Investors are very pessimistic. Globally, stocks are trading at 10x earnings (i.e. 2007 earnings). Chinese shares are trading at 9x, Indian shares are 10x. The prize goes to Russian shares which are now trading at 4.4x earnings. This tells us that investors are expecxting earnings next year to fall 50% at least.
Bears now outnumber bulls. Which in itself is a good sign. Fund managers are sitting on over 60% cash waiting for investors to redeem, not necessarily because they are pessimistic.
The Chinese market looks to be the only game in town with the Chinese government announcing a USD586 billion stimulus package for the next 2 years. Also, the Chinese banking sector has only minimal exposure to Lehman, and the toxic CDO's which have dragged down their Western counterparts. look for value in Chinese banks which have been sold off on concerns about their level of exposure to toxic assets, infrastructure, natural resources, and consumer shares. Stay away from export based companies as the markets in the US and Europe will contract. Ditto trtansportation shares.
Happy hunting!
Subscribe to:
Post Comments (Atom)
No comments:
Post a Comment