Tag Archives: consumer
Look Beyond Short-Term Turbulence In Emerging Markets
http://www.ft.com/cms/s/0/efa289c2-d995-11e2-98fa-00144feab7de.html#ixzz2X2DFzLUx By Mark Mobius The long-term emerging markets picture is bright, says Mark Mobius Emerging stock markets ended May in decline, with concerns that the US Federal Reserve could taper quantitative easing (QE) measures earlier than expected accompanied by a sharp correction in Japanese bonds and profit-taking in Japanese equities. June has been even worse – QE worries are still with us, there have been riots in Brazil and Turkey and softer economic data out of China. Not surprisingly, this has hit emerging market bonds, stocks and currencies hard. This week, the Indian rupee hit an all-time low against the dollar. It is not a pretty picture. But the longer-term case for emerging markets is much more persuasive. Looking back, for example, in 10 of the past 12 calendar years, emerging markets have outperformed developed markets. One major reason I remain positive on emerging markets is growth. Although short-term global GDP forecasts have tended to drift lower as quarterly releases have missed expectations in a number of markets, I think 2012 will mark the low point in overall growth, with acceleration anticipated in 2013 and in subsequent years. I expect emerging market growth in 2013 and beyond to continue to be much stronger than growth in developed markets. As well as feeding into corporate profitability and valuations over time, this economic growth is likely to drive rising demand for commodities. Augmenting overall growth patterns, industrialisation and urbanisation in emerging markets are likely to increase commodity demand further, which over the longer term will drive commodity prices ahead. While commodities, exports and infrastructure development continue to be leading growth drivers in many emerging market economies, overall growth is likely to come increasingly from domestic sources. Expanding consumer wealth is creating an increasingly large and discriminating body of middle class consumers across emerging markets, and their demand – for cars, electronics and other consumer goods and services – is in turn creating increasingly significant domestic economic activity. Consumer indebtedness in emerging markets is far lower than in developed markets, so emerging market consumers have commensurately greater capacity to gear up their demand. In addition, demographic factors are far more favourable in many emerging markets than in many developed markets. With a relatively high proportion of the population in emerging markets moving into the workforce and a relatively low proportion of dependants, demographics are helping to reinforce consumer demand. Even in markets such as China, where demographics are less clearly favourable, productivity gains from moves out of agriculture and into manufacturing and service industries still provide a positive influence on growth and domestic demand. As emerging markets become more mature and investors in the asset class more varied and sophisticated, niche product offerings are becoming increasingly significant. For example, smaller companies represent a distinct opportunity within the emerging markets universe, providing exposure to businesses at an early and fast-growing stage of their life cycle. Private equity and private investment in public equity vehicles also help address these young, dynamic businesses. Within emerging markets. “frontier markets” enjoy strong growth arising from their low starting base, abundant natural and human resources and the availability of easy gains from market reforms and injections of technology into relatively low-wage economies. They are relatively under-researched, so undervaluation and pricing anomalies abound. Nowhere is this more the case than Africa, which I feel represents an investment destination on its own account. There are those who say the link between GDP growth and market returns is tenuous. Maybe. But investors don’t buy markets, they buy companies. For all the attractive trends outlined above, investors should always be looking for those stocks that are most underpriced relative to their long-term potential. In frontier markets, that potential is largely about capital growth. But increasing numbers of emerging market companies now trade on attractive dividend yields, and income is becoming a bigger component of total returns. Mark Mobius is executive chairman of the Templeton Emerging Markets Group Continue reading
No price hikes until end of Ramadan
No price hikes until end of Ramadan Salah Al Deberky / 21 June 2013 Grocery outlets in the country will publish, from next week, a list of more than 60 products consumed during the holy month of Ramadan, with 50 per cent discounts. Products which are most favoured by people during Ramadan have been selected, and will be made available in the markets from June 25, well before the advent of the holy month giving consumers sufficient time to make purchases, said Dr. Hashim Al Nuaimi, Director of the Consumer Protection Department at the Ministry of Economy. “The higher committee for consumer protection has decided to suspend all applications for increasing the prices of commodities, and no decisions will be taken on this count until the end of Ramadan,” Dr. Al Nuaimi said, noting that, the move was part of the ministry’s plan to support stability in prices in the markets during the holy month. As many as 100,000 Ramadan baskets containing a collection of discounted food items will also be made available. The department of consumer protection is in constant contact with sale outlets to be familiarised with all arrangements before the advent of the holy month, he said. The ministry is also keen on implementing Ramadan initiatives like the ration scheme through cooperation with major grocery outlets, he added. The Ministry of Economy, according to him, had contacted charity associations for coupons of the Ramdan ration and they will be distributed before June 25. “The Ministry is keen on developing the scheme which is largely meant for Emiratis, provided the associations supply the coupons with each one valuing between Dh300 and Dh500,” he said. He pointed out to the strong cooperation between the ministry and a number of major grocery outlets like the Abu Dhabi Cooperative Society, Union Coop and Sharjah Coop. The ministry will also coordinate with suppliers to avoid any hikes in prices, and all measures will be taken to maintain the prices during Ramadan, he reiterated. news@khaleejtimes.com Continue reading
If A Tree Falls In The Forest, Can You Make A Little Money?
By John Wasik CHICAGO | Mon Jun 3, 2013 4:42pm EDT (Reuters) – If a tree falls in the forest, can you make a little money? As the U.S. housing rebound continues, you can watch the value of your real estate rise. In addition you can reap gains from resource companies that own and process timber. Since most U.S. homes are still framed with wood, timber becomes a more valuable commodity as new construction booms. Home prices gained the most in seven years in March, according to a recent S&P Case-Shiller housing index report. Housing starts in April rose 16 percent over the previous month with new building permits up 14 percent, according to the U.S. Census Bureau. North American sawmills are running at the fastest pace in six years, up nearly 7 percent over last year, according to CIBC World Markets , a Canada-based investment bank. Growth in China is also contributing to the rebound. More than 60 percent of log exports from the Pacific Northwest head to the People’s Republic. Timber is also becoming more scarce as forests shrink. As a commodity, it provides an inflation hedge, too; the S&P Global Timber & Forestry index has produced an annualized return of nearly 7 percent over the past three years through April 30. The current Consumer Price Index is running at an average 1 percent. Why invest in timber and related resource companies instead of the obvious play in homebuilder stocks ? Those companies have been rallying for more than a year and are pricey. The SPDR S&P Homebuilders ETF, for example, a fund that holds most of the major home-construction companies, is up more than 50 percent over the past year through Friday, almost double the price of a consumer cyclical index. That portfolio’s price- earnings ratio – what investors are willing to pay for a dollar of expected earnings – is 20, compared to 14.4, for the SP 500. The underlying S&P index for the timber sector has climbed more than 31 percent over the past year through May 31 compared to a nearly 50-percent gain for the S&P Homebuilders Index. The iShares Global Timber and Forestry Index ETF (WOOD), has p/e of 18; that’s not a bargain price either, but timber stocks are a better value now relative to homebuilding stocks and may have more upside. REGIONAL VIEW Most timber companies specialize in specific regions where they own or lease properties. But to obtain global diversification, it’s best to consider one of two exchange-traded funds on the market that hold timber, packaging and real estate investment trusts (REITs) that own lumber resources. The Guggenheim Timber ETF, holds major producers like Weyerhaeuser Co and International Paper Co. It tracks the Beacon Global Timber Index, which holds companies that own or lease forested land or produce wood-based products. More than 40 percent of the companies are based in greater Europe or Asia. It’s up 8 percent year to date through May 31 and gained 25 percent last year. As an alternative, the iShares timber ETF mentioned above has more than 60 percent of its holdings in the Americas, including Plum Creek Timber Company Inc and Potlatch Corp . The iShares fund is a better deal on expenses than the Guggenheim product, charging 0.48 percent annually for management, compared to 0.70 percent for the Guggenheim fund. It’s gained 4 percent year to date and 23 percent last year. Of the two ETFs, the iShares fund offers more total international exposure, including 13 percent stakes in Brazilian companies and 11 percent in Japan , says Eric Dutram, ETF analyst at Zacks Investment Research in Chicago. Either way, the two funds are reasonably priced, he said. Many timber companies give you a bonus if they’re vertically integrated. They could mean they are producing value-added products like rayon, packaging or paper, which also would benefit from a broad economic recovery. These companies may also own or lease land that may result in other mineral plays such as petroleum or natural gas . Keep in mind that timber trends can cut the other way. As funds specializing in a handful of commodities that rise and fall directly with economic demand, these ETFs are not for nervous investors. Guggenenheim Timber lost nearly half its value in 2008 and has a 32-percent five-year standard deviation, a volatility gauge. That compares to 20 percent for a world natural resources stock index. If the housing market goes south again, then these ETFs will suffer. Consider them only as small parts of a larger portfolio and not large holdings. (The author is a Reuters columnist and the opinions expressed are his own. For more from John Wasik see link.reuters.com/syk97s ) (Follow us @ReutersMoney or here Editing by Linda Stern and Andrew Hay) Continue reading
