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Asian Frontier Market Strategy
Opportunities in the stock markets of Vietnam,
Bangladesh, Pakistan and Sri Lanka
Asian Frontier markets have started the year on a good footing; up 3-8%
in US$ terms. The one exception, Bangladesh, is down a staggering
24%. Although the economy there remains robust, there has been a sea
change in market sentiment, following the imposition (since rescinded)
of measures meant to reduce the banking sector’s exposure to equities.
With their low GDPs per capita, Asian frontier markets are vulnerable to
the rising prices of commodities. Macquarie analysts forecast further
rises in food and energy prices, meaning inflation is a concern for all
four countries. We recommend investors buy Vietnamese shares, hold
Sri Lanka and Pakistan, and now expect a correction of at least 20% in
Bangladesh, between now and the middle of this year.
Stock picks from our research partners:
PetroVietnam Drilling & Well Services (PVD VN) has a dominant 60% market
share of Vietnam’s offshore E&P drilling sector, and is a play on demand for
jack-up rigs, estimated at 10-14 rigs annually. Our research partner
VinaSecurities estimates the ROE at 19%, on 1.8x PBR and 11.2x PER.
Nishit Mills (NML PK) is a fabric producer, but half the balance sheet value is
investments in banking, cement, and now power plants, which our research
partner Foundation Securities believes will show strong growth yet have low risk.
Foundation Securities has NML on 6.2x PER, a PBR of 0.7x, and ROE of 10.6%.
British American Tobacco Bangladesh (BATBC BD) is over 100 years old, and is
a consistently performing company. It has a strong history of minority
shareholder rights, and is forecast by our research partner BRAC EPL to have a
dividend yield of 5.8% this year, and a PER of 12.5x.
India Equity Research Reports, IPO and Stock News Visit http://indiaer.blogspot.com/ for complete details �� ��
Asian Frontier Market Strategy
Opportunities in the stock markets of Vietnam,
Bangladesh, Pakistan and Sri Lanka
Asian Frontier markets have started the year on a good footing; up 3-8%
in US$ terms. The one exception, Bangladesh, is down a staggering
24%. Although the economy there remains robust, there has been a sea
change in market sentiment, following the imposition (since rescinded)
of measures meant to reduce the banking sector’s exposure to equities.
With their low GDPs per capita, Asian frontier markets are vulnerable to
the rising prices of commodities. Macquarie analysts forecast further
rises in food and energy prices, meaning inflation is a concern for all
four countries. We recommend investors buy Vietnamese shares, hold
Sri Lanka and Pakistan, and now expect a correction of at least 20% in
Bangladesh, between now and the middle of this year.
Stock picks from our research partners:
PetroVietnam Drilling & Well Services (PVD VN) has a dominant 60% market
share of Vietnam’s offshore E&P drilling sector, and is a play on demand for
jack-up rigs, estimated at 10-14 rigs annually. Our research partner
VinaSecurities estimates the ROE at 19%, on 1.8x PBR and 11.2x PER.
Nishit Mills (NML PK) is a fabric producer, but half the balance sheet value is
investments in banking, cement, and now power plants, which our research
partner Foundation Securities believes will show strong growth yet have low risk.
Foundation Securities has NML on 6.2x PER, a PBR of 0.7x, and ROE of 10.6%.
British American Tobacco Bangladesh (BATBC BD) is over 100 years old, and is
a consistently performing company. It has a strong history of minority
shareholder rights, and is forecast by our research partner BRAC EPL to have a
dividend yield of 5.8% this year, and a PER of 12.5x.
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