Papua New Guinea: Overlooked Opportunity For Emerging Markets Bulls

Papua New Guinea is an investment opportunity often overlooked by emerging market bulls. What do they commonly look for? High growth, steady government, abundant resources.

The economy of PNG is steady and growing quickly on the strength of the agriculture, mining, and oil/gas industries. The country is one of the worlds most unexplored and this thought to still be home to numerous undocumented plants, animals, insects, tribes, and languages.

This underdeveloped economy is ready for growth and appears surprisingly open to foreign investment. Like every nation on Earth, there are problems (which I will outline), but what makes investment in PNG special is the how surprisingly overlooked and underdeveloped the country and economy is despite the vast natural resources and economic and political stability.

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Pros

GDP Growth

PNG's GDP was 16.9 Billion in 2011, a growth of 8.9% (12th in the word according to the CIA) from 7.8 and 6.1 percent in 2010 and 2009 respectively. The Debt-to-GDP is a surprisingly low 22.9%. The government is pro-investment in a country that has good reason to want to protect its incredible wealth of natural resources. ExxonMobil recently led an approved 16 billion dollar liquefied natural gas deal.

Chinese investment is "just beginning" according to The Australian, yet state-owned Chinese firms have already broken ground in numerous mining projects including the 1.4$ Billion dollar Ramu nickel project. Malaysian logging companies export to China. Canadian company Talisman Energy is making bets on PNG. The Industrial Production Growth Rate, as measured by the CIA World Factbook, was 10% in 2011. The country is open to development and GDP growth is already excellent. [Read on here]

http://seekingalpha.com/article/1140431-papua-new-guinea-overlooked-opportunity-for-emerging-markets-bulls?source=yahoo

Can't hurt, but the key is the approaching deadline and the timing of taking long positions.  Today's buyer is waiting patiently for sellers, knowing there is time.  Not everyone is going to wait for 85 at the end of Feb and will start to nibble.  This low volume won't continue.

It's an interesting piece.  Written by:
Brendan Metcalfe

From Toronto, Canada. Student at Babson College for a BSc in Business Administration concentrating in Finance. Babson team member of the New England Federal Reserve Challenge 2012 and Co-Founder of the Babson Apprentice Fund.

He's younger than any of us I bet!  He also neglects to address a very important point that he mentions at the beginning, "steady government".  Kind of an imortant thing in PNG.  Hope he got an "A", but if STP were grading him, I think there might be some red comments on the paper. Also, the Babson Apprentice Fund is an interesting name of a fund; and for good reason:
"The BAF is a new virtual fund meant to mimic the BCF in both structure and operation. We will use a virtual portfolio equivalent in sum to the BCF's portfolio. We will be running the portfolio on Bloomberg thus working to achieve Bloomberg certification." Little wet behind the ears me thinks.