US Investment Views 25 Oct

Good morning New York! To catch up with what has happened last week, please read my weekly review.

Asia

Asian markets were mixed today. Japan was down as export data shows slowing growth: NIKKEI –0.27%, while Hong Kong/China were up: HSI +0.46%, HSCEI +0.97%, SHSE +2.57%, boosted by strong earnings announcements from a couple of companies reporting today.

The Japanese market is down because export slows, and their currency is not helping them. Japanese Yen and other currencies rose again today while the US dollar dropped after the G20 produced no surprise. The dollar index (DXY) dropped below 77.00 now as all those currencies traders are apparently returning to their trades of a weak dollar. Of course, as dollar weaken, it would give a boost to the stock markets. That is the most important factor which I have been talking about, and certainly everyone should be looking at that.

SGX also agreed to pay $8.3bn to acquire ASX. I have written a commentary on the implication of this on Hong Kong Exchange, criticising HKEX of being too complacent and not getting things right quickly.

Europe

European markets are higher now, as US dollar continued its downtrend post-G20.

Headlines include LVMH (LVMH.PA) denied a rumour of taking-over Hermes (HRMS.PA), although HRMS.PA rose some 16.15% in Paris. In the UK, the PM David Cameron announce his plan to get the private sector growing and supporting the economy by invest in green technology. In Italy, banks are cutting dividend payout rates.

US

Futures are higher in US as US dollar is weakening. Ben Bernanke is speaking as I prepare the morning call, and he said the regulators are aware of the foreclosure mess, and will keep paying attention to its impact on housing market and economy. I may have more comments later after his speech if there is anything important.

Today we will have Existing home sales figure in US, with the consensus pointing to a 4.1% increase from August. However, I wonder if the current foreclosure mess would have any effect on the sales progress of home. We probably will grow more sceptical in the coming months.

Also noteworthy, Goldman Sachs (GS.N) put Citi (C.N) into their conviction buy list as their emerging market exposure are giving them a strong growth engine. They also re-iterated HSBC (HSBA.L, 5.HK) as conviction buy as their strong global network is undervalued in their view. Citi is up in premarket.

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About Zarathustra

Zarathustra: Founder and Managing Editor of Also sprach Analyst. Once an analyst, now an investor and entrepreneur. Based in Hong Kong, but Londoner at heart.