Related Articles
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The Valuation Debate: Long Term vs. Short Term (MORGAN STANLEY)
At the outset, we have to state that the P/E metric can be quite flawed when used as a valuation measure for equities. That said, our recent meeting with investors reveals that the biggest debate is about India’s multiple and whether it deserves to trade at a P/E premium to emerging markets. We break this debate into two parts – what the sustainable premium is for Indian equities, if any, and whether the current market multiple makes the market vulnerable to relative underperformance…
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SKYSCRAPERS & ECONOMIC CRISIS: IS THERE A LINK?
Dubai World, with $59 billion of liabilities, is seeking to delay debt payments, sending contracts to protect the emirate against default surging by the most since they began trading in January. The state controlled company will ask all creditors for a standstill agreement as it negotiates to extend maturities, including $3.52 billion of Islamic bonds due on Dec. 14 from its property unit Nakheel PJSC, the builder of palm tree-shaped islands…
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OUTLOOK 2010: Global Strategy, Economics, Credit, Quant, & Sector Research
Risk re-allocation Equity and credit valuations are ‘fair’, global growth remains uneven, and in 2010 market volatility may increase. Yet we opt to increase allocations to equity, credit, commodities, and real estate for 2010. Why? A gradually improving global economy and the prospect of higher policy rates undermine the case for government bonds, nominal and inflation-linked. Cash returns remain unattractive. Stocks and corporate bonds are likely to out-perform, along with commodities and selected REITs…
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GREED AND FEAR (CLSA)
Hong Kong: A further melt up remains the most likely end to 2009. The equity markets’ resilience has been further demonstrated over the past week with the mini panic over Dubai. This is an amusing example of markets being rudderless when America is closed, given that the news broke over the Thanksgiving Holiday…
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THE GLOBAL ECONOMY OF TOMORROW: BETTER, STRONGER, FASTER
• The ‘myopia of the mature economies’ has set in – surely the global economy must see slower growth since the epicenter of the global economy as it is currently constituted will slow as mature, advanced markets age?
• But this change will coincide with the ongoing coming of age in emerging markets.
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Ranbaxy Launches GSK’s blockbuster drug (VALTREX) in US.
Ranbaxy Laboratories has launched generic Valtrex (valacyclovir hydrochloride) tablets in the US market, two years after it settled a patent dispute with GlaxoSmithKline (GSK) and secured a 180-day sales exclusivity for it. Though Industry had an apprehension that whether Ranbaxy will be able to monetize this opportunity or not because of ongoing issue at Dewas facility from where this molecule was filed earlier…
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Have the central banks saved us from the crisis, or caused it?
The behaviour of the central banks of major OECD countries since the start of the crisis has led to opposing comments: for some, thanks to them the global economy has avoided a deflationary collapse; for others, they have put in place the conditions for the next financial crisis through the adoption of incredibly expansionary monetary policies, exacerbated by the reaction of emerging countries to the dollar weakness this has caused…
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What were the initial causes of the crisis? (ECONOMIC RESEARCH)
The crisis is often blamed on the “excesses” in finance and banks. However it is important to understand that the crisis has far deeper causes. If we go from the most recent events to the earliest events, we can identify:
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2010: The return of the Sovereign Wealth Fund (ING VYSYA)
■ Having dominated the headlines in 2007 and 2008, Sovereign Wealth Funds (SWF) have been more introspective in 2009, looking to help beleaguered domestic economies. ■ Yet the resurgence of global trade volumes and the prospect of continued heavy FX intervention from Asian authorities suggest FX reserves and SWF assets under management (AUM) will rise…
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Emerging Asia’s growth outlook may get clipped on rice rally
By and large, emerging Asia investors aren’t paying much attention to the rising price of rice. Perhaps they should start. Rice prices have recently surged, nearing the record highs of 2008 as India appears set to become a net importer for the first time in more than 20 years on the weakest monsoon season in 37 years. The government expects its summer-sown rice output to fall 18%…
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Crude oil inches lower; US payrolls data eyed
Crude futures fall slightly amid cautious sentiment ahead of key US nonfarm payrolls data due 1330 GMT. “The nonfarm payrolls number will most likely have much influence in determining the dollar’s short-term direction, with a stronger than expected number bolstering the dollar’s fortunes,” says Edward Meir of MF Global. Adds a rebound in the dollar would bring “more lasting damage” to oil prices…
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The Dubai Debt crisis: What really happened?
Dubai’s debt woes are a lot older and deeper than Friday’s announcement by Dubai World (a conglomerate of the government of Dubai) might indicate. The announcement-asking for a standstill on the repayment of USD 60 bn worth of debt till May, 2010-appears to be a culmination of the stress that Dubai has been witnessing over the last year. It is just a visible symptom of the woes of an economy long reeling under the weight of a real estate…
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GLOBAL SCENARIOS: Fighting Gravity (DANSKE MARKETS)
Our forecasts for the global economy are left broadly unchanged. We continue to look for strong growth in the short term and expect business surveys to continue higher. Our growth forecast is still slightly higher than consensus – but less so than three months ago. From Q2 10 we project a gradual slowdown in growth as the boost from the inventory cycle and policy stimulus fades…
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Home loans – Demand returning, pricing pressures to continue
Pressure on pricing to continue in the near term. Banks have been extending their discounted home loan rate schemes, basing their decision on marginal cost. While Axis Bank has entered with its own discounted rate scheme for new home loans, PNB and SBI have extended the time period for which their low rate scheme will be applicable. With loan growth in other segments remaining moderate, at best…
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Which bonds will struggle when fund flows reverse?
Net inflows into corporate bond mutual funds have had a big price impact over the past year – bigger, we think, than most investors generally realize. When these flows stabilize, as they obviously will at some point, or possibly reverse, we see a potential softening or reversal in performance for those names that have so far outperformed due to the technical pressure from mutual fund inflows…
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Capital Controls … Back in Vogue, Will India Follow? (CITI)
Growth and interest rate differentials are causing a renewed surge in capital flows to Emerging Markets. This has resulted in currencies appreciating, forex reserves rising (in most cases to pre-crisis levels) and some countries imposing controls on capital flows. How a country deals with capital flows depends on (1) its export dependence and (2) inflationary/sterilization costs associated with dollar inflows…
