TechLahore

Lots of stuff will happen in 2012, but the world will not end. Sorry Mayans! (Image credit: TheAtlanticWire)

2012 is going to be a very interesting year. Elections are coming up in two very important countries, Pakistan (in early 2013) and the United States (2012). The US’ confrontation with Iran has both countries making threats and accusations and heading in a direction that seems to be escalatory. Further, the US has retreated from Iraq and violence there seems to be at an upswing. As someone said, the US-Iraq war is over. Iran won. Then, we also have the NATO drawdown in Afghanistan which has led to much drama and desperation on the part of the ISAF and NATO forces; as we predicted last year, the US is now openly saying that the Taliban are not a US enemy, the Taliban leader, Mullah Omar, has been removed from the FBI’s most wanted list and US diplomats are now negotiating with the Taliban with no preconditions. In that the Taliban have not laid down their weapons and continue to control over 75% of Afghan territory, these negotiations appear to be more about NATO giving in to the Taliban position and figuring out how to withdraw in haste than the opposite.

And that’s just the geo-strategic picture. Lots of exciting technology is going to be introduced also this year, and all eyes are on Europe and America as the economic troubles enter their fifth year. Will this finally be the bottom and will we start heading in the right direction? I thought this would have happened in 2011, but I was wrong. So, what happens in 2012? Read on to find out.

Political and Geo-strategic Predictions

1. The PPP government in Pakistan will not be removed. They may choose to go for early elections once the Senate elections are completed, but no other force (Army, PTI etc.) will compel them to leave office. This will be good as it sets the tone for a long running democratic dispensation which self-adjusts to find a workable solution to governance in Pakistan.

2. The PPP will pull off a successful senate election, strengthening the President.

3. Memogate will not lead to Asif Zardari’s resignation.

4. Mitt Romney will win the Republican nomination.

5. Romney will come pretty close to removing Obama, but Obama will scrape through. Personally, with all of Obama’s broken promises and false mantras of change, we would rather Romney win in his stead, not because we support Romney, but simply because we feel there should be some accountability for such a disastrous and damaging run in office.

6. The PTI will emerge as a political force post the next election, but nowhere near the numbers being claimed by Imran Khan who has suggested that it will be a Tsunami and will take an outright majority. Not even close.

7. 2012 will mark Pakistan’s strategic goodbye to America. There is still lots of discussion about whether regular business-as-usual relations between Pakistan and the US will resume, but we don’t think they will in the foreseeable future. In fact, the NATO massacre of Pakistani troops precipitated what had to happen anyway. Pakistan has simply had enough of the US pushing it around and asking for “more” when the US themselves, along with all their other allies, have done far less than Pakistan in prosecuting the WoT. The absolutely false claims of $20B in “aid”, which have been made repeatedly, have done nothing other than simply insult, irritate and anger both the Pakistani establishment and its populace. First off, it’s not as if this $20B was the figure of assistance for any single year. This paltry sum, which pales in comparison to the $600+B annual US defence budget, and the $1T+ spent on the lost war in Afghanistan, covers TEN years of supposed (and imaginary) assistance to Pakistan. Second, $20B have not actually been transferred, so the figure itself is nonsense. Third, the bulk of the money actually dispensed by the US has been for reimbursements, i.e. money ALREADY SPENT by Pakistan which the US OWES it. Fourth, the rest of this money has been spent through US agencies, contractors and mostly, on US goods. This means the effective value of every $1 spent by US AID is probably less than 25c of benefit to Pakistan. With the hefty, fees due to overpaid American consultants and vendors along with the unnecessary spending on transportation, very little actual benefit is accrued. In a nutshell, the real value of all US “AID” to Pakistan stands probably at 2-3% of the $80+Billion Pakistan has lost in the WoT. To top off the monetary exploitation, Pakistan has been bullied, the US press and media have been used as a veritable weapon in an unrelenting disinformation war against Pakistan and Pakistan’s interests (e.g. the IP(C) pipeline with Iran), on fundamental issues unrelated to the US or the WoT, have been repeatedly threatened. This simply cannot go on. We also believe that the death of this last US-Pakistan alliance will lead to Pakistan’s migration into the Asian camp, where it will work increasingly in concert with Russia and China in future, and will never again (at least for the next 30-50 years) consider an alliance with America.

8. Despite rumours, Gen. Pasha and Gen. Kiyani will not secure further extensions.

9. The bluster doesn’t past muster. The US will not attack Iran in 2012.

Technology Predictions

1. Windows 8 will be a significant force this year. It will rekindle interest in Windows as a consumer OS as a large number of tablets and phones will support it. 2012 is when Microsoft will really launch its counterattack against Apple, but unlike in the past, this will not be based on stealing marketshare from the iPhone, but grabbing as much interest from non-Smartphone and Blackberry users as possible. Windows Phone applications will touch 100,000 by the end of the year.

2. Microsoft will buy Nokia’s Smartphone division.

3. RIM had a terrible year, but the new Blackberry 10 products will begin to stop the bleeding. RIM still provides the most secure solution, and it is generating north of $5B in revenue every quarter, so it is a force to be reckoned with. There will be a lot of discussion around a RIM acquisition in 2012, but it will not happen.

4. Android will continue to grow at the expense of the iPhone and most of all, Symbian and RIM. In the end, though, we don’t quite understand what Android does for Google. In many respects, the fundamental desire Google had of owning the endpoint to ensure that access to its services would be smooth and uninterrupted, seems premised on the assumption that non-Google OSs somehow wouldn’t allow access (or at least, fair, open access) to Google. I am not sure this makes much sense, since Google services are available and used on all non-Android OSs. Either way, Android is definitely going to grow market share in 2012, probably by another 5-10 points.

5. Ultrabooks are going to be BIG this year. They will also, in concert with Windows 8, lead a PC renaissance which should stem Apple’s growth on the PC/Laptop side of the house. My gut tells me that Apple’s desktop/laptop marketshare will grow at 60-70% the rate at which it grew in 2011. Ultrabooks will put a dent…

6. The next iPad will come out with a) 2-3MP display resolution b) reduced entry level model price c) Siri integration d) dual core 1.2+Ghz processor. However, momentum for non iPad tablets will continue, especially with the advent of Windows 8 slabs. By the end of 2012, less than half of all tablets sold will be Apple iPads.

Financial Predictions

1. The KSE will post 10% growth this year. First, as explained below, the favourable USD-Rs. exchange ratio will make Pakistani stocks cheaper for foreign investors, and second, the continued reduction of WoT related violence inside the country will bring the stability necessary for growth in investor confidence. If it weren’t for 2012 being the run-up to an election and numerous political events punctuating the year (Musharraf’s return, court proceedings, PTI “jalsas”, Senate elections, pre-election politics and so on), this number would have been higher. In part, growth will also be helped by the beginnings of a global recovery in 2012.

2. The Pakistani Rs. will touch an exchange rate of Rs. 95 to $1 USD during the year. It may go as high as Rs. 100, but 95 is within reason. Some repayments to the IMF are coming up which will pressure the foreign reserve. We’ll get through it without all that much trouble, but a rise in the exchange rate can be safely assumed.

3. The Dow will show modest growth, around 5% for the year. The early part of 2012 will be marked with some optimism, with a dip hitting the middle of the year. The last few months of the year will show a recovery powered by fundamental improvements in economic indicators such as the unemployment rate, and some control over federal spending finally kicking in. The huge amounts of cash on corporate balance sheets also need to be spent at some stage and if 2012 looks safe, CFOs will let go of the purse strings, kicking off M&A and spurring some market growth.

4. Pakistan’s GDP will grow at about 4% during 2012.

5. There will be a reduction in the unemployment rate in the US, probably by about .3-.5%, ending at about 8.2% or so in December 2012.

6. Netsol touched a peak in 2011 and then fell to the ground in terms of stock value. 2012 will see improvement, but a peak of $1 is probably optimistic. Nonetheless, some money can be made on Netsol if it is bought around 40c and sold when it approaches 60-65c during 2012.

[Techlahore takes no responsibility for any financial projections or stock predictions. We are not advocating the purchase or sale of any security and are providing our opinions purely for general interest purposes. The reader assumes all responsibility for all his/her financial decisions, including the sale or purchase of any security.]

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