Dividend Stocks Could Be Dangerous in 2015, Ketterer Says – Bloomberg 12-31-15

Salient to Investors:

Sarah Ketterer at at Causeway Capital Mgmt said:

  • Buying energy stocks very incrementally as oil prices eventually reach a floor and rise again but no idea when. Looks for companies with tremendous financial strength that can continue to pay dividends. Smart companies will use  their balance sheet strength to buy distressed company assets.
  • Do not be passive and just buy the S&P 500 or a world index in an ETF because markets are fully priced and the largest weighted stocks are the most fully priced.
  • Active management fees pay to identify stocks left behind and avoid those that won’t blow up the portfolio.
  • Owns some Russian stocks but not aggressively. If crude oil stays at current prices or slightly higher, there will be further economic strains in Russia over the next several quarters.
  • Underweight US-listed stocks in global funds at 45 percent versus the almost 60 percent benchmark. Some of the best-managed oil and gas companies are US-domiciled.
  • Outside the US there are few tech stocks and no managed care. Some of the best opportunities in financials are abroad.
  • Consumer staples, utilities and health care globally are overpriced so it will be hard for them to meet expectations.
  • Likes industrial stocks in Europe that have fallen because of concerns about growth in China and Europe because they will end up outlasting their competitors, taking market share and becoming even more efficient. If businesses are doing their job and constantly evolving they can succeed even in a stagnant environment.
  • Investors worst mistake is short-term thinking, by selling at just the wrong time.

Read the full article at http://www.bloomberg.com/news/2014-12-31/dividend-stocks-could-be-dangerous-in-2015-ketterer-says.html

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Morgan Says Buy Russia Stocks Seven Weeks After Sell Call – Bloomberg 10-20-14

Salient to Investors:

  • Ronan Carr at Morgan Stanley said they are tactically overweight Russian stocks – upped to Buy from Sell – and that the situation is not deteriorating and that worst case outcomes, like additional sanctions, now appear less likely.
  •  JPMorgan Chase said Russian stocks are likely to extend declines. Analyst Alex Kantarovich said buyers should wait for stabilization of oil and geopolitical de-risking. Analyst Anastasia Amoroso said the de-escalation of the Ukraine conflict may take 6 months to a year, and the sanctions would not be lifted until after that happens.
  • Kirill Yankovsky at Otkritie Capital said the absence of either Wall Street bank or individual consensuses indicates that no one understands what is going to happen – Russia’s economic future is tied up in politics, so a single political decision can spark a rally or tank.
  • Moody’s cut Russia’s credit rating to Baa2, the second-lowest investment grade.
  • The Micex is at 4.7 x estimated earnings, the cheapest in emerging markets.
  • Freeman & Co said that from 2002 through 2013, Morgan Stanley earned more investment banking fees in Russia than any other Western bank.
  • The median analyst expects Russia to grow 0.3% in 2014.
  • Ilya Kravets at Daniloff Capital said we have not passed the bottom yet, and investors are extremely cautious and well aware that it will take time for the Ukraine crisis to be solved and the sanctions to be removed.

Read the full article at http://www.bloomberg.com/news/2014-10-19/morgan-says-buy-russia-stocks-seven-weeks-after-sell-call.html

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What Putin Wrought Has World Asking What Russia Might Have Been – Bloomberg 09-29-14

Salient to Investors:

  • Michael McFaul at Stanford University sees long-term damage to Russia from Putin’s new direction.
  • Anders Aslund at the Peterson Institute for Intl Economics sees a similar shortfall in Russia’s 2014 growth to 2013’s growth of 1.3%, and versus IMF’s 2013 forecast of 3.9%.
  • Alexei Kudrin expects Russia to post zero or negative growth for the next 2 to 3 years.
  • Charles Collyns at IIF said engagement with Ukraine has put the Russian economy on a far weaker growth path.
  • EPFR Global said global investors withdrew $850 million from Russian bond and stock funds in the year through September 24.
  • Goldman Sachs and Citigroup CEOs skipped the Petersburg Economic Forum gathering in May. Blackstone has stopped seeking investments in Russia.
  • Sergei Guriev said Putin’s dream of making Russia one of the world’s 5 biggest economies by 2020 is in ruins and predicts he will soon have to shrink spending on military and pensions as a falling oil price provides another fiscal challenge.
  • Vladimir Lukin said the US and EU must bear some responsibility for their persistent and unilateral expansion of NATO, and then the EU, towards Russia’s borders.
  • Benoit Anne at Societe Generale expects further sell-offs in ruble assets because international investors are either primarily or have decided to avoid them.

Read the full article at http://www.bloomberg.com/news/2014-09-29/the-cost-of-putin-s-economic-u-turn.html

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Emerging Stocks Fall to Lowest Since May Amid U.S. Rate Concern – Bloomberg 09-25-14

Salient to Investors:

  • Jonathan Garner at Morgan Stanley said the problems are more than just reaction to a Fed tightening, but include declining relative return on equity compared to developed markets.
  • The Russian Micex is at 5 x estimated earnings, the cheapest in emerging markets.
  • The MSCI Emerging Markets Index is at 10.9 x estimated earnings versus 14.8 x  for the MSCI World Index.
  • BNP Paribas lowered its rating on the Hang Seng China Enterprises gauge .

Read the full article at http://www.bloomberg.com/news/2014-09-25/emerging-stocks-drop-with-currencies-on-concern-over-u-s-rates.html

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Emerging Market Stocks Extend Rout With Currencies; Ruble Slides – Bloomberg 09-15-14

Salient to Investors:

  • BIS said unprecedented stimulus by central banks and historically low volatility levels across asset classes have made it more likely that emerging markets will destabilize. BIS said governments and companies from Latin America to Asia have boosted borrowing in local and foreign currencies, leaving them more vulnerable when interest rates increase or their exchange rates weaken.
  • John Lomax at HSBC said emerging markets are concerned with the substantial move of the dollar and US interest-rate expectations, while sanctions remain a constraint on Russian equities.
  • The MSCI developing-nation index is at 11.1 x estimated earnings versus 14.9 x for the he MSCI World Index.

Read the full article at  http://www.bloomberg.com/news/2014-09-15/emerging-stocks-extend-longest-loss-in-10-months-on-china-data.html

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Russian Bulls Replace Bears in Latest ETF Inflow Surge – Bloomberg 08-27-14

Salient to Investors:

  • Alexander Antipov at Veles Capital said investors are cautiously optimistic as there are talks and there have been no new sanctions on Russia. Antipov said Russian equities are very cheap, and long-term investors will make serious profits when the Ukraine crisis is solved and things return to normal.
  • The Micex Index is at 5.2x projected earnings, the cheapest among emerging markets and at a 57% discount to the MSCI Emerging Markets Index multiple.
  • Igor Nuzhdin at OAO Promsvyaz Bank said investors do not expect a quick solution to the crisis, but the market sees no new sanctions against Russia as long as talks continue. Nuzhdin said ex-geopolitical risk, most of Russia’s biggest companies are fundamentally attractive long-term.
  • Cameron Brandt at EPFR Global said Russia-dedicated funds this month through August attracted the highest monthly inflow since March, and the performance gap between Russian equities and emerging markets in general is inviting, especially if events in Ukraine resolve themselves without getting close to the worst-case scenarios.
  • Alexey Tretyakov at Aricapital said investors take no breakthrough but no major escalation in the Ukraine crisis as good news.

Read the full article at http://www.bloomberg.com/news/2014-08-27/russian-bulls-replace-bears-in-latest-etf-inflow-surge.html

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World’s Biggest Wealth Fund Slows Emerging Market Investment – Bloomberg 08-21-14

Salient to Investors:

Yngve Slyngstad at Norges Bank Investment Management, Norway’s sovereign wealth fund, said:

  • They are gradually picking up some new markets but at a less rapid pace than at the beginning of 2014. At the end of June, 9.9% of the fund’s stocks and 13.4% of its bonds were in emerging markets.
  • They neither buys nor sells markets that exhibit the kind of turbulence and geopolitical risk that Russia is enduring.
  • They expanded into stocks in 1998, emerging markets in 2000, and real estate in 2011.
  • Invest in countries roughly in proportion to the size of the underlying economy. Will move to correct being hugely under-invested in China, currently 2.4% of all equities and largest emerging market position,
  • They will reduce the share of European stocks to 40% from the current 46%.

Harald Magnus Andreassen at Swedbank said growth markets are prone to more volatile developments because people get too fascinated with the growth story and forget the long-term balance in the market that does not yield that high a return on those investments.

Read the full article at  http://www.bloomberg.com/news/2014-08-20/world-s-biggest-wealth-fund-slows-investment-in-emerging-markets.html

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BlackRock Sees Russia Buying Opportunity After Calling Rally – Bloomberg 07-10-14

Salient to Investors:

  • Sam Vecht at BlackRock says Russian stocks are very cheap, carry a high dividend yield, and earnings downgrades are absent. BlackRock’s Emerging Europe Trust was 50 percent invested in Russian stocks at the end of May.
  • JPMorgan upgraded Russian stocks in June,
  • The Micex is at 5.6 times estimated earnings, the lowest of 21 emerging markets.
  • A Bloomberg survey forecasts Russian economic growth of 0.5 percent for 2014.

Read the full article at http://www.bloomberg.com/news/2014-07-10/blackrock-sees-russia-buying-opportunity-after-calling-20-rally.html

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Dimensional Winning in Emerging Markets: Riskless Return – Bloomberg 07-08-14

Salient to Investors:

Karen Umland at the DFA Emerging Markets Small Cap Portfolio Fund is slightly overweight India, and had 15 percent of holdings in Taiwan, over 14 percent in South Korea, over 14 percent in China, and 9.2 percent in Brazil at the end of Q1. Umland dislikes Russia and Egypt because of lack of market transparency and trading volume. Umland and co-manager Joseph Chi say companies with very low profits and high relative prices are chronic underperformers.

Patricia Oey at Morningstar said limited variation in country and industry weightings can hold back a fund so the DFA fund may outperform at times, and underperform at other times.

Read the full article at http://www.bloomberg.com/news/2014-07-09/dimensional-winning-in-emerging-markets-riskless-return.html

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How I Am Playing The Game – Jim Rogers On The Markets 01-30-14

Salient to Investors:

Jim Rogers said:

  • Prefers the Japanese market, down 60 or 70 percent from all time highs. to the US which is at all time highs. Abe has no constraints, can spend and print as much as he wants.
  • Like Russia’s very depressed stock market. Russia is hated more than any other place except maybe Argentina. 

Read the full article at http://jimrogersonthemarkets.blogspot.com/2014/01/how-i-am-playing-game.html

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