This sunday saw another key meeting between European politicians, with French and German leaders continuing to seek common ground over the terms of the European Financial Stability Facility (EFSF) expansion. In Brazil, October’s Copom Minutes will be released Thursday, with the local inflation and rate outlook critical to Brazilian share price performance in the coming weeks. Chinese macro data remains in focus. Last week’s third-quarter gross domestic product (GDP) reading of 9.1 percent marginally missed expectations of a 9.3 percent rise and represented a deceleration from the second quarter’s 9.5 percent level. Stabilization of iron ore prices is a pre-requisite for outperformance of the Brazilian materials sector near-term.
The China and Hong Kong markets trended down last week. Globally, the euro debt crisis overhang has not been removed yet. In China, the consumer price index declined by 0.1 percentage point to 6.1 percent in September, but overall liquidity conditions have not seen a significant improvement. Moreover, China’s State Council approved four local governments including Shanghai, Zhejiang, Guangdong and Shenzhen to issue bonds with amounts no more than 25 billion Chinese yuan, which could reduce local government’s dependency on land premiums. Mirae Asset added some large cap names.
The equity markets in India have seen a decent rally on expectations of a crude oil price correction and the peaking-out of interest rates. The corporate earnings announcement season has started and initial results across banks, autos, IT and oil and gas have been either in line or above expectation. Globally, markets have seen a strong rally on the back of rising liquidity and promises from different governments to do all in their capacity to sustain growth, with inflationary concerns taking a backseat. The world is waiting in anticipation to the fallout from the G20 summit and the European financial package if any. In Mirae Asset’s portfolio, the company continues to remain overweight in the India consumption story and have added risk very selectively and only at favorable valuations.
This report is provided by Mirae Asset Financial Group