Monday 29 October 2012
China's Economy To Rebound In Q4
The Chinese economy is more likely to rebound in the October-December period from the slowest quarterly expansion in 14 quarters "with positive signs," the China Iron & Steel Association (CISA) said in a report released Monday.
Fixed-asset investment, particularly the construction of infrastructure projects, will continue to be the major driving force of the economy in the months to come, according to the CISA report.As the country posted better readings on investment, consumption and export in September, the CISA said, economic growth has stabilized in the third quarter and there is greater likelihood for a rebound in the coming months.
The report quoted Yi Gang, vice governor of the People's Bank of China, the country's central bank, as saying that the Chinese economy is expected to expand 7.8 percent in 2012, higher than the 7.5-percent annual growth targeted by the government.The CISA indicated that the government might introduce more measures to stabilize the economy in the wake of the 18th National Congress of the Communist Party of China, which is slated to open on Nov. 8
"We can't rule out such a possibility," the CISA said, adding that an improving economy and higher prices will boost crude steel output in coming months, but weak demand from the property and manufacturing sectors will make a rapid recovery very difficult.
China's economy expanded only 7.4 percent year on year in the July-September period, marking the slowest quarterly growth in 14 quarters. China's crude steel output added only 0.6 percent year on year to reach 57.95 million tonnes in September, with the daily crude steel production accelerating 2 percent from the August level, according to data from the National Bureau of Statistics.
Friday 26 October 2012
Easy Business Trend In Emerging Europe
Polish central bank governor Marek Belka doesn’t apportion a lot of importance to the fact that Poland can boast the second biggest improvement in the latest World Bank’s ease of doing business index, after Kosovo.
“This year we have improved, but I don’t care too much about it,” Belka said at a meeting in London today.
As Charles Robertson, economist at Renaissance Capital, says in a note:
Emerging Europe has done the most to improve its rankings. Poland jumped 19 places, Ukraine rose 15 places, Mongolia increased 12, … Kazakhstan was up 7 places, Russia 6. Latin America has fallen back.
Others do see a significant trend emerging from the data around Poland which paints an optimistic picture for those wishing to start and do business in Europe, but not necessarily in the developed markets.
Uzbekistan is another climber in the 2013 index, albeit still lingering in the lower echelons of easy business on place 154.Armenia is on Poland’s heels as the world’s third most impressive upward mover, reaching 32nd place from last year’s 50th.
Perhaps unsurprisingly, doing business in Yemen and Syria has become more difficult over the last year, with the latter tumbling 17 places to 118th.Greece can hold its breath in the hope of attracting more business next year as it rose to 78th place, up 11 from 2012.
Beating all of those, Kosovo jumped up more than anyone else, 28 places in total, making it into the top 100 on place 98 according the ranking (although the ranking’s website says Poland is the biggest mover, their data indicates it’s Kosovo).
“There’s even a little (and much needed) good news for South Africa which improved 2 places,” Robertson observes, pointing to it reaching place 39, in spite of prolonged labour unrest in the country’s large mining sector.
Georgia may have shifted away from its U.S. allies after awarding victory in parliamentary elections to a more Moscow-friendly coalition early in October, but it did make the top 10 in 2013.
Wednesday 24 October 2012
European Investment Summit – Online Conference On Oct 9 & 10
The new European Investment Summit 2012, scheduled for October 9 and 10, promises to change all of that.
Put together by the folks behind The Manual of Ideas, the European Investment Summit is a fully online conference, meaning no plane flights or costly entry fees.
Having just participated in my first investment conference this summer, they are great opportunities to hear ideas from top investment professionals.
However, the cost of attending these conferences is usually prohibitive (at least for those of us who are still full-time students), even before the travel arrangements and other costs.
The conference has managed to attract an amazing group of speakers and will focus on investment ideas in Europe – an area of focus lately given the economic turmoil in that region.
A few quotes from the Marks’ interview (emphasis mine):
“What the investor has to do is weigh out on the one hand price and on the other hand reality. Everybody thinks very dire thoughts about Europe and the Euro, and I would be the last person in the world to argue against that position. Then the next question is, European assets are lower in price because of the macro conditions, but are the macro conditions being viewed too pessimistically?”
“[U.S. Treasuries] are a safe investment in the sense that the outcome is known and not really subject to variation. I think they are not a good investment because the known outcome is an unattractive one. Today you can buy the ten-year [Treasury] and with no risk, lock up the certainty of 1.9% return for ten years. Is that really a good thing to lock up?”
“Tenet number three of our investment philosophy says we are active in less efficient markets only. We probably wouldn’t do a hedge fund forlarge-cap New York Stock Exchange firms because the tendencies are that those would be more efficient than others. But emerging markets, yes. Japan, yes.”
Monday 22 October 2012
Academic Investing Research – Charts And Graphs
As I’m now entering the fourth module of my 1st year in business school, I’m starting to get into some of my elective classes for investment management.
So far, it has been a lot of academic-focused lessons on efficient markets, betas, CAPM, and factor models…not exactly topics that mesh with trying to outperform the markets by picking undervalued stocks!
I thought I would include a few of the more interesting charts and graphs from the year so far.
Returns on Small vs. Big
Returns on Value vs. Growth
However, if an investor is patient, a willingness to tie up capital for an extended period (hopefully in an undervalued security) could yield above-average results.
Risk Premiums
Source: John R. Graham & Campbell R. Harvey, “The Equity Risk Premium in 2010”
This chart is pulled from a forecast of CFOs on the equity risk premium used in cost of capital calculations.
An initial look at the graph shows that premiums are extremely volatile, which further weakens the validity of a CAPM model.
On the other hand, CFOs demanded a much higher premium (and therefore thought future projects were riskier) in the early part of 2009, right when investors should have been buying.
Could a low risk premium be an indicator for poor stock market performance?
Earnings Surprises
Many short-term focused hedge funds play an earnings game, and it turns out that there is some interesting effects, especially after large earnings surprises.
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