolated. One wonders, too, what comes next. China, for all its provocations, has shown strategic patience. It has not panicked in response to Trump’s volatility. It has not begged for relief. It has waited, calculating that chaos is its own kind of leverage. In that, Beijing may have read the game better than Washington.

This moment, then, is not just a turning point for Trump’s trade agenda – it is a referendum on American governance in a globalized world. A world where power is no longer measured solely in economic volume or military might, but in strategic coherence, institutional memory, and the ability to negotiate without bullying. For now, the Trump administration’s tariff whiplash serves as a cautionary tale. It is a reminder that power, when wielded without purpose, invites decay. That policy, when driven by impulse, devolves into farce. And that leadership, when hollowed out by ego, ceases to lead at all.

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President Donald Trump’s declaration of April 2, 2025, as “Liberation Day” marked a seismic shift in U.S. trade policy, with the imposition of sweeping reciprocal tariffs that have sent shockwaves through the global economy. The new measures include a universal 10% tariff on all imports, with punitive rates as high as 54% for China, 46% for Vietnam, and 20% for the European Union, alongside a separate 25% levy on foreign-made automobiles. Framed as a corrective to decades of “unfair” trade practices, the policy has been celebrated by the administration as a rebirth of American industry. Yet beneath the rhetoric lies a complex web of economic consequences, retaliatory threats, and a potential reordering of global trade dynamics that could leave the U.S. and its allies grappling with long-term instability.

For American manufacturers, the tariffs present a double-edged sword. On one hand, industries like steel, automotive, and textiles – long battered by foreign competition – may see short-term gains as higher import costs push consumers toward domestically produced goods. The Alliance for American Manufacturing, for instance, praised the move as a lifeline for workers who have “seen unfair trade cut the ground from beneath their feet for decades”. However, the reality is more nuanced. Many U.S. manufacturers rely on global supply chains, importing components like auto parts from Mexico or semiconductors from Asia. The 25% tariff on foreign auto parts, for example, could raise production costs for American automakers by $2,000 to $15,000 per vehicle, forcing them to either absorb losses or pass expenses onto consumers. Small businesses, from craft breweries to electronics assemblers, face similar strains. The National Association of Manufacturers warned that thin margins could collapse under the weight of new tariffs, jeopardizing investments and jobs.

Consumers, meanwhile, are poised to bear the brunt of this policy. Despite White House claims that tariffs act as a “tax cut,” economists overwhelmingly agree that import taxes inflate prices for everyday goods. Fruits and vegetables from Mexico, clothing from Vietnam, and electronics from China – all staples of American households – will become more expensive. The Yale Budget Lab estimates that the average American family could pay an additional $2,700 to $3,400 annually. Retailers, already grappling with inflation, warn of unavoidable price hikes, particularly for items like apparel and toys, which lack a domestic manufacturing base. Even sectors temporarily spared, like pharmaceuticals, face uncertainty as the administration considers future investigations that could extend tariffs to critical medicines.

The global reaction has been swift and severe, signaling the onset of a protracted trade war. China, the EU, Canada, and Japan have all vowed retaliatory measures. Beijing denounced the tariffs as “bullying” and pledged to “fight till the end,” likely targeting U.S. agriculture and technology exports. The EU, already finalizing countermeasures against earlier steel tariffs, warned of duties on American tech firms, while Canada’s Prime Minister Mark Carney called the move a “fundamental change” to the trading system and promised “forceful” retaliation. Even traditionally neutral nations like Switzerland and Thailand are recalibrating trade strategies, with Thailand’s finance minister predicting a 1% GDP contraction due to lost exports. The collective backlash threatens to fracture supply chains, disrupt alliances, and erode the WTO’s authority, as countries increasingly bypass multilateral frameworks in favor of bilateral deals or regional blocs like the RCEP, where China holds sway.

The long-term implications for global trade are profound. Trump’s tariffs represent not just a tactical escalation but a philosophical rejection of the post-WWII liberal order. By weaponizing trade deficits and framing security alliances as transactional – where allies like Germany or Japan must “balance trade” to retain U.S. protection – the administration is dismantling the premise of mutual economic gain that underpinned institutions like the WTO. Economists warn that the resulting uncertainty could deter foreign investment in the U.S., as companies balk at volatile policy shifts. Many auto giants, which built U.S. plants to avoid earlier tariffs, now face renewed pressure as the 25% auto levy will disrupt their carefully calibrated supply networks. Meanwhile, the administration’s ambition to replace income tax revenue with tariff proceeds appears mathematically dubious, as reduced imports would shrink the very tax base it seeks to exploit.

Historical parallels offer cautionary tales. The Smoot-Hawley tariffs of 1930, which deepened the Great Depression, loom large in economists’ warnings. Goldman Sachs has already downgraded U.S. GDP growth forecasts to 1.7%, citing trade policy risks, while models predict a $438 billion contraction in U.S. GDP if retaliatory tariffs escalate – a larger blow than any other nation would suffer. The erosion of trust in U.S. predictability may prove irreversible, pushing trading partners toward self-sufficient regional ecosystems or alternative markets. Factually speaking, Trump’s tariffs are less a solution to globalization’s discontents than a high-stakes gamble – one that prioritizes political symbolism over economic stability. While the administration touts “liberation” from foreign competition, the costs – higher prices, lost exports, and a destabilized trading system – will be borne by the very workers and consumers it claims to protect. The world is now bracing for a new era of economic nationalism, where the rules of trade are written not through cooperation but through conflict, and the collateral damage could reshape economies for decades to come.

The article Trump’s Tariff Gamble: A Path to Global Recession? appeared first on Arabian Post.

The winds of uncertainty are sweeping through Europe as the continent grapples with the stark reality of a diminished U.S. commitment to its security. The handling of the Ukraine crisis by the Trump administration has rightly sent shockwaves through European capitals, unearthing a reality that policymakers have long feared but often failed to address head-on: the United States, under its current leadership, is no longer a reliable guarantor of European stability. This development has prompted European Commission President Ursula von der Leyen to propose a comprehensive five-point strategy aimed at bolstering the continent’s defense capabilities – a kind of first step towards strategic autonomy. Yet, beyond military considerations, the fundamental challenge before Europe is how to redefine its role in an increasingly transactional world order.

The Trump administration’s justification for halting military aid to Ukraine – framed under the guise of prioritizing peace – has been met with widespread skepticism. Many European leaders fear that this move will only embolden Russia and pressure Ukraine into an untenable settlement. French President Macron has been particularly vocal in their criticism, asserting that withholding arms from Kyiv plays directly into Moscow’s hands. Meanwhile, Poland has also expressed frustration over Washington’s lack of consultation with European allies, highlighting a growing transatlantic rift. Similarly, British PM Kier Starmer has also repeatedly exhibited commitment to Ukraine. While Viktor Orban of Hungary is siding with Trump’s strategy on the Ukraine peace process,  exposing the divergent responses among European allies.

Von der Leyen’s response is emblematic of a broader shift in European strategic thinking. The proposal to increase defense spending, relax debt regulations, and mobilize nearly 800 billion euros to fortify military capabilities marks a significant step towards reducing dependence on Washington. Yet, the challenge remains daunting. Military rearmament, even if pursued with unwavering determination, is a slow and costly process. The idea of European strategic autonomy has gained renewed traction, but its feasibility is questionable in the short term. Even if all necessary political, legal, and financial frameworks were swiftly put in place, it would take decades for the European Union to emerge as a global military actor capable of rivaling existing great powers. The costs of such an endeavor would be staggering, especially for economies already under strain.

Yet, the conversation around strategic autonomy should not be limited to military dimensions. A more pragmatic and immediate avenue for Europe to assert its independence lies in economic resilience. The EU’s heavy reliance on U.S. economic policies and supply chains leaves it vulnerable to the whims of Washington’s shifting priorities. If Europe is to manage the turbulent waters of the 21st century, it must invest in economic sovereignty through technological advancement and diversified supply chains. Digital infrastructure, artificial intelligence, semiconductors, and the green economy represent vital areas where the EU can secure greater autonomy without incurring prohibitive costs.

A critical element in this equation is China. Despite ideological differences, the economic synergy between Brussels and Beijing is undeniable. With bilateral trade amounting to $804 billion, the EU-China economic relationship is one of the most significant in the world. However, trade has stagnated since its record high of $847 billion in 2022, largely due to EU concerns over China’s technological ascendancy and Washington’s pressure to align with U.S. restrictions on Chinese investments. The Trump administration’s approach to transatlantic trade – characterized by tariffs, threats, and demands for economic concessions – has left the EU in a precarious position. On one hand, Brussels is expected to support Washington’s hardline stance against Beijing. On the other, it is treated as an adversary in trade disputes. This paradox is untenable.

There is a growing recognition in European policy circles that closer economic ties with China could provide a counterbalance to U.S. dominance. Unlike Washington, which prioritizes unilateralism, both Brussels and Beijing share a commitment to multilateralism and global governance reform. They have common ground on issues ranging from WTO restructuring to AI governance and climate change. A deeper economic partnership between the EU and China could serve as a hedge against Washington’s increasingly unpredictable policies. Of course, such a shift would not be without complications. Differences on human rights, market access, and security concerns will persist. However, strategic engagement, rather than alignment with Washington’s zero-sum calculus, would offer Europe greater leverage.

This is not to suggest that Europe should abandon its transatlantic ties. The United States remains a crucial partner, and NATO remains central to European security. But the era of blind reliance on Washington is over. Trump’s transactional diplomacy has laid bare the reality that alliances are now dictated by interests rather than shared values. Europe must adapt accordingly. A diversified strategy – one that enhances military preparedness while also securing economic independence – offers the best path forward.

Europe’s predicament is reminiscent of an empire in transition. For decades, the U.S. has maintained a hegemonic system with Europe at its core, exercising control over military, economic, and political domains. But hegemony is costly, and as Washington struggles under the weight of debt and domestic turmoil, it is looking to shift the burden onto its allies. This is the essence of Trump’s strategy: maintain dominance without paying for it. Europe, long accustomed to the security umbrella provided by the U.S., now faces the reality that those days are numbered.

In a striking speech at the European Parliament, renowned scholar Jeffrey Sachs described the Russia-Ukraine conflict as a proxy war instigated by the U.S. to maintain its strategic foothold. While such assessments may be contentious, they underscore the broader reality: Washington’s primary interest is not in European stability but in global power projection. Europe must recognize this and act accordingly.

The old transatlantic order is fading, and what replaces it depends on the choices Europe makes today. A reactionary approach – one that simply compensates for U.S. disengagement – will only prolong dependency. A proactive strategy, combining defense modernization with economic diversification, offers a genuine path to sovereignty. The coming years will determine whether Europe remains a subordinate player in Washington’s grand chessboard or whether it finally steps into its own as a geopolitical force. The stakes could not be higher.

The article Redefining Europe’s role in shifting global power equation appeared first on Arabian Post.

It is an ironic twist of history that the world’s largest Muslim country, an archipelago of 18,000 islands, whose ancient Sumatran kings once funded countless monasteries/temples at Nalanda, the Harvard/Oxford of Vedic India two millennia ago. Sumatra was then known as the kingdom of Srivijaya when Mauryan India’s ruler was Ashoka, imperator of the Magadan superstate. Fast forward 22 centuries and the two best performing emerging Asian stock markets for dollar investors and moi have been India and Indonesia. Yet King Dollar, a trade war and capricious global capital flows threaten currency chaos in both these two Sanskriti civilizational states. After all, I was a student of history long before I discovered I could finance my global wanderlust via EM FX macro trading.

Indonesia, with its $1.5 trillion economy, 5% GDP growth, limitless lithium/nickel treasure trove in an electrifying world economy, 280 million people/200 million smartphones, Indonesia was a must own for me in the Jokowi era but I will take a pass in 2025 as General Subianto, briefly Suharto’s son in law, faces the worst currency crisis since Sasurji’s regime was blown apart by a rupiah freefall/banking crisis in 1998. The Rupiah (IDR) is now down 17% and has unnerved global hedge funds after the central bank failed to prevent its fall below 16,000. Will I finally get the chance to buy Bank Mandiri at 20% discount in 2025? Once the Bank of Japan guts the carry trade, yes.

The IMF/World Bank have a bromance with Jakarta and I was honoured to know Sri Mulyani Indrawati, Jokowi’s Finance Minister and the architect of his economic miracle. Yet the rupiah crisis/Trump 2.0 means Subianto will not achieve his 8% GDP growth target. Chicken salad and chicken merde are both white but EM FX trading teaches you fast to tell the difference, lest you drown in Merde-istan.

Subianto is a former general but unlike our Pakistani Generals who just engineered a 100% US dollar return in Karachi after locking up PTI’s voodoonomics maestro Imran Khan, is clueless about the leveraged wolves of Wall Street. Subianto wants to boost government spending and ignore the deficit, so the rupiah can well fall to 18,000 before the bond vigilantes teach him a lesson. Like 1965 and 1998, 2025 will be the year of living dangerously in Jakarta.

I had warned my NRI friends that the Indian rupee was a screaming short when the RBI let it fall below 84, despite $700 billion in high octane FX reserves. INR has now fallen to 85.5. It is no coincidence that this fall in the INR has coincided with a spike in its volatility, a 8% overvaluation on its REER and a new RBI boss Sanjay Malhotra. If it quacks like a duck and walks like a duck, it is a duck or, in this case, a central bank policy shift. Too bad Malhotra is an IAS hack with no real world experience with Planet Forex. The INR is headed to 92 as the bears go berserk on Dalal Street. Bahloo alert!

The article Currency crisis in two Sanskriti superstates appeared first on Arabian Post.

If ever there was a year to make money in Big Tech, 2023 was it. My three big strategic calls all outperformed my expectations. Google rose from 85 to 142, Nvidia rose from 150 to 492 and Microsoft rose from 295 to 374. 2024 could well see several emerging markets beat the S&P 500’s stellar 26% rise this year, though the real fairytale has been Argentina’s YPF, up 70% since the election of a first libertarian President who quotes Friedman/Von Hayek, admires Mrs. Thatcher despite the horror of the Malvina’s war and is committed to energy privatization. There is still serious money to be made in the Pampas if economy minister Louis Capoto executes Milei’s reform blueprint.

India has been the darling of EM in 2023 with the Sensex up 17% and $20 billion in foreign inflows as it emerges as the highest growth/reform/macro momentum story in the EM constellation, a beneficiary of investor fears on China’s structural property woes, trade/geopolitical friction with the US and tech crack down since 2021. This is reflected in their relative valuations. The Shanghai Composite trades at 9.8X 2024 earnings whilst MSCI India is at 20X. Indian small caps and real estate stocks have had a spectacular 2023, yet I sense the mood of the market has now shifted to expectations of Modi/BJP win in the general election if the results of the three Hindi belt state elections are a loadstar for the future. This makes mega caps a compelling theme and cement an ideal proxy for a pre-election construction boom. India will have a general election in 2024 while Pakistan will have a General’s Election and General Asim Munir is Da Man while Imran Khan is still a state guest of the GHQ in Adiala. Howzzat?

A lower dollar, lower US inflation, lower borrowing costs and the near/friend shoring trend is a license to make money in Mexican stocks. Prologis Mexico is the obvious choice to surf the industrial renaissance reshoring theme in the northern states that border Gringolandia. On the consumer side, Grupo Televisa and Femsa have multiple catalysts to make us mucho dinero. Brazil has been a consistent performer since Lula calmed investor angst on Wall Street with his fiscal/pension reform compromises and the largest economy in Latin America is an emerging Saudi Arabia of crude oil as Petrobras spends $105 billion in capex on new projects in deep water offshore/the Amazon Basin while agri-business is 30% of GDP. Mercado Libre is up 90% in 2023 but I still think it is premature to sell this LatAm e-commerce colossus whose majority footprint is in Brazil while Itau Unibanco is a play on credit growth. The Brasilia Central Bank has begun to cut its 13.75% Selic rate, the dawn of a massive consumer boom that could well trigger three bagger moves in some specialist retail/property stocks listed on the Sao Paulo Borsa. Nubank is up 100% now but as Reagan would say you ain’t seen nothin yet given the scale of its TAM, 50 million new internet accounts opened since 2019 and a loco 35% ROE.

The article India remains darling of Emerging Markets in 2023 appeared first on Arabian Post.

In my late 1970’s boyhood, I was mesmerized by the Shah of Iran’s regal hauteur and magnificent uniforms as he made periodic state visits to Larkana, the then de facto capital of Pakistan. Sadly, the party ended for the Shah in January 1979 as he piloted his Imperial Boeing 707 out of Tehran while a million Islamist revolutionaries screamed for his blood and welcomed a 80 year old mullah with a medieval world view back from a Parisian suburb in an Air France Jumbo Jet.

I never thought I would live to see a Shah of Pakistan anointed and crowned in my lifetime but miracles do happen in the Third World and we now have a flesh and blood Shah – General Syed Asim Munir Shah, the new Shah of Pakistan. I wish General Sahib would borrow the Kohinoor from its rightful owner Queen Consort Camella and Crown himself in the same Lahore Fort where Maharaja Ranjit Singh, the Lion of Punjab held his Darbar, ruled the Sikh Empire that alone could have vanquished John Company Bahadur and wore it on his Armband. After all, General Ayub never won a war but promoted himself to Field Marshal since his coup in 1958 made him the Pakistani equivalent of Rommel, von Manstein, Guderian and Montgomery, a legend in his own mind and a legend in his own time when state media christened the Khabarnama as the Sadrnama.

Pakistan desperately needs legitimacy and its political class (Thieves R Us), bureaucrats (Dumb and Dumber with Oxbridge accents) and generals (assi-tussi changi gal, khanda be hey aur landha be hey. Translation for our non-Punjabi friends, we are your big brothers, fiends not masters. We eat but we also bring home the loot as the $26 billion skimmed from China’s CPEC and $40 billion skimmed from Uncle Sam’s magnificent delusions attests). There is ample historical precedent for military adventurers who seize power and crown themselves as kings, sultans, shahs, emperors and even caliphs.

Napoleon usurped the crown of the Bourbons at Notre Dame in 1804. Vespasian, the son of a mule trader, killed two praetorian rivals to crown himself imperator of Rome in AD 69, the artist Nero’s true heir. Raza Khan was an illiterate sergeant in the Cossack Brigade in Tehran until he launched his coup against the Qajars in 1925 and crowned himself Shahanshah of Iran. Which means King of Kings in Farsi or Falcon King Afridi in Urdu. The one eyed Mullah Omar declared himself Caliph or Prince of the Believers when the Taliban overran Kabul, as did Abubakar Baghdadi in Daesh held Mosul even as he clutched his Hello Kitty bag.

Pakistan’s biggest problem is that we have monarchy in our DNA but no real flesh and blood king, other than on the cricket pitch or in the neo-Dubai marble palaces of Bahria town. So why not have a real Syed, a Hafiz Quran, a 2 star chief of military intelligence, 3 star generals of ISI, 4 star army chief who gutted the PTI and locked up Imran Khan in Attock Jail now anoint himself with holy oil as the Shah of Pakistan. Surely the PTI Kaptaan understood the ancient law of the Mughal court that every princeling understood. Takht ya takhta – the throne or the hangman’s scaffold.

Now that Modi has changed India’s name to Bharat to honour the exquisite Kashmiri beauty Bharati I once knew, why not change Pakistan’s name to the Faujistan Empire since we have failed so miserably as the Land of the Pure? All our ethnic minorities, including the Pajero/Benzi/Beamer tribes in my city by the silver sea, will all embrace a grand army that won the Bangladesh and Kargil Wars, never molested a single Bengali woman if she was patriotic and sang Noorjahan’s karnailji janarailji at full decibel count and reached the height of our military genius under the legendary Chicken Tikka Khan, whose name has been immortalized by the best Tandoori menu ever eaten in the history of the Emirates.

I admit that I am not a credible chronicler of Pakistan’s geopolitical and economic twilight. I was born into not a burger but a Big Mac family in Karachi where Dad was so anglophile that he ate his peas with a fork/spoke fluent Latin from his Jesuit school boy days and introduced us to real English lords who worked with him in his blue blooded Lloyd syndicate when he was a chokra boy in London. Mom was an Francophile artist who took us to all the great museums of Europe and introduced us to the most exquisite paintings and sculptures I have ever seen, from the Prado in Madrid to the Rijksmuseum in Amsterdam, from the National Gallery in Trafalgar Square to the Musée d’Orsay/Louvre in the Ville Lumiere.

As a boy, I lived in the enchanted world of Enid Blyton, Alistair MacLean, forbidden fruit, Harold Robbins. The Sind Club and the Karachi Gymkhana tuck shops and swimming pools and libraries were my haunts. We left Karachi in 1976 for Dubai but how can you ever forget your first love, the city of my birth in Holy Family Hospital (its a boy and a bundle of joy), your early school days with the shamrock and a green tie at St. Pats in Saddar, your classmates who included the sons of Chinioti billionaires, Baluchi tribal chiefs, corporate executives but also Catholic Goan, Anglo Indians, Parsis, Hindus from upper Sindh and Khojas/Ismailis from East Africa after fatso Amin expelled the Asians from Uganda. How was I to know that the adorable liberal Karachi whose social king in the Hotel Metropole was Mr. Bhutto and his elegant wife Nusrat, who opened all my Mom’s art exhibitions as the chief guest, was destined to die in an orgy of ethnic, sectarian and tribal blood letting. General Zia, Pir Altaf, Mir Murtaza, those innocent French naval engineers, the untold thousands of young men and women killed in bomb blasts and the obscene murder of Daniel Pearl still haunts me. James Joyce was so right. History is a nightmare from which we all struggle to awaken.

Since the US Congress will not allow General Munir to become Pakistan’s next President for Life like Ayub, Yahya, Zia and Mush, becoming the Shah and King of Pakistan is his only viable option. I am sure the IMF will fork out the $5 billion he will need to have a suitable party and invite the world’s power brokers to jet into Lahore though I doubt if Vlado the Baddo in the Kremlin will receive an invitation and will thus miss the geopolitical mujra of the century. This will be great for Pakistan’s brand image as Faujistan has no corruption, no crime, no terror attacks, no starving peasants, no teenage servant girls raped and battered to death, no bloodied headless corpses of young women murdered by a monster who has still not been hanged since daddy is a billionaire and boys will be boys in the mansions of F8, no looting, no black money but plenty of manicured golf courses, tennis courts, swimming pools and white peacocks. The Fauj runs Pakistan’s biggest conglomerate that makes everything from corn flakes to cement, steel to fighter jets, missiles to bathroom fittings.

General Munir is COAS, Chairman, CEO and Pasha of Pashas of this $25 billion business and patronage empire. So why not solve our perennial problem of political succession and make ourselves an empire since Islamabad rules so many kingdoms? The General can become Shah Asim the First and he can have a suitable successor from his own clan, as long as his name is not Kassim. He has silenced Imran Khan, he has checkmated the Mian Saheb of Mayfair/Raiwind and Asif Zardari – Sub Pe Bari. The ISPR is doing exactly what it did for Zia and Mush in their time when they settled down for a long innings as our Shah is doing now. In fact, we now have two Shahs in Pakistan. In politics the hafiz General whose August 14th speech quoted the Holy Book numerous times but did not speak of democracy or election even once.

Last week, he spoke to a 100 business arabpatis and promised he would bring $100 billion of Arab petrodollars into Pakistan (hello?) and root out the Dacoits of Sindh. Just who may they be, Your Imperial Majesty? Would it not be a good idea for Fortress Faujistan to root out the terrorists of Afghan Taliban and TTP who started a new war on terror that has gutted global investor confidence and the free fall in the rupee now at 305 against the US dollar? As economic Shah, how will you deal with the IMF/World Bank, squeeze more billions from China, patao the Imran Khan acolytes back to fall in love with Rawalpindi GHQ, catapult Kashmir to the top of the global agenda even as the G20 (minus Xi and Putin) convene in New Delhi, force the Gulf to foot the bill for Faujistan’s fiscal fiesta, resurrect white elephant zombies like PIA and find a cure for cancer?

On the cricket pitch there is a far more authentic Shah, King Falcon Shah, an adorable lanky, 22 year old fast bowler from Landi Kotal who will bring home the world cup and history’s tragic saga will continue. Omar Khayyam’s caravans will pass into the long eternal night that ties my umbilical cord to the bottomless trap door of this ancient land. Pakistani people Zindabad, the human race Zindabad.

The article General Munir should be crowned the Shah of Shahs in Pakistan! appeared first on Arabian Post.

As US President Joe Biden prepares to reengage in negotiations with House Speaker Kevin McCarthy and other influential Republicans on the critical issue of the debt ceiling to find common ground amidst a landscape riddled with challenges, constitutional experts warn of the potential ramifications should the they fail to forge an agreement on this matter.

The stakes are high. Inaction or an impasse in these deliberations would catapult the United States perilously close to defaulting on its debt obligations. Such a scenario, once unthinkable, would have far-reaching consequences, reverberating across financial markets worldwide and threatening to upend the delicate balance of the global economic order. The intricate negotiations taking place within the hallowed halls of Congress carry profound implications for the US and the world. The outcome will determine whether the United States treads a path of fiscal responsibility or inches closer to the precipice of a potential default. President Biden’s leadership and the engagement of Speaker McCarthy and other congressional leaders will be pivotal in charting a course forward that avoids the impending danger.

The eyes of the world are fixed on this crucial juncture, cognizant of the potential reverberations that could ensue from a failure to reach a consensus. Their ability to rise above political divides and find common ground will determine not only the economic fate of the United States but also its standing on the global stage. The world awaits the outcome with bated breath, hopeful for a resolution that will avert financial calamity and reaffirm the strength and resilience of America’s democratic institutions. If the US defaults on its debt, it will significantly diminish the dominance of the US dollar in the global financial landscape and weaken the country’s ability to shape international affairs. Adding to Washington’s woes, the unresolved banking crisis and the intensifying bipartisan struggle over the debt ceiling further exacerbate the situation, with small and medium-sized banks facing a potential “death spiral” and a subsequent economic slowdown.

As the world’s largest economy that leverages the strength of the dollar, the economic problems plaguing the United States could have negative ramifications for other countries. Could a US debt default unleash a “financial atomic bomb”? In the United States, in the last few years, an atypical pattern has emerged, where the two major political parties engage in high-stakes brinkmanship when it comes to the debt ceiling. What was once a procedural formality has now evolved into a formidable challenge, as bipartisan agreement on this critical matter becomes increasingly elusive with each passing year. The debt ceiling, once a routine legislative procedure, has now morphed into a battleground for partisan disputes and ideological clashes.

Gone are the days when raising the debt ceiling was viewed as a “routine” step to ensure the continued functioning of the government and the fulfillment of its financial obligations. Instead, it has become a contentious point of contention, emblematic of the broader political divide that permeates the Capitol Hill. In 2011, when the United States was last perceived to be teetering on the brink of default, negotiations pushed the limits of time, with a compromise agreement reached just hours before the deadline. This agreement entailed $900 billion in spending cuts spread over a decade. However, even temporary delays in reaching a resolution carry significant consequences. The 2011 standoff left an indelible mark on the country’s financial landscape. It triggered a downgrading of the US credit rating, causing tremors in the stock market and shaking investor confidence. The repercussions extended beyond the realm of financial markets, impacting the public directly. It is estimated that the American people faced an additional burden of at least $1.3 billion in elevated borrowing costs during that year alone.

One may ponder why the debt limit engenders such deep divisions and contentiousness among policymakers. The answer lies in the complex interplay of political ideology, fiscal responsibility, and divergent views on government spending. President Joe Biden and Democrats in Congress have been pushing for increase in the government’s borrowing limit of $31.4 trillion without any conditions since the start of the year. However, Republicans, who hold a slim majority in the House of Representatives, insist on establishing new spending limits for the future before approving further payments to cover previously authorized expenditures. Moreover, the debt limit debate intersects with broader partisan dynamics, reflecting the deep political polarization that characterizes contemporary American politics. It has become an arena for power struggles, with each party using the issue as leverage to advance its policy agenda and extract concessions from the opposition.

The intricate nature of the debt limit issue makes it susceptible to political posturing, brinkmanship, and last-minute negotiations. The consequences of failing to reach an agreement on time are grave, with potential disruptions to financial markets, increased borrowing costs, and damage to the global economy. The Republican Party has adopted a relatively atypical strategy, driven by a conviction that the current trajectory will inevitably result in economic and societal devastation. For many Republicans, this approach is seen as a necessary measure to create a potential crisis for President Biden and Democrats. These divergent perspectives on the debt limit reflect deeper ideological divisions between the two parties, shaping their respective approaches to fiscal responsibility and the role of government in society.
This heightened level of polarization and gridlock has cast a shadow of doubt over the ability of Congress to effectively address the country’s fiscal challenges.

As the debt ceiling looms overhead, the consequences of a failure to reach a timely agreement become increasingly grave, with potential implications for the stability of the economy and the well-being of the American people. The US finances its budget deficit by issuing bonds, and the debt ceiling is the limit imposed by Congress on how much the federal government can borrow to meet its financial obligations. Reaching the debt ceiling signifies that the borrowing capacity of the US Treasury Department has been exhausted. Raising the debt ceiling allows the federal government to issue new debt to repay old obligations. The current US debt ceiling stands at approximately $31.4 trillion. This limit was breached in January, prompting the Treasury Department to employ “extraordinary measures” to avoid defaulting on its debt. The failure to legislate an increase in the debt ceiling will plunge the United States back into a state of default. If the United States were to default on its debt obligations, the repercussions would be severe, encompassing a range of undesirable outcomes. Among the potential consequences are the downgrading of Treasuries, resulting in diminished trust and confidence in U.S. government bonds.

This, in turn, would lead to elevated borrowing rates for American consumers, corporations, and the government itself. Furthermore, global investors may opt to sell off their dollar-denominated assets, causing the value of the dollar to depreciate in foreign exchange markets. Stock markets would likely experience a sharp decline, with negative implications for investors and the overall economy. The situation could be exacerbated if a rush to close positions occurs simultaneously, straining the central counterparty clearing house, the essential infrastructure that supports the financial system, potentially leading to its collapse. The potential fallout from a U.S. default underscores the criticality of reaching an agreement to avert such a dire scenario. While these are viewed as short-term consequences, the US could also suffer permanent economic losses and a diminished ability to shape global affairs if a debt default occurs.

The United States’ position of economic strength, bolstered by the dominance of the dollar, provides several advantages in managing its foreign debts. Repayment in its own currency affords American companies a distinct advantage in global trade and finance, as they face less vulnerability to currency fluctuations compared to their foreign counterparts. Additionally, the prevalence of dollar denominations in international trade facilitates a significant concentration of power in the hands of the US government. This is exemplified by the utilization of dollar-denominated sanctions as a political tool against other nations. In the intricate dance of political negotiations, the urgency surrounding the debt ceiling looms large, casting a shadow of uncertainty over the American economic future. According to the astute projections of Moody’s Analytics, the consequences of prolonged discord between the two parties could be severe: stock prices will fall by nearly one-fifth, the economy will shrink by more than 4%, and more than 7 million jobs will be lost in the wake of this fiscal impasse.

The article Impending US debt default? appeared first on Arabian Post.

The year 2022 has been an annus horribilis for Pakistan’s sovereign debt, even by the dismal standards of the emerging markets. Political stability has been illusive as the populist, incompetent PTI government of Imran Khan lost a no confidence vote in parliament and the fragile PDM coalition has not been able to restore credibility on macro policy as the free fall in the rupee to 240 suggests. Pakistan’s sovereign bonds due in 2024-26 all trade significantly below par and price an imminent default risk, as do its credit default swaps.

Despite Punjab’s DNA as South Asia’s breadbasket, Pakistan’s agricultural productivity is so poor, the state even imports wheat, cotton and sugar. A country which imported $80 billion last year and barely exported $31 billion only demonstrates that its elite’s had led its people to the brink of macro economic meltdown since its products, other than labour are uncompetitive in the global economy. Pakistan has one of the lowest tax collection to GDP ratio in Asia and a subsidy culture that only benefits a small elite, both civilian and military.

Imran Khan had left a landmine for his rivals with his unsustainable 150 rupee a litre petrol price, a subsidy which cost the exchequer billions and sabotaged the last IMF program. The Russian invasion of Ukraine and surge in Brent above $130 coincided with PDM government’s removal of the petrol subsidy, the reason the energy prices and inflation have spiked. The misery of Pakistan’s poor and powerless masses, who have always been defined in the image of the powerful in one of the most callous and unequal societies in the world, is palpable.

Foreign exchange reserves at the State Bank are now $9 billion, barely enough to cover imports by two months. I believe finance minister Miftah Ismail when he asserts that an IMF bailout will avert sovereign default but even $4 billion in loans from the Bretton Wood twins will not improve Pakistan’s structural economic woes, led by a fiscal black hole, a chronic current account deficit, a surreal taxation regime and parasitic feudal, political and Pretorian elites. This time the wolf is here even though the slight rise in the rupee to 224 indicates that an IMF bailout is a done deal.

In the Cold War and war on terror, Pakistan was a geopolitical too big to fail state for Washington, Abu Dhabi and even Beijing. I wonder if this is still the case now that the US has done a cut and run from Afghanistan. The IMF’s austerity diktat may avert the fate of Sri Lanka for now but millions of impoverished Pakistanis are condemned to a Hobbesian life that is “brutal, nasty and short”. Pakistan desperately needs to peace with India and a zero tolerance policy against the religious zealots who have only given terror and death to its people and made a shameful mockery of Jinnah’s promise to protect its minorities. The alternative is a peasant revolution akin to the Taliban or Maoist takeover in China.

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Indubitably, Pakistan is nowadays passing through one of the most turbulent periods in its recent history. On the surface, it is a serious political turmoil. But, intrinsically, it is an amalgamation of financial and political tribulations which are dragging the country into the slough of uncertainty. The whole saga started in mid-March this year, when the Opposition submitted the no-confidence motion against former Prime Minister Imran Khan in the National Assembly. Since then, the political arena of Pakistan has been witnessing many swirling ups and downs on daily basis for all the players, but there is only person who is finding himself being continuously whirled into the quagmire of despondency and anguish, without any hope of respite in the near future. This is none other than Prime Minister Shehbaz Sharif. Every stakeholder has gained something out of the existing political turmoil – all the political parties in the Pakistan Democratic Movement (PDM), the ruling coalition, except the Prime Minister’s own party Pakistan Muslim League -N (PML-N), have relatively bigger share in the federal cabinet and other lucrative postings. Ironically, Imran Khan too, despite losing the premiership, has emerged as the biggest beneficiary of this episode by successfully diverting attention from his extremely dismal performance as the PM to his new agitation movement against the current coalition government, with a new tagline of “imported government – na manzoor” (imported government is unacceptable).

Former Prime Minister has openly alleged that the United States conspired with the Pakistani establishment and PDM (current ruling coalition) to topple his government through a no-trust motion. That’s why he has labelled the current coalition regime as the “imported government” because it was planted by Washington through a conspiracy with the help of the establishment (army).  This is a seriously dubious allegation without any tangible proof and it has been categorically refuted by the White House as well as the spokesperson of the Pakistan Army. But Imran Khan has made this allegation as the main mantra of his protest campaign after his dismissal through a no-trust motion in the parliament. And now he has been demanding early general elections. Interestingly, it is the same establishment that was considered to be his main patron till March this year and which also blatantly helped him to become the Prime Minister after his 22 years of straying in political wilderness.

The reality is that Imran Khan was already in hot waters due to his inefficient financial management of the country. At the start of 2022, when the public resentment was picking up momentum against the astronomical inflation, continuous devaluation of rupee and bad governance, it was all clear that Imran Khan would have a very tough time at the annual budget session in June and political analysts had already started talking about his dwindling chances to survive after the annual budget session. The removal from power before the budget session has actually proven a blessing in disguise for Imran Khan, whose popularity is now inversely soaring high because of a very effective protest campaign that is playing the sympathy and patriotism cards against the so-called imported government. He has been conducting unabated protest gatherings, press conferences, media interviews and image-building through social media platforms ever since he was thrown out of the PM house in April.

In the last days of the PTI government, the value of rupee was melting fast, commodity prices and petrol prices were jacking up on almost weekly basis, Imran Khan was in deep mess and it was expected that after the 2022-2023 budget the PTI government would not be able to survive against the disgruntlement of the public any longer.  All was set for the “natural political demise” of the PTI government. The Opposition had to just wait for few more months and the PTI would have been out of the corridors of power under the extreme public pressure against the high inflation, fuel prices and eroding value of rupee. In the absence of good financial managers – courtesy the long list of incompetent and clueless heads of the PTI’s finance team – Imran Khan changed 4 finance ministers in the last 2 years- the PTI government had actually no concrete plans to salvage the country from impending financial catastrophe.

The Opposition, particularly the leadership of PML-N, needed a little more patience for few months to let the erosion of the PTI government to take its natural course. But the Opposition – the PDA to be more exact – showed unnecessary haste in getting rid of Imran Khan at a very wrong time, though for all the right reasons. Till April, it was clear to everybody, even to the common men in the streets, that the country was heading towards a massive financial crunch after the budget session.

Everyone was expecting that the currency devaluation will be drowned to new lows, fuel prices will cross the Rs.200 mark the imposition of the IMF dictation will make it almost impossible for any finance head of Pakistan to steer the economy out of this vicious circle in the near future. Writing on the wall was very clear in early April; the uncontrollable storm of inflation, price-hiking, electricity distribution disruptions and unemployment will eat up the political career of Imran Khan. But instead of showing some patience, the PML-N leadership toed the line of the stalwarts of the PDM like Asif Ali Zardari and Maulana Fazalur Rehman who wanted to get rid of Imran Khan as quick as possible.

While Mian Nawaz Sharif, former Prime Minister and chief of PML-N, was also fiercely against removing Imran Khan before the budget session. Now the question is what prompted Mian Shehbaz Sharif, against the advice of his elder brother Mian Nawaz Sharif, to jump into the fray and take up such a step, which can at best be described as “utterly rash” at a time when economy was heading towards massive crisis. Asif Ali Zardari (husband of Benazir Bhutto and co-chairman of the Pakistan People’s Party and Maulana Fazalur Rehman (head of Jamiat Ulemai Islam – F)– the two main players of this episode – had their own venal reasons to persuade the PML-N leadership to join hands in uprooting Imran Khan and replacing him a with a coalition set-up under the leadership of Mian Shehbaz Sharif before the budget session. Obviously, there was also a go-ahead from the powerful establishment to dislodge Imran Khan hastily. Both Asif Ali Zardari and Fazalur Rehman had nothing to lose in this game. In case of failure of the no-confidence motion, the whole embarrassment would have been smashed in the face of the PML-N, and in the case of success, as it happened eventually, the whole credit would be given to Asif Ali Zardari and Maulana Fazalur Rehman. This is exactly what happened, both Asif Ali Zardari and Maulana Fazalur Rehman are now averring the credit for staging a successful parliamentary coup against Imran Khan. Both have major share in the power structure after the formation of the new government, both have their sons in the federal Cabinet and both are now keeping a low profile and letting Shehbaz Sharif alone to face the music and take the blame alone for the fuel price hike and sinking rupee.

Prime Minister Shehbaz Sharif is the only person who is facing the brunt of the harsh realities of running a government with both hands and pockets tied. The rupee devaluation against dollar has crossed a Rs.210, the petrol prices have also followed the dollar, electricity distribution is getting out of control in this blistering summer and commodity prices are skyrocketing. All the right ingredient to make any government highly unpopular. Most of the financial and technical experts agree that these landmines were planted by the inept and incompetent finance team of the PTI government, which made delayed and faulty financial decisions that dragged the country into this financial imbroglio. But now PM Shehbaz Sharif, not other partners of his coalition government, is being blamed for his inability to control the unabating financial predicament. PM Shehbaz Sharif was well aware of the impending financial crunch and its fallout on the popularity of the PML-N. Mian Nawaz Sharif was also seriously against tabling the no-confidence motion before the budget session. But both Asif Ali Zardari and Maulana Fazalur Rehman shrewdly exploited the old, burning desire of Mian Shehbaz Sharif to wear the cap of premiership and convinced him to strike Imran Khan out of power in April, which has so far proven to be a miss-timed stroke for PM Shehbaz Sharif.

The overtly over-confident Prime Minister Shehbaz Sharif, famous for being a hard task master with a hefty track record of initiating and completing “projects” within the tight deadlines, was relying on his traditional style of brinkmanship to control the situation within few weeks. But the ground reality is that the financial mismanagement of the previous government as well as existing snags of global economy have created so much mess that it will take years to put the things back on the track. As for today, a common man does not understand, nor he wants to understand the technical complications of domestic and global economy. This is the simple reality. As expected, owing to the tough monetary constraints and the stringent IMF conditionalities, the 202-2023 budget presented by the coalition government does not offer any tangible relief for the people at large. Apparently, PM Shehbaz Sharif and his core team have no concrete plan to offer some respite for the common man in the immediate future.

Post-budget months are going to be very tough for PM Shehbaz Shari: the inflation-related pressures on the lower and lower-middle classes of society will engulf his popularity. On the other hand, Imran Khan is riding high, courtesy the extremely professional social media team of the PTI, on the wave of his resurgent popularity to create more problems for the government. Contrary to his questionable performance as the Prime Minister, there is no denying that Imran Khan has always proven to be the most formidable person as an Opposition leader – he will become more Khatar Nak (dangerous) in his own words. But PM Shehbaz Sharif is now in a fix. He can neither leave the stage at this time, nor he has anything tangible in his bag to resolve the immediate problems of the common man. This was the personal choice of PM Shehbaz Sharif to get rid of Imran Khan before the budget session.  Mian Nawaz Sharif was too adamant to listen to the persuasion of Asif Ali Zardari and Maulana Fazalur Rehman, who are now both hiding in low limelight. Th fact is that the 2022-2023 budget would have political weakened Imran Khan to the point of surrendering his premiership. In that case, situation would have been much conducive politically for Mian Shehbaz Sharif to take the charge of the government. However, on the other hand, Imran Khan is also treading on a rather dangerous path of direct collision with the establishment in his last-ditch effort to get assurance for early elections.

The article Pakistan in the slough of uncertainty appeared first on Arabian Post.

“We must be prepared for this to last for years. We must not weaken in our support for Ukraine, even if the costs are high” is how NATO Secretary General Jens Stoltenberg said in an interview with the German media this week, while referring to the possibility of the Ukraine war to be dragged to many years. So, a cursory glance at this statement would reveal two realities about the new thinking of the Western leadership towards the Ukraine war.

One, Washington and the European capitals are bracing for a low-paced conventional war in the southern and eastern parts of Ukraine in the coming months. And two, this also reflects that the NATO leadership is quite confident that the hardware and logistical support from NATO would be sufficient enough to galvanize the Ukrainian forces to not only sustain the Russian attack for a longer period but also to push back them from the Donbas region. Furthermore, it has given a kind of reassurance to the world that the war is likely to remain confined to a well-demarcated area – with little chances to escalate to other parts of the European continent – perhaps the biggest fear of the inhabitants of the European continent pertaining to the Ukraine war. This is quite in a contrast with the acutely grave situation that was observed in the first week of war when the Russian troops launched attack on Ukraine.

The panic was particularly aggravated by the February 27 order of Vladimir Putin to Russia’s nuclear forces to move to a higher state of alert. “Western countries aren’t only taking unfriendly economic actions against our country, but leaders of major NATO countries are making aggressive statements about our country. So, I order to move Russia’s deterrence forces to a special regime of combat duty,” declared Russian President Vladimir Putin to defense officials on the very next day after unleashing the  Ukraine invasion.

This was the first time since the demise of the Cold War that any top leader from Moscow or Washington had actually raised the specter of nuclear conflict.  At a time, when the Russian jets were already conducting aerial attacks on Kyiv, for obvious reasons, Putin’s statement, with regard to the readiness of Russian nuclear arsenal, pushed the panic buttons in the Western capitals. The situation appeared to be too grave at that time and the NATO leadership took Putin’s words too seriously and started working on the counter plan to preempt and retaliate in the worst-case scenario. The terror and horror were too thick in the air. However, it was divulged later that it was nothing more than a calculated ploy by Vladimir Putin to confuse the NATO leadership so as to gain a psychological advantage in the initial phase of the war and force President Volodymyr Zelensky to resort to the table talk.

As the war lingered on, it eventually became clear that Putin’s threat was similar to the tactical plan that was employed by the US President Richard Nixon in Vietnam to pressurize the North Vietnamese and their supporters in the Soviet Union to move them to the negotiating table. Interestingly, in October 1969, President Nixon, in consultation with his national security advisor Henry Kissinger, secretly ordered the Pentagon to place the US forces on high alert globally to subjugate Hanoi and Moscow, But, both Nixon and Kissinger failed in their plan and they had to actually change their whole strategy in Vietnam after the failure of “hollow” nuclear threat. Vladmir Putin’s nuclear threat, however, has rekindled a new debate in the academic and security circles about the possibilities and fallout of a global nuclear.

Technically speaking, Putin’s order to his nuclear forces was just a preliminary nod to the control and command system to be in the “working conditions” only. It never implied that Vladimir Putin was preparing its nuclear arsenals to strike first. It was all part of his long-term plan, which also included a gradual de-escalation pathway, so that the Ukrainian government could be forced to resort to the negotiating table to extort maximum territory without wasting resources in the war. Putin was well aware of the fact that NATO, despite its constraints, will go full throttle to support the Ukrainian army to bolster its strike power against the Russian positions and then war will be dragged over many months. His strategy was to compel Ukrainian President Volodymyr Zelensky to the table talk in the first phase of war and extract maximum out of him at that stage.

However, NATO’s support and realignment of the Ukrainian army emboldened Zelensky and his team to discontinue talks with Moscow. Nonetheless, Putin’s threat has given birth to many new questions about the nuclear war and its implications on the global power structure. Two times in recent history, Vietnam in 1969 and Ukraine in 2022, the nuclear threat was used against two non-nuclear states, and in both the cases it failed to yield the desired results.

So, do the nuclear arsenal give enough leverage to bully a non-nuclear state in today’s global power structure? Is the nuclear war a possibility in the near future?  Are the global non-proliferation agreements and treaties between the nuclear powers like New START (between the US and Russia) enough to safeguard against any accidental or deliberate nuclear outbreak? How to discourage the nuclear powers from producing the short-range battlefield nuclear weapons? Will Putin’s threat result in pushing the non-nuclear countries to renew their nuclear programs and secretly pursue the weapon-grade nuclear proliferation? This episode has opened a plethora of similar questions on the nuclear weapons proliferation and its short-term and long-term implications on the global power structure.

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As the 5% crude oil plunge in both WTI and Brent on fears of Omicron demand shock demonstrates, the fate of the virus is inextricably linked to global economic growth, Fed policy and thus commodities returns. Yet thanks to black gold’s stellar performance the GSCI Energy index was a winner in 2021, up 47%. Even Brent rebounded 4%  to 74 a barrel in its own version of a Santa Claus rally and the steepening of the UST yield curve with the 10 year Uncle Sam IOU at 1.49% suggest that the bond market has concluded that virus angst precludes aggressive Fed monetary tightening.

The rise in the US dollar and speculative alternatives like crypto currencies meant that the GSCI Precious Metals index was a yawner/loser, down 6% in 2021. Despite the spectacular EV revolution, silver was down a dismal 17% as it is hyper correlated to global central bank tightening and Chinese GDP growth deceleration. Yet if the steepness of the yield curve continues, gold and silver may well get a pop as the markets conclude that the Fed’s tolerance for negative real interest rates will not end despite Powell’s hawkish tilt on Capitol Hill/FOMC boardroom.

As I expect an escalation in US-Russian geopolitical risk over Ukraine/cyber espionage, it is entirely possible that Washington pressures the new German Chancellor to ban the Nord Stream 2 pipeline. This could wreak havoc in the European gas market and thus be a great opportunity to take advantage of the 35% slide in natural gas since last summer. It does not seem as if the US-Iran talks in Vienna on a revived JCPOA will be successful, as Raisi’s hardline IRGC generals position him to succeed Khamenei.

The point of maximum danger for a potential Russian invasion of Ukraine is in January or February as General Winter has been the biggest asset of the Kremlin at war, as was proven in the fateful winters of 1812 and 1941. This event could be a game changer in both crude oil, natural gas and the world financial markets as a post-Kabul Biden White House will respond with draconian economic sanctions on the Putin regime.

I also doubt if OPEC+ has the spare capacity to act as the world’s white knight if a Ukraine invasion triggers panic buying in the global wet barrel market. My favourite commodity remains Dr. Copper for all kinds of reasons, both short term and structural.

Agflation is another theme in the commodity markets but I am morally reluctant to try to make money in wheat, corn and meat futures since millions of human beings face the very real threat of starvation. A close diplomat friend who knows Afghanistan and its odious Taliban regime tells me that the colossal incompetence of the mullahs means 95% of Afghans now face food insecurity and that 3 million deaths from famine would not surprise him. Those who cheered the Taliban’s victory in August, led by Imran/Taliban Khan and his Pretorian cheerleaders have a lot to answer to history for their immoral policies. Who will feed the children of Afghanistan now?

Matein Khalid is Strategic Advisor with Asas Capital, Dubai

The article A possible game-changer for crude, gas and financial markets appeared first on Arabian Post.

When Amazon, Boeing, Apple deliver Q3 earnings disappointments, it is time Matt-san scurries to the deck of the HMS Titanic as I hunt for the looming iceberg while my pals rearrange deck chairs on Interactive Brokers. The macro zeitgeist is not exactly reassuring either. Q3 US GDP was a pathetic 2%. Inflation metrics have gone ballistic. There are 10 million vacant jobs but 5 million Baby Boomers have left the workforce forever. A tax rise is inevitable. The Powell Fed has failed its dual mandate and is now dangerously behind the inflation curve.

Iron ore prices have plunged in China. The US national debt is $30 trillion. As the mother of all interest rate rise cycle begins with the Fed taper, I can easily envisage a 30% fall in at least eight emerging market countries I track, whose names I cannot reveal lest they deny me a visa. In one case, they could even revoke my passport and it is too much of a drag to pay AED 1 million for a St. Kitts replacement. Even though que sera sera for the Pakistani rupee needs no intervention or comment from me.

Imran Khan and his cabinet clowns have taken the rupee down to 170 and I can trust this absurd captain to navigate the rupee down to 220 against the greenback before General Faiz returns to the GHQ late next year. 2022 will be – like 1994, 1998, 2001, 2008 and 2014, an epic year to make money in emerging market FX.

The S&P 500 trades at 23X earnings on the eve of a Treasury bond yield curve flattening and a desperate Fed’s me too monetary tightening. I know that bull markets climb a wall of worry but I do not have faith in my ability to climb, let alone pole vault over the Great Wall of China. In any case, the history of communism tells me those who try to climb walls in the Socialist Paradise usually end up with a hole in the head as anyone from East Berlin to Beijing attest. In America, you always hunt for a party, in China, the Party hunts for you as comrade Jack Ma will surely agree. So get real, get hedged, get out and get in.

Matein Khalid is Chief Investment Officer at Asas Capital

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Matein Khalid

The civilized world watches in horror as the Taliban flogs women on the streets of Kabul with whips and cable wire, maims arrested journalists with truncheons and reinstates the Ministry of Virtue and Vice. The religious police that carried out executions, amputation, beheading and stoning to death of women that so disgusted the world in 1996 to 2001.

It is also no coincidence that Afghan men and women are protesting at Pakistan’s interference in the streets of Kabul and outside Pakistani embassies all over the world. Their chant of “marg bar Pakistan” (death to Pakistan in Dari) is an eloquent testament to their hatred of Islamabad’s 45 year track record of supporting the most regressive, primitive mullahs in Afghan society. Pakistan lost 70,000 lives when the Taliban offshoot TTP launched a war against the Pakistani state in Swat/North Waziristan.

For any rational person to celebrate the return of the Taliban regime in Kabul is an act of shamelessness and self delusion. Kabul has now replaced Raqqa in Syria, the capital of the defunct Daish caliphate as the epicentre of Jihadi terrorism whose sinister shadow has only meant mass death and tragedy for dozens of nations worldwide. No wonder Al Qaeda has publicly congratulated the new Taliban regime after all its members include the son and aides of the same Mullah Omar who once hosted Osama Bin Laden after he was expelled from Sudan and began his reign of terror against the West that culminated in the horror of 9/11.

I was attacked by many compatriots who agreed with Imran Khan’s idiotic conviction that the Taliban were a force for good in Afghanistan and thus deserved Pakistan’s support. The new Afghan government proves that Im the Dim justly deserves his nickname Taliban Khan.

The self-styled Emir is Mullah Akhundzada who ordered hundreds of beheadings in his role as the Taliban’s top jurist. The new Emir’s son was not an Oxbridge or Ivy League graduate but a suicide bomber who died storming a base in Helmut. The Interior Minister is a world class terrorist who is on the FBI’s most wanted list and a top warlord of the Haqqani Networks. Mullah Yaqoob, the Defence Minister is Mullah Omar’s son.

It is also no coincidence that the 34 members, all male, all Pashtun and all mullah éminence grise do not remotely represent the linguistic, ethnic, religious and gender diversity of the country they now hold hostage in their theocratic grip. If the Taliban model of governance and male fashion sweeps the world, I strongly recommend shorting Gillette shares on Wall Street for obvious reasons as to paraphrase Andy Grove, only the hirsute survive.

John Major is absolutely right, the US abandonment of the elected, secular Afghan government is as morally wrong as it is strategically insane. Taliban 2.0, like Taliban 1.0 retains its terrorist DNA and will turn Afghanistan into the Las Vegas of global terror. What happens in Vegas stays in Vegas but what happens in Talibanistan will not stay in Talibanistan.

Matein Khalid is Chief Investment Officer with Asas Capital

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Matein Khalid

The terrorist DNA of the Taliban is proven now that Sirajuddin Haqqani, a warlord with the blood of thousands of innocent Afghans, NATO soldiers and foreign diplomats on his hands that earned him a place on the FBI’s most wanted list, is the Interior Minister of the Islamic Emirate of Afghanistan.

The regime, like the post Napoleonic Bourbon Kings of France, has forgotten nothing and learnt nothing from its sordid past. The world’s chancelleries should not recognize such despicable mullahs who led Afghanistan become a petting zoo for the world’s most criminal terrorist gangs.

The legitimate acting President of Afghanistan is Amrullah Saleh, who represents an elected, secular government recognized by the United Nations.

The Taliban regime faces financial meltdown as no government in Kabul is sustainable without billions in US, British and EU annual aid. The IMF and the World Bank have frozen all loans to the Taliban regime, $9 billion in Afghan’s central bank reserves are inaccessible to the mullahs. The Taliban’s emissaries have begged Indian ambassador Deepak Mittal to arrange an emergency loan against iron ore reserves but there is no way the BJP government in New Delhi will ever do deals with a Taliban that once hosted Maulana Masood Azher, the terrorist behind the Indian Parliament attack and the Lashkar-e-Tayyiba who slaughtered 168 innocent civilians in South Bombay.

President George W. Bush’s decision to invade Afghanistan in October 2001 to overthrow the regime that hosted Osama Bin Laden was the best thing that ever happened to the Afghan people in modern times. There were 100,000 students in Afghanistan in 2001, all boys in Taliban run madrassas. There are now 9 million students in Afghan schools and universities, including 4 million girls and women whose future under the Taliban mullahcracy is now tragically uncertain.

The Afghan population rose from 20 million to 38 million in the past two decades and life expectancy increased by 22 years. America spent $2 trillion dollars trying to bequeath a decent life to the impoverished masses of Afghanistan. But alas their future is as Malthusian as the fate of Al Shabaab’s Somalia and Houthi Yemen.

My friends in Washington tell me that the US and Britain are enraged at Imran Khan, put into office by the same military Generals who created, armed and hosted the Taliban since the 1990’s. Economic sanction and FATF black list and pressure on US allies in the Gulf oil states to cut aid on Islamabad and diplomatic isolations now faces a near bankrupt Pakistan.

This may explains why the rupee has begun to drop, now that Uncle Sam no longer needs Pakistan for its Afghan war air/ground supply logistics, it is inevitable that the US will punish Pakistan for the ISI’s close linkages with the Taliban and Haqqani terrorist networks. Whatever ISI DG General Faiz, was doing in Kabul, he did not bring the Taliban the billions of dollars they crave. ISI is not Santa, unlike Uncle Sam!

Matein Khalid is Chief Investment Officer with Asas Capital

The article Taliban regime faces financial meltdown appeared first on Arabian Post.

Imran Khan described the fall of Kabul as liberation, I wonder if he has seen the images of desperate Afghans trying to flee their “liberation” by the odious Taliban – mothers handing over babies over the razor wire, the country’s best and brightest coming back to the airport after the savage suicide bomb attack, which was the Taliban’s modus operandi to slaughter the citizens of Kabul for the past 20 years.

I wonder how any human being with a shred of shame or decency can support a medieval, murderous and misogynist gang that flogged/stoned women, poisoned school girls, executed female teachers, amputated limbs and massacred ethnic minorities as a credible national liberation movement.

Every utterance of Imran only reinforces his nicknames of Im the Dim/Taliban Khan. Im even rejected a bill by feminist Pashtun legislators in the KP province to ban husbands from beating their wives (domestic violence) to appease his mullah fans.

Is this the kind of politician the West/civilised world can morally support? Who created the armed Taliban in the mid-1990’s and hosted their leadership in Quetta in the first place? The same Pretorian ghosts (or angels in Urdu) who overthrew an elected Prime Minister via a judicial coup and put Imran in his place.

It is repulsive that the Taliban handed over the security in Kabul airport to Sirajuddin Hakkani, a warlord from one of the most homicidal terrorist groups in South Asia. ISIS Khorasan is nothing more than the rebranded name of a breakaway faction from Mullah Radio’s TTP gang in Waziristan. The concept of a moderate Taliban is an oxymoron, no matter what propaganda Imran Khan dishes out to his brain washed acolytes.

Taliban will not be able to resurrect a robust Afghan state in such a fragmented, violent milieu and provide even basic services for 38 million people without the tens of billions in an annual aid lifeline from the US and EU tax payer.

I just hate to think what will happen to the 4 million girls enrolled in Afghan schools whom the Taliban had once banned from education. What will happen to the Afghan war widows who’s jobs made them the sole breadwinners for their impoverished families? An embryonic anti-Taliban resistance has already emerged in the Pangsher Valley, led by Amrullah Saleh and the brothers of the slain Ahmad Shah Masood, murdered on the eve of 9/11 by Al Qaeda suicide bombers on the orders of Mullah Omar.

President Biden must now atone for his grave error in rejecting the advice of SecDef Lloyd Austin and Centcom top brass on the logistics of the bungled evacuation. POTUS will compensate with military action on a massive scale to offset the calls from Republicans in Congress for his impeachment/resignation even as his approval ratings plunge. A US Navy aircraft carrier is off the Makaran Coast and JSOC special forces are on the hunt for the terrorists who murdered all those innocent people last week in Kabul.

Uncle Sam will now exact his terrible revenge, badal in Pashto.

The article A medieval, murderous, misogynist gang appeared first on Arabian Post.

By Matein Khalid

The horrific fall of Kabul to the Taliban is an indictment of both the systemic corruption that plagued the Ashraf Ghani government and the policy incompetence of the Biden White House in a critical stage of the war.

In retrospect, the US had no business negotiating with the primitive savages of the Taliban who have never severed their links with Al Qaeda and ISIS terrorists still on Afghan soil.

This geopolitical shock will not derail the Wall Street bull market as Afghanistan is an economic pigmy and plays no role in world finance, other than the lucrative opium/heroin money laundering business. Yet it could have second round effects if the erosion of Biden’s political capital also erodes his legislative agenda, notably the infrastructure bill.

The immediate impact should be a higher US dollar as safe haven buying of US Treasury notes continues, flows also stimulated by the spike in global delta variant cases and the weak Chinese industrial production data. This will mean pressures on energy and metal stocks but should not have a major impact on sectors like technology or consumer discretionary.

The other impact of geopolitics could be a higher risk premia on Taiwan assets as the US abandonment of Afghanistan has gone unnoticed in Taipei, under existential threats from a PRC that still calls the islands its renegade province.

Second loser of the events in Kabul is Pakistan as its military intelligence agency ISI which created and armed the despicable Taliban since the mid 1990’s. It is only a matter of time before the Taliban regime in Kabul exports terrorism and secessionist violence to Pakistan’s own 25 million Pashtuns and makes a mockery out of the Durand Line that not even Mullah Omar ever recognised.

The Pakistani Taliban (TTP) created a reign of terror that caused Islamabad 70,000 lives and more than $100 billion in economic losses. It would be a tragedy if Pakistan was again engulfed in civil war and a Pashtun revolt as the military is still deployed in Waziristan.

The Taliban victory could also harden Western attitudes to funding Pakistan via the IMF and the FATF could blacklist the state for terror financing. Pakistani Prime Minister Imran Khan has been a consistent apologist for the Taliban and shares some of its misogynist attitudes on women, despite his playboy past in Annabels and Stringfellows.

Russia and China both celebrate the Taliban’s victory in Kabul but I am certain that their leaders will regret the day they embraced these religious fanatics as they will foment political dissent in Central Asia and Sinkiang.

I feel really sorry for the millions of Afghan men and women who believed in the promise of rational, liberal values under the ages of Uncle Sam. They were betrayed by Trump and Biden at the altar of political expediency. Thousands of American, Brit, Australian, German and Afghan combat troops died fighting the “forever war” in Afghanistan. What did they die for? Sadly, they died for nothing.

Matein Khalid is Chief Investment Officer with Asas Capital

The article Ghani corruption plus Biden incompetence = fall of Kabul appeared first on Arabian Post.

By James M Dorsey

Widely seen as a populist with ultra-conservative inklings, Pakistani Prime Minister Imran Khan increasingly appears to reinforce widespread traditionalist attitudes that reject religious tolerance as well as the rights of women and minorities.

In doing so, Mr. Khan is aligning Pakistan in religious and social terms closer to Turkey than his country’s traditional allies, Saudi Arabia and the United Arab Emirates. Turkish President Recep Tayyip Erdogan has bolstered religious education at home as well as in Turkish schools abroad and recently withdrew from an international women’s rights convention.

Mr. Khan’s foreign minister, Shah Mahmood Qureshi, reportedly was scheduled to meet this week in Islamabad with Saudi Minister of State for Foreign Affairs Adel Al-Jubeir amid concern about regional security as US forces withdraw from Afghanistan and the Taliban rapidly gain ground.

Saudi Arabia, once a bulwark of religious ultra-conservatism, has, like the United Arab Emirates, sought to shave off the raw edges of its long-standing austere interpretation of Islam, liberalize social mores, enhance women’s mobility and professional opportunities, and position the kingdom as a proponent of a moderate form of Islam that highlights religious tolerance and inter-faith dialogue while supporting autocratic rule.

Except for his empathy with authoritarianism, Mr. Khan appears to be going in the opposite direction. In doing so, Mr. Khan can dip into a deep reservoir of ultra-conservatism in Pakistan that was fueled in part until the rise in 2015 of Crown Prince Mohammed bin Salman by decades of Saudi financial, material, and religious support.

Last month, the prime minister pushed the implementation of educational reform that would Islamicize syllabi across the board from primary schools to universities. Arabic would be mandatory for the first 12 years of a child’s schooling. Critics charge that religion would account for up to 30 per cent of the new syllabus.

Fueling controversy, Mr. Khan recently blamed increased sexual violence in Pakistan on women who failed to dress properly. “If a woman is wearing very few clothes, it will have an impact on the men, unless they are robots. It’s just common sense,” Mr. Khan said.

The prime minister went on to say that the practice of wearing a veil existed so “that there is no temptation in society.”

Earlier, Mr. Qureshi, the foreign minister, told CNN that Israel had “deep pockets” and was home to “very influential people” who “control media.”

When accused by the interviewer of employing anti-Semitic tropes and asked to condemn anti-Semitism, Mr. Qureshi sidestepped the question by saying: “I will not justify any rocket attacks…and I cannot condone the aerial bombardment that is taking place.” Mr Qureishi was speaking in May as Israel responded to rockets fired by Hamas, the Islamist group that controls Gaza, with a massive assault on the territory.

A recent explosion in Lahore that killed three people and wounded 27 others appeared to suggest that there could be regional consequences to the ultra-conservative moves. The explosion was seen by analysts and officials as India warning the government not to ease a crackdown on Islamic militants who long did Pakistan’s bidding in disputed Kashmir.

Mr. Khan’s national security advisor, Moeed Yousuf, said an investigation had concluded that the explosion was a car bomb planted by Indian intelligence near the home of Hafiz Saeed, a leader of the outlawed Jamat ud-Dawa and founder of Lashkar-e-Taiba, another Kashmir-focused group banned as a terrorist organization.

It was not immediately clear whether Mr. Saeed was at home at the time of the explosion. Sentenced to multiple prison terms on terrorism-related charges, some sources suggested that he had been allowed to serve time under house arrest.

Without identifying India by name, Pakistan’s Punjab province police chief, Inam Ghani, said a United Arab Emirates-based Pakistani national had recruited local Pakistanis to place the bomb.

The UAE mediated earlier this year a revival of a lapsed ceasefire between India and Pakistan along the Line of Control that divides Kashmiri into an Indian and Pakistani-controlled bit. The line often was a flashpoint along which Pakistani-backed militants operated.

A United Nations-designated terrorist, the US Department of Justice has put a US$10 million bounty on the head of Mr. Saeed. Mr. Saeed is believed to have masterminded the 2008 attacks on multiple targets in Mumbai that killed 165 people.

The Financial Action Task Force (FATF), an international anti-money laundering and terrorism finance watchdog, recently refused to remove Pakistan from its grey watchlist because the country had not been vigorous enough in the prosecution of United Nations-designated terrorists.

Grey listing carries no legal sanctions but restricts a country’s access to international loans. Mr. Qureshi, the Pakistani foreign minister, estimated that the grey listing cost his country’s economy US$10 billion a year.

Mr. Khan’s ultra-conservative inklings suggest that Saudi and US hopes that Pakistan, the world’s second-most populous Muslim-majority country, may pave the way for the kingdom’s establishment of diplomatic relations with Israel by going first, is a figment of the imagination.

A former senior adviser to Mr. Khan denied days before the reported talks with Mr. Al-Jubeir, the Saudi minister, that he had secretly visited Israel for meetings with senior government officials.

Sayed Zulfi Bukhari tweeted “DIDNOT go to Israel. Funny bit is Pakistani paper says I went to Israel based on ‘Israeli news source’ & Israeli paper says I went to Israel based on a ‘Pakistani source’-wonder who this imaginative Pakistani source is. Apparently, I’m the only one who was kept out of the loop.” Mr. Bukhari resigned weeks before the tweet after being accused of abuse of power in a government report.

The issue of Saudi recognition of Israel is likely to be a topic in talks in Washington this week between US officials and visiting Saudi Deputy Defense Minister Prince Khalid bin Salman.

Saudi Arabia, in a move primarily targeting the United Arab Emirates, which last year established diplomatic relations with Israel, signaled its refusal to follow suit by altering its application of Gulf Cooperation Council (GCC) customs tariffs.

The kingdom said it was exempting from GCC preferential treatment goods that include components manufactured in Israel or made by companies fully or partially owned by entities on the Arab League boycott list because of their commercial relations with Israel.

The article Pak PM’s ultra-conservative inklings appeared first on Arabian Post.

By Matein Khalid

George Soros once observed “the big money in emerging markets is made when things go from Godawful to just plain awful”. So true. The point of maximum pessimism in an emerging market is often an opportune moment to accumulate its shares, ideally after a political, economic or financial systemic shock. I sold my entire Pakistan equities portfolio in summer of 2017 after the Supreme Court and the Praetorian powerbrokers in the Rawalpindi GHQ (“Prussia not a country with an army but an army with a country”. The French philosopher Voltaire once observed – and he died almost two centuries before the birth of the Land of the Pure on August 14, 1947!) sacked thrice elected Prime Minister Nawaz Sharif for his fondness for Mayfair luxury flats bought via Panamanian shell companies.

I knew the Pakistani rupee was grossly overvalued at 105 to the US dollar as Sharif had squandered $7 billion in State Bank hard currency reserves to maintain an inflated exchange rate. An inflated exchange rate enables the political/financial elite of a Third World state to loot the local economy, squirrel capital abroad and enjoy subsidized imported luxuries, like the proliferation of high end Benzies, Beamer and Range Rovers (Pajero is for plebs!) on the streets of Karachi, Lahore and Islamabad.

This unreal rupee peg to the US dollar would, I concluded, lead to a Mount Vesuvius scale volcanic eruption in the financial markets once the captains and kings in Islamabad changed, a dismal but recurrent theme in Pakistani history. So when Nawaz was sacked, I knew his game of monetary chicken on the rupee would end in tears and trigger a financial meltdown in Karachi equities. This is exactly what happened. The Pakistani rupee has plunged from 105 in 2017 to 160 (my target, published ad infinitum since August 2018) in the rupee and a ghastly 20,000 point fall in the Karachi 100 index to 32,950. We are now at the Godawful moment in Pakistani politics but destined for a “plain awful” future, a compelling argument for me to reenter the market. Why?

One, the $6 billion IMF extended fund facility is a game changer as it unlocks World Bank, Asian Development Bank, Islamic Development Bank and even sovereign Gulf loans. The IMF bailout package was also a prerequisite for Pakistan to issue another sovereign Eurobond, a prospect publicly announced by de facto Finance Minister Hafeez Sheikh. The IMF has distributed $1 billion to Pakistan as an initial tranche, double the 2013 initial payout.

Two, Pakistan is no longer in the geopolitical cross-hairs of a Trump White House eager to exit Afghanistan with a negotiated deal with the Taliban (to avoid a Saigon 1975 scenario in Kabul 2020), apply “maximum pressure” on Iran and ally with Saudi Arabian strategic interests in the Islamic world. This necessitates a softer line with Pakistan, the reason Prime Minister Imran Khan is in Washington on a state visit. This also means World Bank/ADB funding and no real risk that Pakistan is black listed by the Financial Action Task Force in September. Relations with India have also improved since the two successor states to the British Raj went to war last March after the terrorist attack in Pulwama.

Three, the ineptly executed, catastrophic 40% devaluation of the Pakistan rupee has led to an inflation spike 10%, which has caused the State Bank in Karachi (run by ex-IMF “our man in Cairo” Dr. Reza Baqir) to respond with multiple draconian interest rates hikes. Yet the State Bank policy rate could well peak at 14%. After all, the IMF forecasts inflation will fall to 8% by next summer and the real effective exchange rate (REER) on the rupee is near equilibrium value. Pakistan’s hard currency reserves are now a dismal $7 billion but the IMF believes central bank reserves will rise to as high as $18 billion by next summer. A Bretton Woods macro pipe dream? Sure, yet a perfect data point in my “Godawful to just plain awful” thesis. I live in a world of second derivatives as a trader in the global financial markets and I see economic, “blood on the streets”, Nathan Rothschild’s ideal time to buy!

Four, the tax amnesty defies everything the populist Imran Khan promised the impoverished masses of Pakistan and negates the ethos of an Islamic welfare state. Yet the amnesty generated $460 million in desperately needed revenue and bought $20 billion dollars in ghost assets into the tax net. True, Nawaz Sharif’s PLMN tax amnesty bought $800 million in tax revenue in 2018 but at least Imran Khan has finally grasped that politics is the art of the possible. Hopefully, Pakistan can improve its tax collection/GDP ratio to at least Sri Lanka/Bangladesh levels.

Five, Pakistan is on the eve of a major privatization program. Dr. Sheikh, after all, was a former World Bank executive and Privatization Minister in General Musharaff’s Cabinet. This, coupled with a laisse faire Foreign Direct Investment (FDI) regime can resurrect Pakistan’s moribund industrial sector and help ameliorate its external funding gap. Imran Khan also needs to drastically cut a 3.5 million government payroll and a black hole public sector expenditure that is 23% of GDP and a shocking 7% budget deficit.

Six, the London Daily Mail’s shocking exposé of systemic money laundering by the family of ex Punjab Chief Minister Shahbaz Sharif, Nawaz’s younger brother, seriously weakens the opposition at a time when even former PPP President Asif Zardari is also in jail for corruption. Imran Khan has broken the chokehold of the dynastic kleptocracy that defined the Bhutto-Zardari and Sharif rule since the late 1980’s.

Seven, the PSX 100 Index in Karachi is dirt cheap at 5.7 times forward earnings. I expect the rupee to be at 175 by year end as the IMF mandates a free float FX regime and the State Bank policy rate to peak at 14%. If I am right, Pakistani equities can rerate to 7 times earnings by next summer, their valuation level after the 2008 IMF loan disbursement. So the cosmic pendulum of risk reward tells me to accumulate rupee revaluation and peak interest rate beneficiaries. This means OGDC and United Bank Ltd., I see 40% upside on both shares as I ride the macro rollercoaster in Pakistan from Godawful to just plain awful!

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|By Matein Khalid| I confess, I fell in love with South Africa’s Cape Town, though not its Johannesburg Stock Exchange (JSE). 2018 has been an annus horribilis for both the rand and South African equities, with 30% losses for a US dollar investor, the fifth worse in the emerging markets. The euphoria after President Cyril Ramaphosa replaced Jacob Zuma early this year did not last as South Africa succumbed to the big chill of emerging market contagion, shock waves from the US-China trade war, a tough love Powell Fed, King Dollar’s rampage against the rand, a $3.4 billion exodus from JSE listed companies by offshore investors amid angst over the $30 billion debt accumulated by state utility Eskom in the Zuma era which happens to be guaranteed by the government. In addition, the rand plunged 14% against the US dollar as the economy slipped into recession, factory orders, exports and gold prices fell. South Africa was also collateral damage on Brexit fear, Washington’s tariff threats, the French riots, the Italian budget woes as well as the fact that the domestic cyclical slump that coincided with a global economic slowdown and the recent carnage on Wall Street.

The article Bullish case for South African shares appeared first on Arabian Post.

|By Matein Khalid|I am often asked by investors to articulate my “philosophy” of real estate investing. Tough question. My ideal deal is one where it is possible to buy brick and mortar assets at 60 – 70% of replacement cost. This usually occurs in the aftermath of a banking crisis or economic shock. This was the case in Florida homes in 2009 or Spanish office space in 2010. Another strategy is to “buy, fix and sell”. This was my rationale for East Kent homes as a proxy for King’s Cross, the biggest retail and office development complex in Britain since Canary Wharf and the Docklands in the Thatcher era. Now that towns like Ashford and Folkestone are linked to Kings Cross St. Pancreas by high speed link, rents will rise, bank mortgages will rise, commuter traffic and capital values will rise in East Kent.

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