Here’s a chart explaining why MSCI just, once again, said no to China entering its emerging market indices club:
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There are no Googles and Apples in Europe. So Societe Generale’s global quantitative research team pointed out on Monday morning. They are not the first to say so, but the analysts use it to help explain why Europe’s share of MSCI World earnings has slumped to its lowest point since 1986.
Buying shares in a company ahead of an index re-weighting is rarely a good idea but that hasn’t stopped brokers pushing Glencore ahead of November 24th – the day the lock-up agreement with cornerstone investors expires.
Citigroup has even created a timeline. Read more
China is cheap — at least on a price-to-book basis.
At 1.58x the P/BV of the MSCI China is still below the 2008/09 lows of 1.64x. At this level China is among the cheapest countries in the MSCI universe (Russia and Hungary are the cheapest) . Read more
Low on Tuesday at pixel time of 4855.35 = off 20 per cent from the FTSE 100’s February 2011 high of 6091.33:
Asian shares were mixed as investors continued to chew over the impact of Europe’s sovereign debt problems and slowing US economic growth, although strong corporate earnings gave some stocks a lift, reports the FT. The MSCI Asia Pacific index was up 0.5 per cent with Japan’s Nikkei Stock Average off 0.2 per cent, Australia’s S&P/ASX 200 up 0.3 per cent, South Korea’s Kospi Composite 0.6 per cent higher, and New Zealand’s NZX-50 inching up 0.1 per cent. In Tokyo, Sony dropped 3 per cent on the view that its forecast of a Y80bn profit this year may be overly optimistic given its ongoing struggle with the aftermath of the March earthquake and security breaches on the internet. But Hitachi Construction, Japan’s second-largest maker of construction equipment, gained 2.2 per cent after reporting a 56.5 per cent increase in operating profit in the year ended March 31. Senshu Electric, a supplier of electric cables, rallied 6.9 per cent after raising its full-year profit target. Nippon Sheet Glass advanced 2 per cent after Nomura Securities upgraded the stock to Buy from Neutral. The resumption of foreign buying provided some support in Seoul but the stock market was still set for a fifth consecutive week of losses. Hyundai Motor, South Korea’s largest automaker, was up 2.9 per cent and oil refiner SK Innovation was 0.7 per cent higher. Hanwha Engineering & Construction rose 3.8 per cent on a $7.25bn order from Iraq to build a new town. LG International added 2.7 per cent after Korea Investment & Securities raised its stock price target by 31 per cent. Hana Financial Group fell 2.1 per cent while Korea Exchange Bank rose 1 per cent on media reports that Hana may buy a 10 per cent stake in KEB ahead of regulatory approval to keep its $4.3bn deal alive. A 10 per cent stake would not require regulatory approval.
No prizes for guessing what triggered this halt on short-selling. From Reuters on Monday:
Several Japanese Exchange Traded Funds (ETFs) triggered the newly created short-sale restriction shortly after the market’s open on Monday.
Asian stock markets were softer as investors locked in profits on commodity shares’ recent sharp gains, with sentiment also darkened by an uptick in US jobless claims, reports the FT’s global market overview. The benchmark S&P 500 was off 0.2 per cent, led lower by growth-linked materials shares, and the price of oil tumbled in late trading despite a weakening US dollar. The MSCI Asia Pacific index slipped 0.1 per cent while Japan’s Nikkei 225 retreated 0.4 per cent after hitting an eight-month high. Australia’s S&P/ASX 200 was off 0.1 per cent, South Korea’s Kospi Composite 0.4 per cent lower and New Zealand’s NZX-50 down 0.2 per cent. The Hang Seng index lost 0.2 per cent and the Shanghai Composite index dropped 0.7 per cent. In the currency markets, the euro was lower against major currencies due to profit-taking after a rally in overseas markets – it was up 2 cents versus the dollar – propelled by hawkish comments on inflation from European Central Bank president Jean-Claude Trichet. Against the US dollar the euro was trading at $1.3333 from $1.3364 late in New York and it was at Y110.32 against the yen, from Y110.67. The yen was fetching Y82.76 per dollar, versus Y82.80.
Weir Group, the Scottish pumps and values manufacturer, and Essar Energy, the London-listed Indian oil and power group, are worth following over the next couple of weeks:
Asian stocks were higher for a fifth day in a row, led by commodity shares as the Fed’s recent stimulus measures have boosted investor appetite for risky assets, the FT’s global markets overview reports. Japan’s Nikkei 225 was the biggest gainer as it jumped 3.37 per cent to 9,674.21. Australia’s S&P/ASX 200 climbed 1 per cent to a seven-month high and South Korea’s Kospi Composite was up 0.43 per cent. The Hang Seng index in Hong Kong was up 1.33 per cent and the Shanghai Composite was up 1.27 per cent. The region-wide MSCI Asia Pacific index was 1.4 per cent higher. In Thursday’s trading, some nicknamed the Federal Reserve’s $600bn quantitative easing package ”no asset class left behind”, and so it seemed with rallies for stocks, bonds, gold and oil – almost everything except the dollar. The S&P 500 index hit a two year high, its strongest level since just after the fall of Lehman Brothers in September 2008, rising 1.9 per cent to 1,221.06, crossing its April 2010 high-water mark in late-day trading. The global FTSE All-World index was up 2.1 per cent, also at a 26-month high, with new pre-crisis highs for the FTSE 100 as well, which hit its highest since June 2008. Crude oil hit a new six-month high over $86.50 a barrel.
Investors remained cautious ahead of the Fed decision on a second round of quantitative easing but Asian stocks were generally higher, especially in South Korea, reports the FT’s global market overview. The MSCI Asia Pacific excluding Japan index was up 0.4 per cent on expectations for further asset purchases by the Fed. The Shanghai Composite Index was off 0.3 per cent. The Japanese market was closed for a national holiday. In Tuesday’s trading, growth assets like stocks and commodities made one last move toward recent highs as markets prepared for easing from the Federal Reserve and election results from the US. The early push was provided by Australia and India, after both central banks raised their key rates by 0.25 percentage points. The moves propelled further losses for the US dollar, and moved into stocks and the long end of the US Treasury curve. By mid-morning in New York, the S&P 500 was 0.8 per cent higher at 1,193.57 while in Europe, the FTSE Eurofirst 300 added 0.52 per cent to 1,093.65. Oil and gas stocks were widespread gainers after BP’s quarterly results beat estimates. London’s FTSE 100 was up 1.21 per cent at 5,763.35 while the oil major added 1.5 per cent to 430.45p.
Asian stock markets were mixed amid cautious trading ahead of a long-awaited US Federal Reserve meeting later in the day, the FT’s global market overview reports. The MSCI Asia Pacific index was little changed as investors were reluctant to make big bets ahead of the Fed meeting, where a second round of quantitative easing measures is expected to be announced. Japan’s Nikkei 225 average was flat, and the Shanghai composite was little changed. In Monday’s trading, surprisingly strong Chinese and US manufacturing data provided investors around the world with something to chew over, but the fast-looming, and crucial, decision on further quantitative easing from the Federal Reserve, still held markets mostly in stasis. London was helped by the UK’s own PMI data which showed the first improvement in manufacturing activity since March, prompting debate over whether a recent run of strong numbers were truly reflecting unexpected economic resilience, or merely the calm before the economic storm when government austerity measures really begin to bite. The FTSE 100 closed up 0.3 per cent at 5,694.62. The yen was at Y80.57 against the dollar, from Y80.60 late Monday in New York, as investors await Bank of Japan’s policy meetings this week. It is at Y111.97 against the euro, from Y111.91.
Morgan Stanley strategist Teun Draaisma has thrown in the towel and closed his bearish underweight position on European equities. Draaisma has been bearish since late January, when he downgraded in the expectation of a 10-15 per cent fall in stock prices. He thinks we have now had the correction – the MSCI Europe index was down 13 per cent last Friday from its mid-April peak – and on a 12-month view its time to turn bullish. FT Alphaville has more. Read more
MSCI, the US investment analysis and market index company, has agreed to buy RiskMetrics, the risk advisory business, for $1.55bn in cash and stock. The offer of $16.35 in cash and 0.18 MSCI shares for each RiskMetrics share represents a 16% premium to RiskMetrics Friday closing price. The deal remains subject to shareholder’s approval from RiskMetrics and regulatory approvals. The deal is expected to be finalised in MSCI’s third quarter this year.
Markets may have rebounded by 60 per cent since March, forecasts might look punchy, the consumer backdrop challenging and there’s the possibility of a dramatic bond market sell off and policy normalisation ahead. But in spite of all that, JP Morgan remains bullish on European equities.
The bank looking for further gains in 2010 and has set a year end target for the MSCI Europe index of 1,300. (Current level is 1085). Read more
And so it begins – strategists at the big investment banks are starting to publish their 2010 forecasts.
Morgan Stanley duo Graham Secker and Teun Draaisma were quick on the draw with a pretty bearish set of predictions for the year ahead. Read more
The results of the latest MSCI reshuffle are out and they are already having an impact on stock prices.
As was widely rumoured, Ladbrokes has been removed from the MSCI World index, along with upmarket housebuilder Berkeley. Traders say this will trigger selling equivalent to 4.6 days average trading volume in Ladbrokes and 10 days in Berkeley. Read more
The chart below tracks the performance of the hallowed Goldman Sachs European “conviction buy list” relative to the MSCI Europe index.
It shows that Goldman’s analyst calls have outperformed the index by 14 per cent since January, 2008: Read more
… is almost upon us – well it is three weeks away – and here are the current runners and riders.
Based on recent prices, just one company, Whitbread, would have exited the FTSE 100, replaced by Wolseley, the building materials group. Read more
The quarterly reviews of the FTSE indices usually prove to be something of an anti-climax. Traders usually have a pretty good idea of what companies will be leaving or entering an index because the methodology used by FTSE is relatively straight forward.
The same cannot be said of the MSCI indices, which are seriously big – they have around $3,000bn benchmarked against them. Read more
Morgan Stanley plans to sell half its remaining stake in MSCI, the portfolio analytics and equity indices company, for about $850m. The move comes after Morgan Stanley boosted its Q2 profit with a $732m gain on a secondary offering of shares in MSCI, which went public last November. Morgan Stanley and other banks have been moving aggressively to raise cash after credit crunch losses and revenue declines. Morgan’s Q2 profit of $1bn would have been essentially wiped out without one-time gains from MSCI and the sale of a Spanish wealth management business. MSCI shares dropped 4.75% to $32.13 early Wednesday after it missed Q2 earnings estimates and disclosed the Morgan Stanley disposal.