Chinese financing spurs Pakistan construction boom

Steel and cement makers in Pakistan are expanding to meet demand as the “One Belt, One Road” trade route financed by China spurs construction with more than USD55 billion in infrastructure funding. The nation’s economy has grown at about 5 percent annually since 2013, encouraging domestic producers to lift production.

Pakistan’s steel output grew 23 percent to 3.6 million tons in 2016, the biggest gain among 40 nations, according to the World Steel Association.

Meanwhile, the construction sector expanded 13 percent in year ended June 2016, more than twice the pace in the previous 12 months, according to State Bank of Pakistan’s annual report. Rapid urbanization and rising income levels has left the nation with an annual shortfall of 500,000 homes, according to real-estate developer Arif Habib.

“Real-estate is the main engine for this growth, it has really picked up,” said Ayub Khuhro, chief investment officer of Karachi-based Faysal Asset Management Ltd., which has about 8 billion rupees in stocks and bonds. “The government is also willing to protect companies with anti-dumping measures.”

In February, Pakistan imposed anti-dumping duty on Chinese imports of galvanized coils and sheets for five years to aid producers in a nation where steel usage per capita is almost half of its neighbor India, said Agha.

Favorable industry policies aside, some family-owned companies are also tapping investor demand that made the nation’s stock market Asia’s best performer in 2016. Even so, less than half a dozen companies list each year in Pakistan, a country where many businesses are conservative in risk taking and often unwilling to open their books to public scrutiny. MDT/Bloomberg