Wednesday, September 16, 2009

Global stocks at new 11-month highREUTERS 16 September 2009, 04:58pm IST

LONDON: World equities rose on Wednesday to new 11-month highs, after upbeat US data boosted faith in an economic recovery, persuading more investors to sell their low-yield dollars to buy growth-oriented stocks and commodities. This week's data showing a jump in US retail sales has been interpreted as another sign the world's biggest economy is indeed on the road to recovery - signals confirmed by Federal Reserve Chairman Ben Bernanke who said on Tuesday the worst US recession since the 1930s was probably over. The optimism saw fresh cash flood to stock markets worldwide and bolstered oil to above $71 a barrel and gold to 18-month highs. The dollar however fell to a one-year low against a currency basket as investors shifted to riskier assets. World stocks rose 0.8 per cent to the highest levels since early October 2008, while emerging stocks surged 1.5 per cent to a new one-year high, trading at levels last touched before the collapse of Lehman Brothers. "When you have comments coming out from Bernanke about a technical recession ending, that's increasing the pressure on the bears, there's a bit of a bear squeeze going on," said Mark Robinson, head of equity research at Unicredit in London. "There is also a stronger fundamental element - the G10 is pulling out of the slump and Asia is clearly in a V-shape (recovery). That's driving risk trade and commodities -- in the last week and a half, and particularly in the last 24 hours, we have seen a commodity stocks trade," Robinson added. The FTSEurofirst index of top European shares rose 0.8 per cent, its eighth rise in nine sessions to the highest since October 2008. The index is up 20 per cent this year. Asian markets set Wednesday's buoyant tone, sweeping to new 2009 highs, with exporters like South Korea and Australia up 1.8 per cent and 2.4 per cent respectively. Japan's benchmark Nikkei added a more modest 0.5 per cent, restrained in part by uncertainty over the policies of new Prime Minister, Yukio Hatoyama. The Bank of Japan began a two-day meeting but no policy change is anticipated. Investors even managed to overlook a 1 percent fall in Shanghai, virtually the only Asian bourse to ease on Wednesday as investors booked profits after three days of gains. The 2.7 per cent jump in US August retail sales - the fastest growth in 3-1/2 years added to expectations US economic growth would stage a sizeable rebound in the third quarter, as businesses rebuild inventories to meet demand. That augurs well for the currencies of exporting nations, especially the big commodity producers like South Africa, South Korea and Australia, probably at the expense of the dollar which slipped as deep as 76.376 against a basket of currencies - the lowest since last October. The euro powered to new 2009 highs around $1.4690. The greenback has shed 2.5 per cent against the currency basket this month and is down almost 5 per cent since early-July. "As the global recovery continues and risk diversification takes place we could see the US dollar stay under pressure for the next six months," said Amber Rabinov, an economist in foreign exchange and international economics at ANZ in Sydney. The yen gained to a near seven-month high versus the dollar after Japan's incoming finance minister said a strong yen had advantages for the nation's economy. Silver and platinum prices rose in gold's wake while growth optimism boosted copper and other base metals across the board. But despite overall exuberance there is some caution, analysts said, citing warnings by the Fed's Bernanke that recovery will be slow and it will take time to create new jobs. Major indexes seem hesitant to make the jump that would take them past the key one-year anniversary of Lehman Brothers' fall. "Both sides of the Atlantic are saying we are now out of recession but growth is going to be slow and anaemic," said Justin Urquhart Stewart, director at Seven Asset Management. "The market still has an attitude that money is to be invested and it's fair value but the economy is showing there is still going to be weakness,” he added.


  1. Dear Rajeev

    need your views on investing in lincoln pharma

  2. Hi Rajeev, I am a fan of Warren Buffett. Love to search companies with durable competitive advantage,consumer monopoly and brand-name. Unfortunately we dont have companies like Mcdonalds, Hersheys, wrigleys, pizza hut, disney,First Data corp.
    But few Indian companies which can fit WB criteria (as I think) will be
    NESTLE- Brands like Maggi, Nescafe,cerelac.
    CRISIL- Credit rating agency
    ITC (unfortunately diworsifying into FMCG sector)
    Godfrey Phillip (Marlboro brand cigarrette)
    VST industries (Charminar cigarrette brand and debt free)
    Hawkins cooker
    Opto Circuits ( May be only indian company producing cardiac stents)
    AlphaGeo- Seismic data helping in oil exploration
    Micro tech- security systems

    These many I can think of. the one not listed are Cadbury, amul, parle.

    All people visiting here are also requsted to add their views.

    Anybody knows Indian company like First data Corp. which deals with all credit card trasactions?


  3. Vikas ji,

    Bartronics can be added to your list. They are in niche segment without compitittors.

  4. Rajeev Bhai
    Can we add Lesha Energy and Telecanor at these levels? Have been on upper circuit since you recommended.

  5. rajeev,
    tracking in last bull run not now so no view

  6. Sanjay,
    After I recomended Lesha and Telecanor both gave chance to buy the next couple of days.Lesha gave chance around 44-46.
    I think Telecanor is still not in circuits.
    Lesha then touched 66 in UC and again it gave chance at 61-62 and UC journey has started.
    Yes, One can buy both of them yet.If what I am reading comes good then there is unlimited growth in this twins.
    But they are high risk high return stocks so keep that in mind.

  7. Vikas,
    What one needs to do here is to try and find a future Nestle,Cadbury.
    My old call Vadilal Ind comes in same category where RJ is invested.Vadilal Icecream is a wellknown brand.
    The call I gave for Kwality was also of the same type.The brand was excellent and promoters were holding over 73% though the earning was not coming good and see the MAGIC .It touched over 500 from my call @17.Calculate the return....

  8. dear rajeev

    regarding lincoln pharma...
    they have recd a few patents in giving treatment using nasal drops.. first of a kind in india..
    if time permits do look into it