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LONDON : Dalton Strategic Partnership (DSP) has become first UK fund manager to offer focused retail access to Pakistan's equities, with the launch of its 'Melchior Selected Trust: Pakistan Opportunities Fund'. The fund, whose investment date was delayed to avoid a sharp correction in Karachi Stock Exchange in May, is slated for release on June 19.
Portfolio management has been outsourced to Karachi-based KASB Funds, which was founded in 1952 and its 5 percent is owned by BlackRock since early 1990s. KASB chief executive and chief investment officer Faisal Potrik will run a selection of 35-45 stocks--80 percent of which will be drawn from 30 largest companies listed on KSE. Remaining 20 percent will be non-benchmark positions.
Starting overweights are in oil exploration, chemicals, agriculture and cement sectors. David Graham, partner at DSP, said that average price/earnings multiple of 11 times for KSE stocks did not price in the country's prospects, which were reminiscent of India's five years ago.
He said: "Pakistan is extraordinarily well positioned between oil-rich Middle East and oil-deficient China and India. All sorts of pipelines are coming across Pakistan, and Pakistan itself is growing as energy producer with aggressive exploration programme. With wealth creation going on in Middle East, a significant amount of money is going into Pakistan."
While he acknowledged inherent degree of political risk in the region, he insisted that underlying fundamentals, with growing consumer spending and a population of 160 million, would drive the country's equity market for foreseeable future. He added: "What people don't realise is Pakistan is pretty broad in the number of stocks it offers.
Copyright PPI (Pakistan Press International), 2008
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