Goldman , Franklin-Templeton Bet on Pakistan's Future

[RiazHaq]

Pakistan's KSE-100 stock index surged 50% in 2009, a year that also saw the South Asian nation wracked by increased violence and its state institutions described by various media talking heads as being on the verge of collapse. This is the kind of performance that has got the attention of some of the top investors and investment firms around the world. Not only has Goldman Sachs reaffirmed Pakistan's place on the list of its top 15 emerging economies for 2010, smart international investment gurus are investing in Pakistan. For example, Mark Mobius of Franklin Templeton International Funds recently said he is "overweight compared with everyone else" in Pakistani stocks.

Ron Rowland, a researcher at Weiss Research, believes that the world is going to hear a lot more about the "Next 11", a group of 11 nations beyond the four "BRIC" nations of Brazil, Russia, India and China. Goldman Sachs "Next 11" group includes Mexico, Nigeria, Egypt, Turkey, Iran, Pakistan, Bangladesh, Indonesia, Vietnam, South Korea and Philippines. Like BRICs, the rationale for the selection of N-11 is a good-size and growing population with a modern industrial base for a critical mass: The ability to produce consumer goods, and the consumers who can afford to buy them. Having natural resources, such as oil, in your back yard helps too. All of this creates the potential for major consumer and business growth. And the investment opportunities — for those who are patient and do their homework — could be enormous!

Goldman Sachs report on "Next 11" projects Pakistan's rank moving up from the 26th largest now to the 18th largest economy in the world by 2025. In this context of Pakistan's tremendous economic potential as outlined in the report, there is considerable interest among individual US investors looking for opportunities to invest in Pakistan stocks.

Haq's Musings: Goldman, Franklin-Templeton Bullish on Pakistan's Economy

Haq's Musings: Emerging Markets Expert Investing in Pakistan

 

[ajpirzada]

thanks for postin.
gud to hear something gud. our resistance is well proven

 

[karan.1970]

a more prosperous pakistan only spells a better South Asia.. So inshah allha..

 

[RiazHaq]

Here's a London trader Manraj Singh talking about Pakistan's KSE stocks potential:

Taliban and credit crunch or not, I expect to uncover some absolute bargain investments in this country. Three Pakistani companies that I have had my eye on have shares that trade in London. I think that they are worth a closer look.

Two long-term plays on Pakistan’s turnaround

United Bank(ticker:UBLS) is one of Pakistan’s top commercial banks. It focuses on servicing the corporate sector and has more than 1100 branches across the country. It has the big advantage of being backed by the colossally rich royal family of Abu Dhabi, the Al-Nahayans. The bank’s chairman, Shaikh Nahayan Mabarak Al Nahayan, is also the United Arab Emirates Minister of Higher Education and Scientific Research. So there doesn’t seem much chance of United Bank running into funding problems even if credit conditions in Pakistan stay tight.

Then there is MCB or Muslim Commercial Bank(ticker: MCBS). This is one of Pakistan’s biggest banks. It focuses on retail customers and has an impressive network of over a thousand branches and some 4 million customers. That makes it a good proxy for the long-term growth of the country’s middle class.

MCB is a highly professional organisation and it has attracted a big international shareholder base. Its biggest shareholder is the Malayan Banking group, which owns a 20% stake. And the Templeton emerging markets funds headed by investment bigwig Mark Mobius are also major shareholders.

Neither of these banks is dirt cheap right now. MCB’s share price has more than doubled since February and United Bank is up by some 80% over that period. They now trade at about eight times earnings. Not expensive, but not cheap either. But they are big, liquid companies and they will be among the first to benefit when international investors start looking at Pakistan seriously again.

Major banks are a good proxy for the performance of emerging markets. So as longer-term investments over the next 3-5 years, these two could pay-off massively.

And one punt for the brave…

On a completely different note is Lucky Cement(ticker:LKCS). Thisis Pakistan’s biggest cement producer. It is also a major exporter to countries in the surrounding region. It ships cement to neighbouring Afghanistan and India as well as to Ceylon and the Middle East. The region is still seeing strong economic growth and that has helped this company.

Lucky Cement has delivered impressive financial results . Despite the credit crisis, political upheaval and Taliban uprisings, profits have more than doubled this year. Its share price has risen by 148% since the start of the year. But it still trades at a reasonable five times earnings. It’s an interesting company, but not without risk. Its major cement production plant is located in the volatile North West Frontier Province where the Pakistani Taliban is active. Appropriately, its shares in Karachi trade under the ticker symbol LUCK. Here in London, its GDRs trade under the less ominous ticker symbol LKCS.

There’s more work to be done and I have other candidates I’m looking at. But I believe Pakistan will be an outstanding investment opportunity in the next few years. The time to get in is when investors fear to go there. That’s now.

I’ll get back to you when I have decided the best way to profit from Pakistan’s undervalued markets.

Till then, good investing.

Manraaj Singh
For The Right Side

Pakistan Offers Good Investment Opportunities 

 

[yashchauhan]

In my management institute we are taught that Pakistan's investment policies are best in the region...better than India and China in investment freedom...if it becomes stable and peaceful then it can give both the giant economies a huge run for their money....it is very strategically placed between ,right on the roof of Arabian Sea...it may act like a buffer between energy rich Mid east and energy hungry India and far east...its an ideal location for setting up petrochemical industry hub...rather India is doing it in place of Pakistan in its Pakistan bordering state of Gujarat and West Maharashtra with huge refineries and gigantic ports like Mundra,Kandla,Surat,Pipapav to name a few...Pakistan as a nation has very high potential of becoming what France it to the world!A smaller but very powerful and dominating economy running on huge industry and technology!

 

[Creder]

this is good news but next 11 shouldnt be just an interim goal, Pakistan must strive to compete among the BRIC nations if it wants to stand a chance in the competition for leading economies of the world

 

[pak-yes]

a more prosperous pakistan only spells a better South Asia.. So inshah allha..

It would be INSALLAH(capital letters).

 

[xenia]

it is very strategically placed between ,right on the roof of Arabian Sea...it may act like a buffer between energy rich Mid east and energy hungry India and far east...its an ideal location for setting up petrochemical industry hub...rather India is doing it in place of Pakistan in its Pakistan bordering state of Gujarat and West Maharashtra with huge refineries and gigantic ports like Mundra,Kandla,Surat,Pipapav to name a few...Pakistan as a nation has very high potential of becoming what France it to the world!A smaller but very powerful and dominating economy running on huge industry and technology!

all pipelines of oil/gas going to india from eurasian states have to pass thru pakistan..n oil refineries etc near ports may provde big business..we hope such things happen soon..good for both countries...

 

[T-Faz]

Pakistan Stocks, Cheapest in Asia, May Advance 23% by Year-end - BusinessWeek

April 9 (Bloomberg) -- Pakistan’s stocks, the cheapest in Asia, may advance by 23 percent in the next eight months, buoyed by overseas funds and improved company earnings, according to National Investment Trust Ltd.

“All the fundamentals indicate that the market will pare most of its losses of the past two years” and reach 13,000 by end-December, Manzoor Ahmed, who manages the equivalent of $857 million as head of asset management at state-owned National Investment, Pakistan’s largest equity fund, said in an interview yesterday. “The economy is in a good recovery phase.”

Pakistan’s benchmark Karachi Stock Exchange 100 Index trades at 8.75 times future earnings, the lowest in Asia, according to Bloomberg data. A Taliban guerilla offensive has killed hundreds in a nation that’s been ruled by the army for half of its existence since 1947, when it gained independence.

The KSE100 rose 0.5 percent to 10,589.26 as of 12:13 p.m. in Karachi, from yesterday’s close of 10,533.57. Still, its 41 percent lower than its record in April 2008.

Oil companies, power generators and lenders may lead gains in Pakistan’s stocks this year, said Ahmed, without naming any.

The KSE100 index sank as much as 69 percent from its peak after the Karachi Stock Exchange restricted trading for four months from August 2008 to prop share prices up.

The gauge has climbed 13 percent this year, extending last year’s 60 percent advance as overseas investors bought more equities in South Asia’s second-largest economy. Gross domestic product may grow 3.4 percent in the financial year ending June 30, after a 2 percent gain in the previous year, according to the Finance Ministry.

Inflation, Politics

Stock gains may be limited if accelerating inflation prompts the central bank to raise borrowing costs, while a struggle between the nation’s top politicians, President Asif Ali Zardari and opposition leader Nawaz Sharif, a former prime minister, may limit the government’s ability to implement policies aimed at buoying the economy, Ahmed said.

Foreign investors bought net $176.6 million of Pakistan stocks between Jan. 1 and April 8, after selling a net $237.4 million in the same period last year, according to stock exchange’s National Clearing Company of Pakistan Ltd.

The KSE100 Index plunged 58 percent in 2008, its first annual decline since 2001. Pakistan needs to expand at an average 6 percent pace over the next five years to cut poverty, according to the government.

--Editors: Margo Towie, Linus Chua.

To contact the reporter on this story: Khalid Qayum in Islamabad at at kqayum@bloomberg.net.

To contact the editor responsible for this story: Stephen Foxwell at at sfoxwell@bloomberg.net.
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