While Myanmar’s natural resources of oil, gas and minerals are positive factors, there are “areas of concern”, Templeton portfolio manager Dennis Lim wrote in a note last week on chairman Mark Mobius’s blog.
Although Cambodia is “ideally located” to benefit from trade with Thailand, Vietnam and Laos, investors need to study corporate governance standards, he said.
“Weaknesses we’re especially mindful of in Myanmar are lack of a proper legal structure, the lack of a well developed banking system, and the lack of solid foreign exchange operations. In Cambodia, I would caution potential investors to monitor corporate governance standards to ensure investors are treated fairly.”
In Cambodia, state- owned Phnom Penh Water Supply Authority will have its IPO next month, making it the first to be traded on the stock exchange that opened last July without a single listed company.
The Cambodian government has said it wants to spur economic development by selling off state- owned companies and encouraging private enterprises to expand with new funding.
Mr Mobius, who oversees more than US$50 billion in emerging-market assets as executive chairman of Templeton Emerging Markets Group, has said he’s watching the Cambodian railroad industry “with particular interest’”
Indonesia, whose natural resources include timber and coal, can benefit from increasing global demand for commodities as emerging markets invest in infrastructure, Mr Lim said. Thailand, which suffered its worst floods in almost 70 years in 2011, will have a sound economic recovery and has “positive’” long-term fundamentals, he said.
“For value investors like us, current valuations in Thailand generally remain attractive, though the potential growth obstacles do bear ongoing scrutiny”. He cited agriculture, tourism and offshore gas as drivers of growth.
Interesting, no mention of Vietnam which is now in the dog house because of high inflation and other problems.
Singapore’s stock exchange is a conduit through which Templeton can access new markets because of listings by some companies from the frontier economies, he notes.