So that is going to be the focal point of this conversation just demystifying the global jargon and more importantly making that defining line between what impacts our market and what may not.
Mark Matthews, Equity Research at Macquarie Capital Securities and Shane Oliver, Head Investment Strategy & Chief Economist at AMP Capital Investors will demystify the global jargon and more importantly make that defining line between what impacts our market and what may not.
Here is a verbatim transcript of their comments. Also watch the accompanying videos.
Q: The two crucial terms that we hear very often, EMs and DMs, what kind of universe do both these terms straddle and why is it important for someone who is investing in the Indian market to understand what an EM or DM is?
Matthews: Both of them are indices that have about anywhere from 25 to 35 countries in them and they are indices that are managed by several different companies. So I am sure these names are familiar to our viewers, S&P, Dow Jones, FTSE but the biggest one is MSCI. MSCI was the first company to create a global index over 40 years ago and then they created various sub-global indices including emerging and developed markets and very simply the difference between emerging and developed is one of maturity and both income, developed markets.
One prerequisite is that they should have high incomes per capita and also in terms of the maturity of the market itself. So the foreign exchange market should be open, short selling should be allowed, minority shareholders rights should be enforced and protected in developed markets. In emerging markets ' it is not to say that some emerging markets don't possess this attribute ofcourse some do but a lot of countries do end up in emerging markets because short selling is not permitted or the foreign exchange market is not open or fully convertible. But the general rule for an emerging market should be that it is a high growth low income economy. In other words, it is a polite term for third world and infact less developed country. It was a term that was more popular until around the 1980s and then that was seen as maybe a little bit politically incorrect.
So emerging markets was termed by a World Bank economist named Antoine van Agtmael.
Q: India would fall under that category you would say, India is an emerging market?
Matthews: Yes, in all four of the indices, as I said, there is S&P, FTSE, Dow Jones but the big one for the most institutional fund managers is MSCI than four of those India is represented.
Q: There is a sub-representation then within the emerging market region which is called the BRIC universe, what countries does that involve and why was this bracket made of just the BRIC universe within the EM context?
Matthews: That was invented by one individual named Jim O'Neill, economist at Goldman Sachs and I think it was ten years ago in 2001 he wrote a report where he created this acronym. So it stands for Brazil, Russia, India, China and it is curiously not an acronym that has developed into a full asset class of itself in terms of fund management. There are a few BRIC funds but it never took off as much as emerging markets did but what is interesting is politically, there seems to be an evolution on this concept.
Q: Aside from the technical qualifications between these markets, are there other ballpark generalisations that people tend to make? For example, the opinion is or the observation is that emerging markets tend to be more volatile, more high beta than a developed market, can those assumptions also be drawn when you are looking at the two clusters?
Matthews: Yes, generally speaking they are. Why is that? One very simple reason is because they are less developed countries therefore they have ' their middle class as a percentage of a total population is smaller and therefore the amount of domestic individuals investing in the stock market is lower in percentage terms than it is in developed marekts because there isn't as much of a middle class yet. So in the absence of a large domestic investor base or atleast I should say a fairly sophisticated one, there are big domestic investor basis obviously in places like China and India but they tend not to be very sophisticated, they tend to be momentum followers and speculative as opposed to investing in stocks for the long-term.
What I wanted to say is in the absence of that, foreign institutional investors assume a much greater directional influence on the market and India would be probably the best example I think in the emerging market space.
Q: We have talked about emerging markets, developed markets, the BRIC universe but the one which has suddenly become on top of mind is the MENA region, what region of the world does that capture and why has it become so important especially when we are talking about crude oil and the implications on the equity market?
Oliver: The MENA region is essentially the Middle East (ME) and North Africa so it is countries like Libya, Egypt, Nigeria, Tunisia, that part of North Africa and ofcourse the Middle East, which includes Saudi Arabia and the Gulf states. Obviously that part of the world has always been very important because it is a key supplier of global oil but in recent months, it has hit the headlines because several countries in that region have seen political unrest starting in Tunisia, which has been led to problems in Egypt and then ofcourse more recently in Libya and although Tunisia and Egypt aren't that significant in terms of world oil supply, Libya certainly is and Libya has broken at a civil war which has affected supply world oil that ofcourse has pushed up oil prices.
There has also been tensions in some other gulf states into a less degree in Saudi Arabia so as a consequence, investment markets have been looking at that part of the world recently as to gauge to how far oil prices might rise and whether that in turn might adversely impact global economic growth.
1 2 3
.gD_15nRedN{font:15px/20px Arial;color:#FF0000 !important;text-decoration:none;font-weight:normal;}
Related News
Risk-return relationship: High return is the risk premium Would falling rupee make bank FDs attractive?
.gD_15nRed{font:15px/20px Arial;color:#FF0000 !important;text-decoration:none;font-weight:bold;}
.GoogleNewsTitle{font:14px/16px Trebuchet MS,Arial,Helvetica,sans-serif;color:#005066;text-decoration:none;} .GoogleNewsTitle:hover{text-decoration:underline} .GoogleNewsURL{font:12px Trebuchet MS,Arial,Helvetica,sans-serif;color:#000;text-decoration:none;} .GoogleNewsURL:hover{text-decoration:underline} .GoogleNewsTitleLine{font:20px/22px Trebuchet MS,Arial,Helvetica,sans-serif;color:#F01414;text-decoration:none} .GoogleNewsTitleLine:hover{text-decoration:underline} .GoogleNewsLineURL{font:12px family:Trebuchet MS,Arial,Helvetica,sans-serif;color:#000;text-decoration:none} .GoogleNewsLineURL:hover{text-decoration:underline}
Tags: Mark Matthews, Macquarie Capital Securities, Shane Oliver, AMP Capital, MSCI, FTSE, World Bank, Antoine van Agtmael
Know the finer points in clubbing income with spouse
Hilton Worldwide launches new global careers website
.scroll_hv .panel{width:250px !important; padding:10px 10px 25px !important} #scroll13{width:540px;} .hv_bx{margin-left:-10px;} .tab_data1{padding:0px;}
Texas-based ConocoPhillips (COP) has validated that it is on the receiving end of a formal notification by the Kazakhstan Ministry of Oil and Gas. The Ministry is exercising its right under the Subsoil Law of Kazakhstan to pre-empt ConocoPhillips' proposed sale of its 8.4% interest in the North Caspian Sea Production Sharing Agreement (Kashagan) to ONGC Videsh Limited. As part of such notice, the Ministry of Oil and Gas has nominated KazMunayGas (KMG) as the body that will obtain ConocoPhillips' interest in Kashagan. The asset is located in the Kazakhstan sector of the Caspian Sea. Under the pre-emption, the proceeds received by ConocoPhillips will remain unchanged at about $5 billion, including customary adjustments. Subsequently, KMG will proceed on finalizing all essential approvals, which will include a consent from the Kazakhstan Anti-Monopoly Agency. The transaction is likely to conclude in the fourth quarter of 2013. The latest sale of the company's interest in Kashagan forms part of ConocoPhillips' strategy to enhance shareholder value through portfolio optimization as well as focused capital investments. These will likely lead to growth in production and cash margins, superior returns on capital and a compelling dividend. ConocoPhillips remains on track with its divestment program, with a total of over $12 billion completed. The company has generated $1.1 billion in proceeds from asset sales during the quarter and expects to raise an additional $8.5 billion from the disposition program by the end of 2013. In this regard, ConocoPhillips is trying to shed part of the Surmont and APLNG projects this year. This would enable ConocoPhillips to generate a healthy cash surplus in 2013. ConocoPhillips carries a Zacks Rank #3 (Hold). However, Zacks Ranked #1 (Strong Buy) stocks – PetroQuest Energy Inc. (PQ), Ocean Rig UDW Inc. (ORIG) and Hornbech Offshore Services, Inc. (HOS) – are expected to perform impressively over the short term.
As Federal Reserve officials pursue the most aggressive monetary policy stimulus campaign in their institution’s history, they are mindful of the unintended consequences their actions can have on financial markets.  Getty Images But as it now stands, most remain confident that huge injections of money into the economy haven’t created any bubbles big enough to threaten the overall course of the recovery. That has allowed them to press forward with their aggressive agenda of bond buying, which is aimed at pushing up asset prices in a bid to boost growth and lower unemployment. Against that confidence, an equities strategist is warning of a major bubble in global stock prices. In a research note, Nomura Securities strategist Bob Janjuah is warning that over the final three quarters of next year and into 2015, there “could be a 25% to 50% sell off in global stock markets.” Mr. Janjuah, who is co-head of macro strategy research at Nomura, sees a lot to worry about, and he sees central banks, including the Fed, at the center of the factors that eventually will bring woe to stocks. “The major themes are unchanged–anaemic global growth/mediocre fundamentals, what I consider to be extraordinarily and dangerously loose monetary policy settings, very poor global demographics, excessive debt, an enormous misallocation of capital driven by the state sponsored mispricing of money/capital, and excessive financial market/asset price speculation at the expense of any benefit to the real economy,” the analyst says. Mr. Janjuah says markets are now priced entirely for good news, leaving them vulnerable to adverse developments. But the main driver of the coming bursting of the stock market bubble, as the Nomura analyst sees it, is a much delayed rebalancing of the global economy as central banks pull back from all of their aggressive stimulus activities. “The next five years has to be about a rebalancing towards the ‘real economy’ and the bottom 90%, at the expense of the top 10%,” Mr. Janjuah writes. “This shift in policy emphasis will not be a happy time for financial markets and speculators while the transition happens,” he says. Fed officials don’t offer predictions of future equity price movements. But they do believe that rising asset prices boost the so-called wealth effect. As consumers feel richer, they feel emboldened to spend more, which lifts the broader economy. To that end, they have been pursuing very aggressive bond-buying policies while offering guidance on short-term rates that suggest monetary policy will be very easy for years to come. Over the course of this year, speculation about the Fed easing back on its bond buying generated considerable market volatility. Some officials welcomed this because they said it helped correct market complacency about future Fed policy while flushing out some pockets of excess in some corners of the bond market. But Fed officials also came to lament the move as they saw higher borrowing costs creating fresh headwinds for an economy that wasn’t growing fast enough to begin with. In an interview Monday, Federal Reserve Bank of St. Louis President James Bullard said when it comes to market levels, “I think we are at a good place right now.” He put himself in the camp of those who see some value in the rise in bond yields, saying the levels seen at the start of the year were so low that they were a bit worrisome. That said, the veteran central banker said the bubble issue remains challenging for Fed officials. “I don’t think we’ve come up with a really great answer” when it comes to dealing with markets that have gone out of line with fundamentals, Mr. Bullard said.
Stock markets tumbled today as investors sold Federal Reserve Chairman Ben Bernanke's talk of tapering bond-buying. The Dow Jones Industrial Average (DJINDICES: ^DJI ) crashed at the open of trading and is down a full 351 points, or 2.32%, as of 3:25 p.m. EDT. The S&P 500 (SNPINDEX: ^GSPC ) has lost 2.5% of its value. Tapering is the code word investors are using for the Fed's slowing-down of its $85 billion-per-month bond-buying program intended to keep interest rates low and goose the economy. Bernanke didn't give a timetable for this tapering, but he said the Fed could slow buying later this year, and there's speculation that the program could end entirely next year. Before you go selling every stock you own to buy rations for your economic bomb shelter, remember why the Fed would slow bond purchases. The Fed started the program to keep long-term interest rates low and encourage investors to bid up stocks and prompt businesses to borrow money to expand. The ultimate goal was that the money would trickle down into the economy in the form of lower unemployment. It's the Fed's view that unemployment is slowly falling and that it will soon be time to take off the training wheels and allow the economy to operate with fewer stimuli. So the Fed would taper bond-buying because the economy is doing well -- not the opposite. For long-term investors, that's great news, although we'll likely see more daily fits and starts on Wall Street. Look at these as buying opportunities, because the Fed is actually bullish on the state of the economy, and you should be, too. The market freak-out has sent all 30 Dow components lower today, but two stocks have been hit particularly hard. Intel (NASDAQ: INTC ) is down 3% today, but it's just beginning to gain traction in the mobile market, and with 14 nanometer chips due out next year, it could be a big winner in smartphones as well. The stock trades at just 12 times trailing earnings, and a 3.6% dividend yield is better than 10-year Treasuries and provides great upside for investors. The other stock to take note of is Disney (NYSE: DIS ) , which is down 3.5% today. If the Fed is right and the economy is improving, that's great news for Disney, because more people will shell out to see its movies and attend its theme parks. Yesterday, I highlighted why I think Disney is still in prime position to grow despite a changing media environment, and that thesis only gets better if the economy improves. It's easy to forget that Walt Disney is more than just the House of Mouse. True, Disney amusement parks around the world hosted more than 121 million guests in 2011. But from its vast catalog of characters to its monster collection of media networks, much of Disney's allure for investors lies in its diversity, and The Motley Fool's premium research report lays out the case for investing in Disney today. This report includes the key items investors must watch, as well as the opportunities and threats the company faces going forward. So don't miss out -- simply click here now to claim your copy today. The market can go crazy on a daily basis, and keeping a cool head is critical on days like this. The sell-off was caused by the Fed, but the Fed is bullish on the economy. For investors, that's great news -- no matter what Mr. Market says today.
Today's economic data certainly didn't seem to indicate the broad-based S&P 500 (SNPINDEX: ^GSPC ) would end the day higher, but further commentary from the Federal Reserve outweighed all that news to push us higher yet again. The "will they or won't they" debate is really starting to weigh on investors. Ever since the Fed commented that it would consider paring back its bond-buying program of Treasuries and mortgage-backed securities, we've been whipsawed up and down. Leading that volatility are investors' interpretations of Fed Chairman Ben Bernanke's comments, and the comments of his Fed governors, which are getting blown out of proportion in both directions. Today, the comments leaned toward keeping QE3 in place, which seemed to please the markets. On the flipside, economic data wasn't horrific, but it wasn't good, either. First-quarter GDP was revised down 0.1% from its previous estimate of 2.5% to 2.4% and weekly jobless claims rose nearly 3% to a seasonally adjusted 354,000. Both figures would suggest that a slower recovery than wanted is occurring in the U.S. economy. As I mentioned, when all was said and done, the Fed more than outweighed today's negative economic data and pushed the S&P 500 higher by 6.05 points (0.37%) to finish at 1,654.41. Powering the S&P 500 higher were shares of solar-panel producer First Solar (NASDAQ: FSLR ) , which rose 6.6% after receiving an upgrade from Goldman Sachs to "buy" from "hold" with a price target of $64. U.S.-based solar producers like First Solar are starting to realize the advantages of their higher-efficiency panels, with import tariffs being placed on cheaper Chinese solar panels and a combination of oversupply and huge debt levels crushing China-based manufacturers. As long as subsidies remain in place for solar conversion in the U.S., you can expect alternative energies like solar to thrive. Heading notably higher as well, up 5.5%, was medical-products supplier CareFusion (NYSE: CFN ) which is said to be in talks as a possible acquirer of Britain-based Smiths Group's medical division. Although neither company would comment on a potential sale it would clearly be a positive for CareFusion since its revenue growth has stagnated in recent years. We should hopefully know more about these developments over the coming weeks. Finally, storage-equipment maker EMC (NYSE: EMC ) advanced 5.4% after expanding its share repurchase program from $1 billion to $6 billion by the end of 2015. The company commented that it plans to repurchase $3.5 billion worth of shares by the end of the second quarter of 2014. Furthermore, EMC also initiated a quarterly dividend of $0.10 to give the company a projected yield of 1.6%. While great news for shareholders and certainly a testament to EMC's amazing cash flow, it also signals to investors that its high growth days may be over. Can this stock continue to shine?
Investors and bystanders alike have been shocked by First Solar's precipitous drop over the past two years. The stakes have never been higher for the company: Is it done for good, or ready for a rebound? If you're looking for continuing updates and guidance on the company whenever news breaks, The Motley Fool has created a brand-new report that details every must know side of this stock. To get started, simply click here now.
MAKO Surgical's (NASDAQ: MAKO ) legal wins just keep stacking up. Just last month, the company not only settled a trade secrets lawsuit on its own terms with competitor Blue Belt Technologies, but also resolved a patent infringement complaint it brought against U.K.-based Stanmore Implants for uncanny similarities between its own RIO System and Stanmore's Sculptor RGA. Curiously enough, the resolution of the latter complaint ended with MAKO acquiring Stanmore's robotics technology for less than $1 million. Meanwhile, Stanmore agreed to withdraw itself from the surgical robotics market completely. Then again, these cases were offensive moves by MAKO designed to make sure their competition would play fair. Even so, I'm sure most shareholders would agree that it would be a lot less stressful if the company hadn't needed to get involved in these legal matters in the first place. As I noted earlier this month, however, management was also facing a courtroom challenge from other shareholders who alleged they were misled by last year's over-inflated RIO System sales projections. Of course, anyone who kept track of MAKO in 2012 remembers what happened after they missed their own lofty expectations: MAKO Total Return Price data by YCharts "Forward-looking statements"
Last week, however, according to a report from the South Florida Business Journal, the courts reminded shareholders the importance of owning their investing decisions. More specifically, a Southern Florida District Court judge dismissed one of the aforementioned class action lawsuits after pointing out MAKO's "2012 sales projections were accompanied by meaningful language that cautioned investors that these 'forward-looking statements' may not be on target." Going further, the judge elaborated by writing: The warnings in the defendants' press releases and the referenced SEC filings warned investors of precisely what happened here: that projected system sales and procedures might be lower than projected due to the economic downturn, variable sales and a reluctance on the part of orthopedic surgeons to adopt the new technology. What's more, the judge also ruled that comments made by management during investor conference calls were also protected as "forward-looking statements," and there exists no evidence at the time they were aware they wouldn't be able to meet their goals. Foolish final thoughts
Of course, management's seeming ignorance was one of the very reasons fellow Fool Brian Stoffel told us last December that MAKO wouldn't remain in his 2013 portfolio, but I personally remain encouraged that the company seems to have finally adjusted investors' expectations with reality -- especially on the heels of two consecutive decent quarters. However, regardless of how effective any given company is at selling you on its prospects, remember these businesses are run by imperfect people who may not always be able to deliver on their promises. In the end, then, don't take those monotonous Safe Harbor Statements as a time to zone out until the real conversation begins. Instead use them as a reminder that your investing decisions -- both good and bad -- are your own responsibility. Zero to hero?
Sitting near all-time lows, has MAKO Surgical's robotic surgery growth story rusted over? To help investors answer this question, Fool.com analyst and MAKO expert David Meier has authored a premium research report covering all of the must-know details on the company, including key areas to watch and risks looming in the future for the medical robotics company. Claim your copy by clicking here now.
#pitch{ margin-bottom: 15px; } More Expert Advice from The Motley Fool The Motley Fool's chief investment officer has selected his No. 1 stock for the next year. Find out which stock in our brand-new free report: "The Motley Fool's Top Stock for 2013." I invite you to take a copy, free for a limited time. Just click here to access the report and find out the name of this under-the-radar company.
On Wednesday morning, Bank of America (NYSE: BAC ) will report first-quarter earnings. It is the last of the four biggest U.S. banks to report. Last week, investors were not overly impressed with the earnings from Wells Fargo and JPMorgan Chase as mortgage revenue fell. On the other hand, the market reacted quite positively to results reported by Citigroup (NYSE: C ) . So, the question is: Where does this leave B of A investors? In this video, Motley Fool banking analyst David Hanson tells investors one major factor that the market will be watching when the megabank reports earnings. Bank of America's stock doubled in 2012. Is there more yet to come? With significant challenges still ahead, it's critical to have a solid understanding of this megabank before adding it to your portfolio. In The Motley Fool's premium research report on B of A, analysts Anand Chokkavelu, CFA, and Matt Koppenheffer, Financials bureau chief, lift the veil on the bank's operations, including detailing three reasons to buy and three reasons to sell. Click here now to claim your copy.
 Skynesher Students in high school and college, along with their parents, do a lot of soul-searching to decide if college is worth the cost -- $200,000 at some private schools, which has propelled college debt in America to more than $1 trillion. Experts who analyze long-term employment trends are nearly unanimous: Despite the sticker shock, a degree beyond high school is definitely worth it. Americans with a four-year degree made nearly double the hourly pay last year compared to those without a degree, according to a recent Labor Department analysis of data supplied by the Economic Policy Institute. And the pay gap for those with a college diploma has widened over the years. For the most part, college graduates agree. A survey of more than 2,000 people conducted online by Harris Interactive for job services company Glassdoor finds that 82 percent of U.S. college grads believe their college degree has helped their careers. But once they have that first job after college, 63 percent rank new skills learned or special training received after leaving school as the most important factor in advancing their careers. "The job itself contains a lot more stuff than you get in college," said Rusty Rueff, a career and workplace expert at Glassdoor, which released the survey results on Tuesday. He said employers are looking for more than a college degree can provide. "The need to gain relevant skills has been exacerbated since we've come out of the Great Recession." What About Your Major or Your GPA? Nearly half of those surveyed say their specific degree is not particularly relevant to their job. And 80 percent say potential employers have never asked about their grade point average. Still, two-thirds say the level of the education they have already achieved has helped their careers, while 56 percent believe a higher level of education would make them more successful.
| | 
