Over the past few months Pakistan Stock Exchanges have opened up to foreign investment, legally for any and every citizen/institution anywhere across the world. I tried early in 2012 to get an account opened to buy Unilever Pakistan, then available at 5000 Rs, similar valuations and attractiveness as Nepal Bangladesh companies are trading today, but it was not allowed for foreign nationals to invest. It finally got delisted at 15,000 Rs recently.
Come 2013 and portals of heavenly abode for value investors, sorry, legal investment hurdles for foreign investors are cleared with foreign repatriation. Pakistan, deemed to be an even less economically stable country than Nepal or Bangladesh, serves as a good example. 18 Month spot charts of 3 out of 25 or so MNCs listed in Pakistan for the recent 18 month period ending 17th of November 2013, i.e. today, are pasted below.
Abbot Labs – 4 bagger in 18 months
WYETH – 6 bagger in 12 months, 10 bagger in 18 months
|“only” is intentional|
Some people had automatic explanation why Gillette/Colgate/Nestle in India can trade at 50-70 times annual earning but similar companies in other developing countries can only trade at 10-12 times. Today NESTLE Pakistan has been re-rated to 60 times earnings ! This had to happen as certainly as death and taxes. Sigh of relief. Peter Lynch never invested in multibaggers in Financial Industry right in his own backyard. A funny quote applies to all of us laser focused on BSE and NSE India trying to find value in Louis Vuitton like priced BSE Index, not once questioning whether we are in the wrong store. “The closer you are to the church, the farther from God”.
Even today, these countries mentioned are more attractive than India and that’s where I am investing. Buffett – “I skate to where the puck is going to be, not to where it has been“. Thank God sufficient people with investment muscle think like me so as to be able to re-rate companies in seemingly unstable countries. Common sense prevailed over xenophobia. Thanks for the Pakistan precedent, I am hopefully on the right track.