by Simon Black
Banking tycoon Baron Rothschild is credited with saying that ‘the time to buy is when there’s blood in the streets.’ Rothschild took his own advice, making a fortune buying deeply undervalued assets following Napoleon’s defeat at the Battle of Waterloo.
Tunisia’s uprising was some 18-months ago, so it hardly qualifies as blood in the streets today. To give you an example, the local stock market (Bourse de Tunis) has recovered from its post-revolution lows, and the TuniIndex is up 17.6% in the last 12-months.
Despite the runup, though, share valuations are not astronomical by any objective measurement; some of the Bourse’s largest companies are valued at less than 10x earnings. With few exceptions, though, dividend yields are 2% to 4%.
These numbers don’t make Tunisian stocks a screaming BUY, though I expect solid long-term growth; as Europe continues to implode, the Tunisian economy will benefit from European companies seeking to park capital and move their operations elsewhere.