Views on corporate governance in Pakistan from Fund Managers
Mattias Martinsson, Chief Investment Officer of Tundra Fonder, recently shared his views on corporate governance in Pakistan (PAK) with Frontera, stating that the country is “superior to its frontier markets peers and well in line with the emerging markets average.”
Martinsson oversees about $260 million in assets at Tundra Fonder and believes that when investing in this Asian (AAXJ) (VPL) market, having a closer association with the economy helps. “The country has been almost isolated from world financial markets for a long time. I think being on the ground and having employees from the same cultural background helps when gathering information from the somewhat smaller companies,” Martinsson told Frontera. One thing that Martinsson feels still needs to improve about Pakistan’s capital markets is client confidentiality.
Companies beyond the top 30 ‘can and should’ improve
While Martinsson has good faith in the corporate governance in the top 30 blue chip companies on the Pakistan Stock Exchange, he does believe that companies beyond the 30 “can and should improve.” In his opinion, he sees the blue chip companies in line with international standards, both in numbers and the way they present themselves. “The Securities & Exchange Commission of Pakistan (or SECP) has worked hard in stifling use of inside information and other malpractices,” said Martinsson.
Discussing Pakistan earlier this year, Martinsson had identified the single biggest risk that could obstruct Pakistan in its growth trajectory, while also identifying 3 sectors to buy on a one-year time horizon.
Mark Mobius thinks otherwise
On the other hand, Mark Mobius, emerging markets fund manager at Franklin Templeton, has doubts on the level of corporate governance and transparency in Pakistan. The emerging markets (EEM) (VWO) guru believes Pakistan (PAK) should not have graduated to the MSCI emerging markets index just yet. While Templeton remains bullish on Pakistan’s growth prospects, Mobius said he would continue to treat Pakistan as a frontier market, despite the recent upgrade.
