Private Investor: Kazakhstan's riches are no laughing matter
Saturday 18 November 2006
Well, I've never had a prayer answered quite so quickly. Last week I was bemoaning the poor performance of my Vodafone shares, which, pretty much alone of the bigger cap stocks, have disappointed me.
I wondered whether it was just a matter of market sentiment, in that while once Vodafone could do nothing wrong, nowadays it could do nothing right, in the eyes of the professional investing community, at any rate. (I accept that there can be certain amount of reality behind "sentiment", but when you consider how crazy things got during the telecoms/internet boom, that can be fairly tenuous.)
Anyway, just as Marks & Spencer has produced a remarkable turnaround in performance and its share price, this week we have seen the beginnings of a similar re-rating of Vodafone. The last set of results were good, the comment positive and the brokers happily setting share price targets well in excess of where the shares stand now.
So I've decided to follow the market's momentum, and buy into Vodafone again, adding to my existing holding at 139p. This is, I guess, the average price I've paid over the past few years, averaging the 90p or so I bought the shares for after the tech shares crash, and the 200p to 400p I'd been buying them for previously. There doesn't seem much sign that the mobile telecoms industry is going to return to its heady days of growth, nor are there many indications that we've all gone 3G-crazy. The point is that the markets have suddenly woken up to the fact that Vodafone isn't actually a basket case, that it has indeed taken steps to address shareholder value by disposing of businesses and that more moves in this general line could follow.
It does not really matter to me which executives get on and do that, so if Mr Sarin has come good at last, fine by me. If they want to ditch him, that's fine, too.
Indeed, last week I witnessed something I never thought I'd see again: British Airways at the top of the FTSE 100 leaders board, with Vodafone not far behind. The dog share in the portfolio now is BSkyB, which slid last week on the back of pessimistic remarks by none other than Rupert Murdoch, doting father of James Murdoch, the chief executive of BSkyB. Well, with a Dad like that...
Those of us who are mere spectators in the crowd at the Murdoch family circus can only watch and wonder what is going on there. There's no clear picture as to how much the company's growth is really sustainable and how much is a matter of just "buying customers". The experts on whom I rely say one thing one month and another the next. I suppose they don't know, either. Maybe that's what they mean by "market sentiment". Anyway, it's fairly volatile regarding BSkyB at the moment, but I'm sticking with it, for now at least.
The sneaky little idea I now have in my mind is to buy Kazakhmys. This might seem crazy, because all the sensible thinking is that we're at the top of a mining stock boom (or bubble) and it can only be a matter of time before the Chinese economy catches a cold, America sneezes and the whole thing collapses.
Still, the long-term picture of emerging markets' growth and hunger for commodities should still be good and I'm a bit underweight on these stocks. All I have in the sector is a few shares in Rio Tinto I bought a long time ago and a small speculative holding in Falkland Oil and Gas. Both are showing very nice paper profits, but maybe the time has come to diversify a little more.
There's also the small matter of Borat. Those of us who emerged from cinemas weeping with laughter at Cultural Learnings of America for Make Benefit Glorious Nation of Kazakhstan (especially the naked wrestling scene) have a moral obligation to consider investing in the real Kazakhstan as well as mocking the fictitious one.
After all, we may think it's very funny, but the Government and the people of that central Asian republic do not seem to get the joke quite as easily.
The problem of course is that, in contrast to the poverty-case image projected by the Borat film, Kazakhmys shares are anything but cheap, and have been good value for some time. Despite my lack of faith in my own timing, I think I'll hold out and try to buy on a little weakness as it appears. All I hope is that my investment in Kazakhmys is quite as enjoyable as the Borat movie. Is naice!
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