Naspers as a long term opportunity / cheap exposure to Tencent.

 

Naspers : Tencent stake worth 160 BLN USD while Naspers market cap on JSE at around 112 BLN USD …
Gap is increasing as Naspers stock price corrected , move mainly due to capital outflows linked to political uncertainties in SA.

All other Naspers stake and businesses are valued « negatively » considering Tencent current price !! …  2 solutions : 1/ Tencent price at some point will collapse.
2/ Gap valuation will close in the future via Naspers stock price adjusting . Anyway , buffer at current price is VERY VERY LARGE .

Stock has corrected 22 % from 4100 to 3200 (top to bottom) – see chart below – :  we are at interesting  long term entry levels at current price or better at october
trigger levels  (see green line on chart) around 3000 ZAR which should act as strong support.

 

UBS Target price … ZAR 5250 (Today ZAR 3290)

 

 

 

https://www.fin24.com/Tech/Companies/naspers-considers-structural-options-to-reduce-tencent-value-gap-20171213

 

 

 

Brazil / iShares MSCI Brazil (EWZ) : Profit taking on position bought in May

 

Initial blog post May 19th  : http://www.investorid.one/2017/05/19/political-crisis-in-brazil-again-market-moves-overdone-buying-opportunities/

 

Triple Top forming and pending reversal.

RSI & MACD divergences & ADX showing bearish signs.

25% profit booking : Purely Tactical = We remain Positive on Brazil & EM in general for the long term.

 

 

 

 

Franklin Templeton Annual Conference / October 2017

Link to slides below text.

Europe

FT has strong view on european equities…

  • Private consumption led recovery (Slide 10) i.e more potential on the export side if EUR weakens.
    From big budget deficit in peripheral countries to surplus since 2010 for the most (Except Spain) (Slide 12).
    European growth better relative to US in 2016. (Slide 17).
    SEK = Opportunity relative to EURO (Slide 18) : Risksbank to hike rates sooner tha later  EUR-SEK spread to go down.
    Earnings in Europe at crisis low (2010) !!! Not the case for US .. (Slide 20). Momentum improving for EM earnings.
    European recovery well established : Unemployment at lows / IFO / Manufacturing PMI / GDP (Slide 21)
    Support for EURO improving vs 2016 amongst Member states (Slide 22)
    Huge potential recovery for european corporate earnings still 46% below pre-crisis peak….(Slide 23)
    … & at all time lows as % of MSCI World. (Slide 24)
    European Corporates sales recovery … earnings not yet … Margins will improve once we have more inflation. (Slide 25)
    P/B at 1.8 in the lower range for last 20 years. (Slide 27)
    Normalised PE at 18.50 cheaper vs US / DM / 30Y average of 21.50. (Slide 28)
    Headwinds & Tailwinds for next 12m. (Slide 33)

Templeton EUROLAND Equities fund is already in our « Best in class « Funds list”

Emerging markets

… and on EM equities.

  • GDP/Capita : Huge room for growth !!! (Slide 36)
    EM GDP( and trade) in % vs World more than doubled in 20 years .. just the beginning.. (Slide 37)
    EM demography = ++++ (Slide 38)
    Internet usage : Amongst the top 10 countries, 5 are EM . (Slide 39)
    EM Ccies Index … 22% lower compared to 2002 and 24% lower than 2009 at bottom in 2016 // Today still nearly 40% lower to 2011 top. (Slide 44)
    EM equities trading at discount vs DM .. PE 12.40 vs 16.50 , PB 1.8 vs 2.3 with higher earnings growth 14.4% vs 10.40% and higher margins. (Slide 45)
    EM increasing Tech domination : (Slides 49 and follow.)
    EM fundamentals sounder than DM : Banking system , Public & corporate debt , cap to asset ratio. (Slide 54 and follow)
    EM key issues : Fed / US stimulus policy/ USD / Korea / China adjustments .

 

Templeton Emerging Markets Equities fund : Last 2 years performance was very good mainly since Manager change back in 2014 .

 

Franklin Templeton Annual-conference-Presentation_Lux October 2017

 

UBS Technical View on Markets – 21/03/17

 

US markets – Break of SP500 2350  targets 2280 -2300 / Worst case 2240  // Sharp move but short in time 1 or 2 weeks.

Oils stocks basing and turning bullish.

Buy US Financials after pullback.

US yields will pull back short term  : Short term Top around 2.60% 10y in place // See 3% in H2 2017 .

Major top in USD in place / UBS sees DXY at 92 in 2018 from 100 now.

Bearish USD so bullish Commodities, Gold, EM, Oil .

Big move in Gold within 12 months minimun target 1700 USd after USD 1375 break.

European, stocks : Buy Dax on pullback at around 11500 and Eurostoxx50 3200 as  max retracement so buying opportunity in  3200 -3300 range.

 

 

 

 

Update Mexican Peso : From Oversold To Overbought in 1 month time.

 

Hereafter an update of chart posted on January 23rd   : “Mexico … Time to buy ! ”  :   Link here  .

9 % gain for MXN since January 23rd . Investors who played this move via a pure Forex/leveraged trade could take partial profit from here and approaching the 19 support level. Investors who traded MXN via a short term 1 year bond purchase should hold. Those who did not act should wait an upward correction to 20,25 to 20,50 as  a good entry point.

 

 

 

 

Indian stocks testing resistances – Nifty 50 @ 8996

 

Growth concerns that followed demonitization announced last november have receded and Indian stocks advance since mid december bottom amounts to around 14%. The market here represented by the Nifty 50 Index is testing the 9000 level for the 3rd time in 3 years . It never closed above this key level so far. Indian stocks might need a pause (divergences do appear on momentum / price) after a 32% up move since march 2016. Investors should remain long term bullish on this very high potential market . Two potential entry points at this stage : 1/ On a firm confirmed (more than 1 or 2 days) break of 9000 level – not my preferred scenario for the time being given the general overbought sutuation in global markets  2/ after a consolidation/down reaction – i will keep you updated on the timing should scenario under 1/ not happen before.

3 funds amongst the best performers (*) in the last 3 years :

  • Comgest Growth India $ Acc – IE00B03DF997 –         3Y : 112,2%  – 2016 :  8,1%
  • Jupiter India Select $               – LU0365089902 –        3Y : 102,2% – 2016 :  4,3%
  • Morgan Stanley India Eq $      – LU0266115632 –         3Y : 88,60% – 2016 :  5,8%

(*) Performance as of 31/12/16 – In EUR terms –

 

Nifty 50 Indian Index

Indian Rupee vs USD

Rupee successfully tested 69-70 previous bottom (top for USD) versus USD and started to reverse days after major event that represented demonetisation in India . Indian Rupee may have found a major bottom against USD (Watch 70 not being crossed) after several years of weakness.

 

Mexico … Time to buy ! – Virt Portfolio

 

Mexican Peso :   The Mexican Peso has lost around 18% against USD since the day before Donald Trump’s election  and  38% since 2014  . This latter numbers might look huge but it has to be put into perspective considering that currencies like EURO, GBP and NOK,..  have respectively lost 24%, 29% and 28% against the Dollar in the same period. In the last 3 years, the Peso has suffered like most other currencies from general USD strength and on top of that was slaughterted by the so-called “Trump”effect especially when in Q2 2016  odds to see Trump as the Republican candidate for the US election started to increase . Even tough the Trump administration might dramatically hurt mexican economy, MXN recent weeks acceleration to the downside (Up for USD) is clearly an exxageration. Do not forget that as The Economist pointed 2 weeks ago,  40% of inputs in goods sold from Mexico to US comes .. from USA !! If Trump wants to punish Mexico, America itself will be hurt.

Technically,  MXN has reached last week the upper side of its 1 year range and being in overbought position it looks difficult to see the 22 level broken at this stage. The trend is slowly reversing as shown by the macd curve and bearish (for USD) divergences do appear between price and momentum indicators (here macd).

There is room for correction here in favour of the peso given that “Trump” effect will likely fade and that USD has entered a consolidation (nice word to say weakness) period .

Short term MXN bonds can be found with 5 to 7% yields in very good names . For example a Rabobank  maturing in Jan 2018 has a approximate 6% Yield , a 3 years EIB with 7% yield .

 

Mexican Stocks :  The mexican stocks valued in USD as shown by the Ishares Mexico here below (ticker EWW) have lost 20% since November 8th ( by the way Russian stocks have GAINED the same percentage) . Stocks like the currency seem to have bottomed from an range (USD 39 -USD 42 – see long term chart link below ) that acted as strong support in the last 10 years . Like for the MXN I add MACD reversal and price/ momentum divergence as technical evidences of a potential rebound .

Action : Buy 1 unit of EWW Max price 43.25 USD // SL : usual 10% closing basis .

 

Long term EWW chart :    http://schrts.co/ZY8wGG