Posts Tagged ‘emerging markets’

Weekly Update 12th – 16th July

Stocks in world markets saw huge gains as investors viewed that the recent correction out of fear of double-dip recession in advanced economies has actually overlooked improving outlook for the company’s earnings. Investors sitting on the sidelines bought stocks with the upward revision in earnings estimates for U.S. companies. The gains in markets got a further boost after China said that it will keep a moderately loose policy and South Korea raised interest rates.

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Belief of Asian and Emerging nations will be able to withstand the storm coming from advanced economies rose with the interest rate increases in India, South Korea, Taiwan and Malaysia. The European Central Bank left interest rates unchanged as the sovereign debt crisis are still posing a serious threat to regions recovery.

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The IMF raised its forecast for global growth to 4.6 percent in 2010, the biggest gain since 2007, compared with an April projection of 4.2 percent reflecting a stronger than expected recovery in first half and at the same time giving warning that financial market turmoil has increased the risks to the recovery. However, IMF has not revised the next year growth projections of 4.3 percent. The IMF urged developed economies governments to commit to implementing “credible” plans to lower their deficits over the medium term, including the adoption of binding, multiyear targets and said that they don’t need to start fiscal tightening before 2011. It said that monetary policy in advanced economies can remain “highly accommodative for the foreseeable future,” because inflation is expected to remain “subdued,” helping mitigate the effects of fiscal consolidation on growth. The growth forecast for emerging markets was raised to 6.8 percent, from 6.3 percent in April.

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The fastest growth rate will be China’s 10.5 percent, followed by India’s 9.4 percent and Brazil’s 7.1 percent, the fund said. On the domestic front with the recent improved outlook in the monsoon situation and expectation of strong double digit gain in Index of Industrial production would keep the markets on a upbeat note. The result season that is going to start in the coming week and guidance by the companies for the rest of the year is further expected to set the momentum of the markets.

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Indian stock markets are in a clear uptrend though other world markets which were in a downtrend took a sharp counter rally from lower levels. We will have to wait and watch whether the rally which has started in other markets can sustain or not..

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Nifty has support between 5250-5200 levels and Sensex between 17500-17300 levels.

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Volatility is spreading in entire commodity complex and thus investors are keeping a tight vigil on relative changes to find the best value. Fundamentals of Asian countries are still constructive but it is Euro zone which is still giving red signals. For the time being, commodities should move in a range. Later half of the week is full of event risk as some important data’s from US, UK, Japan etc. can speak about the health of economy, which may provide some much needed direction to the commodities. In NCDEX, volume of July contract is shifting towards August contract, hence some volatility in premium is expected in near term.
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Global M&A Deals to Fall 56% in 2009: OECD

Global mergers and acquisitions (M&A) are projected to decline 56% in 2009 compared to last year due to sharp declines in such activities in rich and emerging markets including India.

However, the Organization for Economic Cooperation and Development (OECD) stated that the expected decline in M&A activities this year would be the largest year-on-year decline since 1995.

Meanwhile, the estimate is based on an OECD analysis of data for international M&A activities up to November 26, 2009 where the projected decline is primarily due to a 60% fall in value of cross-border M&A by firms based in the OECD area, to just $454 billion in 2009 from over $1 trillion last year.

Moreover, there has been a decline in M&A activities into and from major emerging economies while International M&A activity by firms based in Brazil, China, India, Indonesia, Russia, and South Africa fell by 62% to $46 billion in 2009 from $121 billion in 2008.

Additionally, it is said that such activities into these countries is anticipated to slide by almost 40% to little over $80 billion in 2009 from just under $140 billion last year while M&A investments have been severely hit by the financial turmoil, which has resulted in tight credit flow.

On the other hand, the latest international investment estimates suggest that total foreign direct investment into the 30 OECD countries will fall to $600 billion in 2009 from a 2008 total of $1.02 trillion.