Not your older brother’s emerging markets :: Goldman Sachs

Not your older brother’s emerging markets
Five macro tailwinds drove stellar performance of EM assets
Five major macro tailwinds, alongside very large risk premia for EM assets,
drove the stellar performance of EM assets in the last decade, when they
delivered historically high returns and comfortably outperformed their DM
peers. Those tailwinds stemmed, to a large extent, from the late-1990s
crises and the sharp rise in the growth impulse from China.
But the structural story for the years ahead is very different
But none of the five major macro tailwinds is likely to repeat itself, and some
may reverse. Moreover, risk premia in EM assets are generally much smaller,
with the possible exception of EM equities. Over the next decade, EM assets
are unlikely to deliver the kind of risk-reward that investors had become used
to in the last one. And absolute returns will likely be much lower.
Not your father’s emerging markets either
The good news is that sovereign leverage is generally lower, only a few
countries are running large current account deficits and fiscal positions are
generally on a sounder footing than in the developed world. But macro
policy challenges have become more acute for many EMs and significant
economic adjustments may lie ahead. Investors also have greater exposure
to these markets than in the past. Hence, the skew of potential returns in
many EM assets has become more negative and differentiation across the
group may be more important than exposure to EM assets as a whole.

India emerging companies - Why bother with small/mid-cap stock selection? :: Standard Chartered Research

 Reason #1: Under-researched stocks = Higher returns. For similar improvement in RoEs, under-researched stocks
have generated better returns1. The Indian small/mid-cap (SMID) space has also produced the maximum number of 10
baggers over the past decade in the region2.
 Reason #2: It’s not just beta. Post GFC, correlations of the BSE mid-cap index vs the Nifty has been falling while RoE
dispersion within the SMID space has magnified3, making stock selection more important.
 Reason #3: Alpha generation. Macro-economic cycles can be played via sector rotation strategies, but stock selection
can be a dominant performance driver between cyclical turns4.
 What’s a winning strategy? Investing in small/mid-caps (1) with high RoEs or (2) where the stock is discounting a high
cost of equity (i.e., low PB/RoE) has proved to be the most rewarding strategy over the past five years5.
Is there a method to the SMID madness? We have assessed the predictive capability of 10 financial parameters over
the past five years. We rank the SMID universe using the four factors that our backtests reflect as the statistically most
influential drivers of share price performance (RoE, PB/RoE, EPS growth, RoE momentum). Our backtests show that
selecting the top quartile stocks based on our four-factor merit order would have led to 20% CAGR over five years from
2008 to 20126. Our findings largely align with our regional Emerging Company approach of identifying “Value Creators”
(Refer report Value Creators by Jeremy Sutch).

11 SIMPLE tips to SAVE money ::Fintotal Insights and Resources

A dummy’s guide to help you become rich. Simple, but effective.

1. Walk down to the station if it's just 15 minutes. If not, then bus. This can, surprisingly, save you loads of money in long term.

2. Throw away your credit card. The interest charged is more than 30 percent.

3. Buy non-perishable items in bulk with friends.

4. Shop a lot! But only during sale. And look out for discount coupons and codes.

5. Have three months’ contingency fund in your account. Don't touch unless there is an emergency.

6. Educate yourself on personal finance basics. It's easy and can have tremendous positive effect in your life.

7. Skip CCD. Hang out at your nearest chaiwala or a dhabha.

8. Have a fixed automatic amount transferred to a mutual fund at the start of every month.

9. Eat light before going to fine dine. Good for your body and wallet.

10. Take less than five minutes to write down to your expense every day.

11. Buy generic medicines. It costs 10x less than branded medicines.

The author is director at Fintotal Insights and Resources Pvt Ltd.

Technicals -RPower, Vijaya Bank, Manappuram, Asian Paints, Shree Renuka Sugars, Tata Global Beverages :: Business Line

 

Technicals- Reliance Industries, SBI, Tata Steel, Infosys :: Business Line

Nomura research :: Indian oil & gas weekly

CCEA is likely to consider gas pricing decision this week
While a gas price hike was on the agenda for CCEA’s meeting last week,
the matter was not considered due to the absence of the petroleum
minister.
Nomura view: The CCEA is likely to take up the gas pricing issue this
week. Ahead of the crucial meeting, there seems to be hectic lobbying, we
believe. The fertiliser ministry has seemingly agreed to a price of
USD6.78/mmbtu. But, the power ministry is vehemently opposing a price
hike (especially an APM hike). Private players, on the other hand, are
seeking import parity prices (USD12-14/mmbtu). While we don’t see much
rationale for an APM hike, we think the GoI will opt to play it safe and raise
APM prices also.
Muted consumption growth in May; decline for LPG, kero and diesel
Total petroleum product consumption grew by 2.3% y-y in May. But, all
controlled products saw a y-y decline: LPG (-5.5%), kerosene (-2.1%) and
diesel (-0.1%). Published numbers indicate a sharp 31% y-y growth for
gasoline. Such a sharp increase seems erroneous, in our view. For more
details, please see Fig 24 inside.
May-13 production: Oil declines 2% y-y; gas declines sharp 19%
ONGC’s oil production declined by 1% y-y. The decline in Oil India’s oil
production was much sharper at 5% y-y. Rajasthan block’s oil production
remained flat at ~175kbpd. ONGC’s gas production saw a sharp 4% y-y
decline in May. Private/JV sector gas production declined sharply by 42%
primarily due to the KG-D6 field. For details, please see Fig 17-22 inside.
Brent declined to ~USD100/bbl, SGP complex GRM at USD8.5/bbl
 Crude – The average Brent at USD104/bbl was flat w-w. But over the
weekend, Brent declined sharply to ~USD100 due to weak economic
data, a strong dollar and the US Fed’s comments on the scaling back of
the quantitative easing programme. Henry-Hub gas price increased by
3% w-w to USD3.9/mmbtu.
 Refining – SGP complex margins increased (the eighth successive
weekly increase) by 3% w-w to USD8.5/bbl, driven by firmed up middle
distillates. From April-end, SGP complex margins are up ~78%.
 Petrochem – Ethylene prices were flat w-w.
Key stock movements
 Except for Cairn, all other O&G stocks under our coverage declined w-w.
 PLNG and IOCL sharply underperformed the market by ~5% w-w.
Nomura research
 Quick Note - Asia polyester chain - Recovery is unlikely near term

Top ten technical trading strategies for coming week -- ET

Bulls finally took charge of the markets, supported by both global as well as domestic triggers which snapped a three-week losing streak. The markets ended 3 per cent higher, after lower-than-expected CAD eased worries about deficit funding and the strengthening rupee against the US dollar boosted market sentiment.

The S&P BSE Sensex surged 621.57 points to 19,395.81, its highest closing level since June 10, 2013, while NSE Nifty jumped 174.55 points to 5842.20, its highest closing level since June 17, 2013.

After a fabulous week, the markets will react to auto and cement monthly sales numbers on Monday, followed by China's HSBC Manufacturing PMI for June 2013 due later in the day.

Apart from tapering of US stimulus plans, global markets came under intense pressure on concerns about China's economic and financial stability.

The foreign institutional investors (FIIs) have been net seller of the Indian stocks worth Rs4250.8 crore, while the domestic investors were net buyers of Indian stocks to the tune of Rs379.4 crore till June 27, 2013.

For the month of June, foreign institutional investors have pulled out a record $7.53 billion or Rs 44,162 crore with the dollar at Rs 60 from the Indian debt and equity markets this month, as per media reports. According to experts, the next major trigger for the Indian markets is Q1 results which are going to start from the second week of July.

Analysts advise investors to use any correction as buying opportunity as valuations looks favourable. However, in the medium term, the rupee movement and important data flows both macro and micro will chart market moves.

"A number of checks and balances scheduled in the coming couple of weeks are likely to keep the market range-bound," said Dharmesh Kant, Strategies & Fund Manager (PMS) at IndiaNivesh Securities.

"Prudent trading strategy would be to utilize corrections for buying quality stocks in oil & gas, pharmaceuticals and banking space," he added.

Kant is of the views that some of the PSU banks are available at highly attractive valuations. Levels of 5,750 to 5,950 will be the range in which Nifty may oscillate in the coming week, where corrections are likely to be bought into.

Technical Check:

Nifty was finally able to find support in the range of 5400-5600 levels. It touched an intra-day low of 5566 on 24th June and after a couple of days of consolidation, it moved higher on Thursday and Friday. It actually rose by 5589 on Wednesday to close the week at 5842!

"The Nifty is likely to find stiff resistance near the 5870-5920 levels. It appears more likely that the index might correct again up to 5700 in the next few days," said Vinit Pagaria, VP - Investment Strategies at Microsec Capital Ltd.

"Only a move beyond 5970 would confirm that the medium term trend of the market has reversed and the index would then go on to make new life-time highs," he added.

Pagaria is of the view that the Nifty is likely to consolidate in the 5450-5920 range in the next couple of months.

Consider going long on Canara Bank: Business Line

INDEX OUTLOOK: Market shows resilience :: Business Line

Events that shaped private mutual funds industry :Business Standard

1993

Sebi MF Regulations 1993 formulated

First private sector MF Kothari Pioneer registered in July 93

First open-ended scheme launched by a private sector player (Kothari )

1994

 Morgan Stanley launched a fund on a “first-come, first -serve” basis leading to unprecedented response from investors. 

Also, for the first time, lead managers were appointed for a mutual fund scheme

1995

Reliance Growth and Reliance Vision were the first  schemes launched by an MF with “no load”

Incorporation of AMFI

First instance of a promoter misusing an MF comes to light. CRB mutual fund barred from launching new products 

1996

Sebi MF Regulations substituted by a more comprehensive regulation, that is, Sebi MF Regulations, 1996

1997

First merger in the industry- HB Asset Management  merged with Credit Capital Asset Management

1999

Union Budget 1999 made dividends tax-free in the  hands of investors

2001

First ETF launched by Benchmark MF

2002

Registration of MF distributors made compulsory by  AMFI

2003

UTI Act 1963 repelled and consequently UTI was bifurcated into two parts

2006

Sebi disallows open-ended funds from  charging initial issue expenses to investors

2007

First gold ETF launched

2008

Sebi disallows amortisation of initial issue expenses in close-ended funds ; end of the NFO saga

KYC introduced for mutual fund investors investing more than Rs 50,000

2009

Sebi bans entry load on MF investments

Sebi introduces KYD for distributors

2012

Sebi implements steps to reenergise the MF industry- look beyond top 15 cities, single plan and additional expenses can be charged  for monies mobilised beyond top 15 cities

BS Bureau

Mahendra Singh Dhoni's leadership style offers invaluable lessons for managers: ET

MS Dhoni, India's most successful cricket captain, is well on his way to be regarded as one of the greatest leaders the game has seen. In the past, people have attributed his success to luck, timing, good fortune and the like. But on closer analysis of his success, we see a clear pattern emerging. Dhoni's leadership style offers invaluable lessons to managers at all levels.

Oil & Gas Upstream PSUs: Bettertimes ahead, Gas Sector Languishing Further : Karvy

Upstream PSUs: Bettertimes ahead, Gas Sector
Languishing Further
With softening of crude oil price and diesel price getting partially
deregulated, we expect earnings of Upstream PSUs to accrete in FY14 and
FY15. The earnings could be further enhanced by a domestic gas price hike
which seems to be very likely in the near term. However, we expect Gas
players to continue their weak show on account of availability and
affordability issues amongst core users.
Softening Crude Oil Price and Reforms to Boost the
Earnings of Upstream PSUs
We expect crude oil price to average at $ 105/bl and $ 100/bl with rupee at 54
and 52 in FY14 and FY15 respectively. We have assumed underrecoveries for
diesel to stabilize around Rs 3/liter in FY15. This is likely to come down to
zero as well, however we prefer to stay conservative due to policy
uncertainties. We expect under recoveries to come down to Rs 1140 bn in
FY14 and Rs 970 bn in FY15. Thus we assume 23% and 11% increase in the
netrealizations of ONGC and OilIndia respectively in FY14 YoY
Gas Price Hike on the Anvil: Benefits Reducing
down the Value Chain:
The Oil Ministry has proposed to the Cabinet to approve gas pricing formula
($6.77/mmbtu) recommended by the Rangarajan Committee in order to
incentivize producers without hitting the core consumers adversely. We
expect an increase of Rs. 3/shr and Rs. 4.5/shr in the EPS of ONGC and Oil
India resp. for every $1/mmbtu increase in gas price. Further hike (in
accordance with the demand of producers) could dent the volume offtake
from the core consumers.
Upstream PSUs a Better Bet
We still find Upstream PSUs attractive, looking forward to catalysts in the
form of zero under recovery on diesel; lower LPG and Kerosene losses, and
higher gas price and buoyant volumes. Languishing supplies from domestic
fields and lower demand for expensive RLNG will continue to hit the
earnings of Gas distributors. We assign a BUY rating on ONGC and Oil
India viewing possibility of further rerating, whereas we stay cautious on
Cairn India as outlook for crude oil looks grim. Even though the
fundamental outlook is grim, we assign a HOLD rating on RIL, Gail India,
GSPL, and Gujarat Gas due to cheap valuations. Significant correction in
Petronet LNG gives an opportunity to BUY. We also reiterate BUY rating on
IGL.