**** OT ****
Mobius Buys Pakistan Stocks as Floods Trim Valuations (Update1)
By Shiyin Chen
Aug. 17 (Bloomberg) -- Templeton Asset Management Ltd. is buying shares in Pakistan, the worst-performing stock market globally this month, after the nation’s worst-ever floods prompted a sell-off, investor Mark Mobius said.
About 1,600 people have been killed and 20 million lost homes, farms and livelihoods as heavy monsoon rains sent flood waters across the South Asian nation. The disaster may cut Pakistan’s economic growth in half, Finance Secretary Salman Siddique said Aug. 13, with expansion falling as much as 2.5 percentage points short of a 4.5 percent target.
“There will be an impact on growth but company valuations are very, very attractive now and therefore we continue to invest in Pakistan despite all the negatives,” Mobius said in an interview in Singapore yesterday. “The bottom line is that Pakistan is not going to go away. We want to buy stocks that look cheap as prices come down as a result of the flood.”
The Karachi Stock Exchange 100 Index has dropped 8.7 percent this month, the most among 93 benchmark indexes tracked by Bloomberg globally. The gauge is valued at 7.1 times this year’s estimated earnings, making it cheaper than any other Asian or emerging-market benchmark index tracked by Bloomberg.
The Karachi index climbed as much as 1.2 percent, the most in a month, and traded 0.7 percent higher to 9,604.65 as of 11:37 a.m. local time on speculation that recent losses were excessive. The gauge plunged 2.9 percent yesterday, the most in more than two months.
‘Oversold’
“The market was oversold from yesterday and news of Mark Mobius’s plans to buy Pakistani Stocks because of their attractive valuations supported overall market sentiments,” said Khurram Schehzad, head of research at Invest Capital & Securities Ltd., in Karachi. “Local investors are encouraged and realize the prospect of future gains.”
The World Bank yesterday pledged $900 million in financial support to Pakistan, joining the United Nations, the U.S. and other countries in providing aid.
Mobius, who oversees about $34 billion in developing-nation assets as executive chairman of Templeton’s emerging markets group, said the investment company favors banks and energy companies within Pakistan. He didn’t identify any companies.
Templeton owned more than 5 percent of MCB Bank Ltd., the nation’s biggest lender by market value, as of June 30, according to data compiled by Bloomberg.
MCB gained 1.7 percent to 185.50 rupees today, trimming losses for the year to 7.1 percent. Oil & Gas Development Co., Pakistan’s biggest energy explorer, rose 1.3 percent, extending its 2010 gains to 23 percent.
noir.bloomberg.com |
