Kings of the Wild Frontier

by Tim Price
Sovereign Man

“Simple but not easy” – The title of Richard Oldfield’s book about value investing.

It has a young, highly educated population. 60% of its people are under the age of 35. It has a literacy rate of over 85%. Almost a quarter of a million new engineers graduate from its universities every year. And its stock market trades on a price/earnings multiple of just 5.5 times, with a dividend yield of 13%. Welcome to Iran.

Is this one of the investment world’s big opportunities, asks Merryn Somerset-Webb in her FT column this weekend? It very well might be. The question for foreign investors is whether those attractive valuations offer sufficient compensation for the clear geo-political and resource-related risks that come with investing today in the Middle East. Nobody knows the answer to that question. But purely from a valuation perspective, Iran certainly looks interesting, albeit with the inevitable caveats that come with frontier market investing.

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