When Mark marks the market

The trouble with reading markets is that there are as many views as many faces. Often the views collide resulting in market volatility or in consolidation depending upon the strength of colliding forces.
But more often than not they rally in one direction - a kind of herd you would say. Whatsoever drives the herd or whosoever leads the herd should then be the subject of analysis.
In this context, KSE-100s sudden hike of about 400 points in the last three days, after a flat, fragile and nearly volume-less trade in the preceding ten days, presents a difficult question.
The new found euphoria could be attributed to the late realisation that after all its okay to pay the CGT, or it could be attributed to Israr Raufs visit to the exchange to ease investor concerns - (how much pampering these investors need, anyway, is a matter of another discussion).
KSEs refresh rally could also be linked to hopes of market-friendly leverage products, which are seen as a panacea of sorts that will send KSE-100 to its lost glory against all the odds of rising bond yields, and risks of higher-than-budgeted fiscal deficit and tighter interest rates.
But all this is hard talk. The focus, instead, should be on what the leader of the herd is thinking, and that demands eavesdropping on Mark Mobius. Yes, the famed boss of Templeton Asset Management, a firm that currently owns about 70 percent of the free float of Oil and Gas Development Company.
Knowing that OGDC is the key driver of KSE-100 these days (See June 4, As goes OGDC, so goes the market), its a no brainer to figure that the affair between Mobius and OGDC is going to decide the future of the market.
How strong is the bond between the two? Probably very strong.
Reportedly, AKD Securities held a conference call with Mark earlier this month, and he supposedly told AKDs managers and other investors on the line that OGDC is one of the most attractive of all the oil firms in the region, with plenty of room for business growth.
Interestingly, this comes in contrast to the views held by NIT - Pakistans biggest state-owned asset management firm that is renowned for making astute long term investments. Sources in NIT told BR Research earlier this week that OGDC is currently on their ill loved list, citing its over-valued nature.
Few know exactly what is Mark thinking, but perhaps the following can provide a clue: the $34 billion emerging market asset manager is also said to be very bullish on the war against terror saying that Pakistan will emerge as a rising star once the bad guys are shot dead or shooed away.
Now thats real long term thinking, considering that war against terror is not seen being wrapped up even in the next 2-3 years, even by optimistic estimates, with a lot of ifs and buts involved in the equation.
Mark has both the financial muscle and the patience to hold his position in OGDC for the long haul, despite all the odds. His Pakistani counterparts, however, don have either; even when they boasted sufficiently healthy finances in the pre-crisis world, they rarely exhibited such patience for long term thinking.
In other words, sooner or later, Pakistani investors must realise they will have to sever the umbilical-like-chord between the OGDC and KSE-100, and start valuing the market for what it really is: riskier than perceived.
In the meantime, punters can enjoy the bubble while it lasts; just don forget to pay the taxman.