Posted by: Frederik Balfour on January 11, 2008
For investors with a really strong stomach for risk, [and possibly bloodshed], Merrill Lynch is touting the charms of the Karachi Stock Market. At a media briefing in Hong Kong on January 11, Mark Matthews, Merrill’s Chief Asia Strategist says Pakistan is his top pick among so called Frontier Markets that also include Vietnam, Bangladesh and Sri Lanka.
Matthews says Pakistan represents the “biggest information arbitrage,” which in its crudest terms, means that body bags are good for stock pickers. He reckons that the slew of bad news, [heart wrenching though it is] coming from Pakistan, is diverting people’s attention from the fact that the Pakistan economy is humming along nicely, with growth forecast to reach 7% this year, a repeat of 2007, and stocks yielding an average of 6% dividend yield. Karachi was up an impressive 40% last year, and would have closed even higher had it not been for the tragic assassination of former President Benazir Bhutto in December which trashed the market.