[T.S.R:17278] India: Everything That Can Go Wrong Is Going Wrong. What's With The Smile? (JPM)

JP Morgan

Emerging Asia is reeling under high inflation, interest  rates and an evident slow down in Investments. So it is strange to see investors being smug about future prospects. We remain underweight exporters, technology and Korea. If you take-out tech and exports then what exactly does India offer?

Markets are at a cyclical high. Views are polarized between those who take comfort from the momentum and resilience of equity markets versus those that fear complacency. In 2010, equity market momentum reversed in mid April. Consistent with our bearish view on exporters, we recommend KOSPI puts as our preferred hedge against a market correction.

Within Asia, a number of key sectors did correct meaningfully from their 52-week high. Philippines, India Financials, China Financials, India, Korea Industrials and India Energy corrected more than 10% from their 52-week highs but have been outperforming MSCI APxJ in the past one month. Asian FX appreciation is reducing the inflation risk, particularly in ASEAN.

In the past four weeks, there were 1,370 downgrades to FY11 EPS forecasts versus only 395 upgrades in APxJ, resulting in a net revisions ratio for FY11 of -55%; a deterioration from -44%. FY12 revisions are lagging FY11 net revisions; the risk of FY12 downgrades is high. Finally on quant, earnings revisions strategies are outperforming.

Key asset allocation calls:

UW: Korea, technology and exporters

The main risks to our strategy are Libya - Jasmine revolution, oil shock, economic risks of the Japanese earthquake, food and energy price inflation, bond market volatility, peripheral European stress and uncertain outlook for commodities.

Safe Harbor Statement:

Some forward looking statements on projections, estimates, expectations & outlook are included to enable a better comprehension of the Company prospects. Actual results may, however, differ materially from those stated on account of factors such as changes in government regulations, tax regimes, economic developments within India and the countries within which the Company conducts its business, exchange rate and interest rate movements, impact of competing products and their pricing, product demand and supply constraints.

 

Nothing in this article is, or should be construed as, investment advice.

 

 

 

 

 

--
For Anything related with Stock market be Online at
http://www.niftyviews.com/
 
Get free updates on your mobile phone. Sms "Join TSR " and send to 09223492234
 
FOR TRIAL STOCK/NIFTY/OPTION CALLS
 
 
You received this message because you are subscribed to Google Group "STOCKRESEARCHER" group.
To post to this group, send an email to STOCKRESEARCHER@googlegroups.com
 
To unsubscribe email
Stockresearcher-unsubscribe@googlegroups.com
 
for more info visit
http://groups.google.com/group/STOCKRESEARCHER?hl=en-GB
.
This is Not a Spam Mail.
Disclaimer :-
"The opinions expressed by the members on this board are based on
their individual experience and perceptions and to share information
with other members with the best of intentions to help fellow members
in investment decisions as equity investment is a risky venture."