To be or not to be

bailout

Author: Kunal Damle

All this week has been about Greece with the ups and downs that started off with Capital Controls being imposed on Greece. It was a tough nut but sadly it came to this after all the brinksmanship that was involved. Equity markets swooned over this Greek Swan Song. On the other hand was China, were the markets were on a roller coaster ride of their own, with equity markets extremely volatile; down over 25% in the last month.  One can only say that volatility with a capital ‘’V’’ will be the name of the game.

Indian equities were resilient and saw decent gains going into the week. I would be a little cautious with earnings still weak and the stock markets euphoric; not exactly a recipe for success. Watch out for blips in the coming week.

Closer home GCC markets have been subdued, with Oil correcting to a 12-week low. Commodities have been hit hard on the back of USD Strength. With earnings season round the corner implies most investors would be on a wait-and-watch mode. UAE Stock market especially DFM has been resilient but most of the activity has been in the mid-cap names; eg: Amlak, Amanat, DSI et cetera. Dubai as a market looks to be in a better shape and earnings could be the trigger for the market. Turkey looks apprehensive as June CPI numbers printed at the lowest since 2013 at 7.2%. The outlook for next week, not mutually exclusively depends on the Greek plebiscite.  South Africa too is taking cues from the happenings in Greece.

Finally today will be when the Greeks decide on whether to Vote a “Yes” or “No”. Whatever happens equity markets are in for a choppy week.

© 2012-2015 Tanya Rawat. By posting content to and from this blog, you agree to transfer copyright to blog owner.

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No Monkey Business (Market Wrap- May 31st)

Coverage: Saudi Arabia, Turkey, UAE, Egypt, Nigeria and South Africa 

the_jungle_book-5051

Author: Tanya Rawat

“Now I’m the king of the swingers, the jungle V.I.P,
I reached the top and had to stop” starts the beginning verse of the catchy Jungle Book track “I wan’na be like yo…” made immortal by Louis Prima.

In the same rambunctious flavour, expect the markets to show chutzpah this week with Turkey getting the party started with pre-partying already reaching crescendo in the latter end of May (USD terms); the Borsa Istanbul 100 Index lost ~9.30% as polls conducted by trusted agencies showed the AKP (viewed by many as pro-market) losing ground to opposition. Ahead of the June 7th elections, expect the downward slide to continue with Benchmark 2Y bond yields at close to 1Y highs at 9.85% and 5Y CDS at 220 bps. Additionally, Turkey equity markets have a strong negative correlation with the US 10Y Tsy yields which are creeping up to 1Y highs on strong economic data from the US.

The S&P looks stronger, the VIX at 13 levels, Dollar strengthening expected as US 10Y Tsy yields expected to rise further as the economic makeup improves in the US. Expect Gold to be flattish around $1200 per ounce till the June 5th deadline for Greece to make debt payments to IMF (a key catalyst).

As per my call last week, GCC markets broke first levels of support with the Dubai Financial Market (DFM) breaching the 4K level (AED terms), Saudi failing to continue its upward momentum. This week though markets look more resilient on Saudi opening mid-month via passive flows and I expect them to be range-bound with no major catalyst and Egypt to looking equally sedate.

While I expect Naira to fare in the median in the pool of African currencies, I expect the Rand to continue its slide on continued Dollar strengthening. This is hurting the JALSH Index akin to other emerging market indices.

“Ooh-bi-doo, I wan’na be like you
I want to walk like you, talk like you, too
You see it’s true, an ape like me
Can learn to be like you, too”

© 2012-2015 Tanya Rawat. By posting content to and from this blog, you agree to transfer copyright to blog owner.

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