Pakistani bourses cheapest in Asia

[Naveed Yaseen]

KARACHI: Pakistani bourses, after the recent fall, ranks as one the cheapest in Asia and trades at 35 percent discount of average Asian price earning (PE). This is mainly on account of deteriorating economic fundamentals, rating downgrading, exclusion from Morgan Stanley Composite Index (MSCI) and last but not the least due to lost in investors' confidence after the unwarranted price floor for more than three months. Except for Malaysia and Chinese markets, all other Asian emerging markets are trading at single digit forward PE multiple. This is due to earnings revisions and a fall of 56 percent in MSCI EM Asia and 55 percent in MSCI Asia Ex-Japan in 2008. Share prices in Pakistan are now coming closer where shares change hand and volumes pick up, this has occurred after a fall of 29 percent in benchmark KSE Index since the removal of price floor on december 15, after a gap of three-and-a-half-month. Pakistan bourse now trades at a discount of 35 percent versus other Asian emerging markets compared to historically average discount of 30 percent. Though 16-year average PE of Pakistan is slightly over 10x with a range of 4-22x. However in FY02 Pakistan PE was 4.4x due to geopolitical tensions post 9/11 and Pakistan's own political tension with India that raised risk premium. staff report

http://www.dailytimes.com.pk/default.asp...2008_pg5_8