Financial Market Reactions On Bhutto Assassination (INP, IFN, IIF, MINDX, IBN, TTM)

It is unfortunate to have to analyze tragic international or domestic terrorism news from a financial angle on horrible news such as the murder of a foreign leader or a challenger for that leadership ahead of an election.  Pakistan opposition leader Benazir Bhutto was assassinated Thursday in a suicide attack at a campaign rally that also killed killed more 20 others (reports still vary).  The news of her death was reported after the Pakistan markets were closed. 

Investors are looking to see how far down the Karachi Stock Exchange will drop and one of the best proxies as to see how this will affect the Pakistani stocks is to look at the closest markets.  India is the closest and most tied (good and bad) to Pakistan, and the worries that this could create additional instability in the region has the ETF and the Indian funds that trade in the U.S. down considerably:

• The major ETF that tracks India is the iPath MSCI India Index ETN (NYSE: INP), and it is trading down some 5% at $96.10 today.  Its 52-week trading range is $46.13 to $110.09.
• There are two closed-end funds that track the performance of Indian stocks. India Fund, Inc. (NYSE: IFN) is also down some 5.1% at $59.40 today, and its 52-week trading range is $35.51 to $71.54.  The second is less actively traded, but the Morgan Stanley India Investment Fund, Inc. (NYSE: IIF) is down some 6% at $50.75, and its 52-week trading range is $38.29 to $66.56.
• One open-ended mutual fund that we will not know how that trades really until tomorrow after we have a chance to see how those trade is the Matthews India Fund (MINDX).  These only trade at N.A.V. at the end of each day and these traded at $24.29 yesterday.  This fund started out 2007 at $15.62, so it is also up considerably.
• A couple of the more liquid stocks that trade as ADR’s in the U.S. are ICICI Bank Ltd. (NYSE: IBN) and Tata Motors Ltd. (NYSE: TTM), and both are down close to 5% today.

This is potentially a very large political and geopolitical event that could end up with much greater repercussions than a mere 3%or 5% move.  The hardest part of interpreting these price reactions is that Wall Street is staffed with a skeleton crew this week and part of next week.  These are the go to stock and fund names to track the financial market reactions to the situation.

Jon C. Ogg
December 27, 2007