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Tunisia: Blood in the Streets?

by Simon Black
Sovereign Man

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.

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