Global Statistics Analysis (28-05-07 to 01-06-07):
1) The US & EU Markets:
· US markets bounced back in this week trading on government reports that showed an improving economic outlook. The S&P 500 index moved towards its all time high trading during this period. The closing of US markets were in the range of 1.09% to 1.60% for this week closing whereas for the month of May'07 it's in the positive range of 3% to 4%.
· In EU markets we observed a negative start for the week but by the end of closing session on Friday it has rose to its highest close since Sep 2000, buoyed by a flurry of US data. On the statistics we can observe that it has gained 1% in this week whereas in the month of May'07 it has gained 2.67%.
2) The Asian Markets:
- Nikkei, Hang Seng & Strait Times are showing signs of strong developing markets. They have gained in the range of 0.36% to 2.11% in this week and 1.5% to 4.5% in the month of May'07.
- Taiwan and Korea have gained 1.14% and 3.56% respectively in this week and for the month of May'07 we observe upside at 3.42% and 10.25% respectively for these markets. Further, upward movements can be expected with some global positive cue in these developing countries of Asia.
- Federal Reserve Chairman Greenspan had commented on May 23 that Chinese stocks may undergo a "dramatic contraction" in near future. Well, as we had predicted that China stock market is overvalued and the equity bubble can burst on any negative cues. This is what we saw in this week trading sessions after the government tripled the stamp tax on stock trading to 0.3% from 0.1%. Until today the index had more than doubled this year and its stocks traded at 48 times earnings, almost 3 times the multiple for those in the US Dow Jones Industrial Avg. The statistic chart is showing southwards movement of 6.37% for this week ending and in the month of May it has still sustained positive signs at 7% (approx). We still expect further downtrend in this market. There is speculation surrounding the likelihood that government officials would once again attempt to tighten liquidity through tax measures.
- In India, for the last one month (May) we had a well balanced economic picture; control on inflation, good earnings and economic growth for FY07 has also been reported at 9.4% which is second only to China's about 10%. We don't see many concerns in a short term for the markets to slide down but clearly valuations are stretched and upside from here is very limited. It seems the markets will remain in a consolation phase. The positive trigger from here on to achieve new highs is depended much on monsoons, what happens in China and paradigm shift in the outlook for interest rates in India. Also, in this month market is expecting large amount of inflows from FIIs and investors because there are upcoming IPO's of DLF, ICICI holdings etc. lined up which seems attractive and requires large amount of liquidity for their expansion plans. In this week Nifty & Sensex gained 1% and 1.25% respectively whereas in the month of May gained 5% (approx).
3) Emerging Markets:
- In Bovespa (Brazil) and Bolsa (Mexico) we are observing gains of 2.5% and 1.84% respectively for this week in our statistics. As well as for in the month of May'07 they have managed to gain 7% to 8 % approx. These markets bounced back after correction phase in last week. They seem to be strong emerging markets.
- Russia has shown the sign of uptrend after long correction phase in this week closing. It has gained 2.15% in this week and still seems to be attractive investment destination for FIIs and investors because in the month of May it has corrected by 9% (approx).
- Karachi market is moving upwards slowly and steadily as we can observe on the statistics. It has gained 5% in the month of May'07 and in this week managed to gain 0.8%. It still has the potential to move upwards in coming trading sessions on some positive global cue.
4) Commodity:
- Crude Oil prices have climbed in this week due to supply concern. At, the end of week it has climbed up by 0.68%.
- Gold and silver are showing positive signs after a correction phase which lasted for 2 weeks (approx). In this week they have gained 2.36% and 5.16% respectively. At the end of May'07 on statistics it seems silver was almost flat whereas gold was down 1.89%.
- Similar, is the case for metals which have shown positive signs after a correction phase. Copper, Aluminum and Zinc have gained in the range of 1.3% to 3.63% (approx) whereas Nickel is still in down by 1%.
5) Currencies:
- The dollar hit its highest in nearly 4 months against the Japanese Yen in this week.
- Baht, Rouble and Peso currencies are depreciating must faster against a dollar comparing to other major export oriented countries such as India, China, etc. These are not good signs for other major export oriented countries.
- A rupee has broken the Rs40.5 mark in this week trading against a dollar. It seems in near future it will trade in the range of Rs.38 to Rs.40 per dollar. The IT sector has already increased their hedging position due to rupee appreciation which is major a concern for them.
6) Bond Yield:
- US 10 Year treasury notes rose to 4.95%, the highest level in more than 9 months. Higher bond yields make dividends bearing stocks less attractive.
India 10 Year benchmark bonds were flat in the trading.
Global Statistics