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Hot Stock Pick of the Week: This Pakistan Bank ADR is clearly on the rebound

Posted June 12, 2008

Hot Stock Pick of the Week: This Pakistan Bank ADR is clearly on the reboundTo leverage political crisis in Pakistan, use the ADR of Pakistan’s most profitable bank. It has a return on average equity of 38 percent and loan profitability of 8 percent. The bank has a market share of 8 percent in terms of assets. It has 1,026 branches across the country and more than 4 million customers. Click here to view my Hot Stock Pick of the Week!

by J. Christoph Amberger

Baltimore — (TFN): On June 3, we gave you an advance peek on our latest TFN Crisis Trade of MCB Bank (MCBBI) ADRs to leverage political crisis in Pakistan. We had scheduled to cover it this week… but I had a feeling we might need to lock in bottom price levels at between $8.10 and $8.35 per ADR… (We entered it at $8.25 for our internal record-keeping.)

My original argument to buy this stock was based in part on the acquisition of a hefty share of MCB Bank through Malayan Banking Berhad.

Friday, as U.S. indexes crashed, MCB Bank ADR was trading at $9.07 a share. (Prices reported on Bigcharts.com typically reflect the closing price of the last trading day.) That’s a 10% gain in less than a week! Yesterday, it closed at $9.11

Hot Stock Pick of the Week: This Pakistan Bank ADR is clearly on the rebound

Which indicates that our early release actually managed to peg this particular cycle’s bottom.

Hang on to your shares if you bought when we pre-released our Hot Stock Pick of the Week. Even at current levels, they still have plenty of upside left. I’m expecting to see at least $11 per ADR (which represents 2 regular Karachi-traded shares) within the next four weeks.

Of course, you’re quite correct in considering Pakistan a volatile market. Political instability and outbursts of high-profile terrorist activities have cause the Karachi Stock Exchange to drop precipitously in the immediate aftermath.

We consider these current events-based downturns excellent entry opportunities, usually three to four days after the triggering event: It’s been part of a long-term strategy… in the case of a dramatic emerging market downturn, we like to pick up the two or three ADRs of that country that have sold off the most.

Hot Stock Pick of the Week: This Pakistan Bank ADR is clearly on the rebound

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Posted by J. Christoph Amberger · Filed Under Featured Video, Hot Stock Pick of the Week, Videos 

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