a view from the buy side. easy opinions with 2 % management fees with a kicker for not going to zero with the rest of the classmates.
so commodities, tech, exports lower by a lot. India at 8 % of em index, china 26 % + taiwan, korea + 27%
expect earnings + 15% ?
http://www.livemint.com/Money/lgu3D9NWVSZjRErKhrEOAP/The-worst-is-definitely-over-for-corporate-earnings-Samir-A.html
The worst is definitely over for earnings. Big picture, this is a great time to invest as an earnings pick-up in the next two quarters is very likely. A massive reduction in fiscal deficit obviously slowed the economy significantly in the second half of last fiscal. Earnings decline in the second half—i.e. September 2014 to March 2015—was of the order of negative 13%. This year there is no such government induced tightness; so the base effect itself will be very helpful going forward. Bigger problem with earnings is that 44% of earnings also come from commodities and export, excluding technology sectors. Stocks in global sectors have seen earnings decline of 80%. Two successive weak monsoons have also hurt earnings in a few sectors. Other domestically oriented stocks have had reasonable earnings growth even this year. All in all, even if there was no earnings visibility in 2015 at the consolidated level, the difference in different groups was very large, allowing investors to add significant alpha. Going forward, these differences between sectors may become less as commodity earnings bottom out, government-induced spending improves the health of many sectors, India has a normal to good monsoon and favourable base effect optically helps earnings growth. We would expect 12-15% earnings growth for the market in 2016-17.
Within emerging markets the Indian market should definitely do well. However, overall emerging market investing will have less interest for the world. Today, China is around 26.5% of the index and India is 8.6%. Taiwan and Korea—which could easily be classified as developed markets, or at least developed economies—are approximately 27%.
so commodities, tech, exports lower by a lot. India at 8 % of em index, china 26 % + taiwan, korea + 27%
expect earnings + 15% ?
http://www.livemint.com/Money/lgu3D9NWVSZjRErKhrEOAP/The-worst-is-definitely-over-for-corporate-earnings-Samir-A.html
The worst is definitely over for earnings. Big picture, this is a great time to invest as an earnings pick-up in the next two quarters is very likely. A massive reduction in fiscal deficit obviously slowed the economy significantly in the second half of last fiscal. Earnings decline in the second half—i.e. September 2014 to March 2015—was of the order of negative 13%. This year there is no such government induced tightness; so the base effect itself will be very helpful going forward. Bigger problem with earnings is that 44% of earnings also come from commodities and export, excluding technology sectors. Stocks in global sectors have seen earnings decline of 80%. Two successive weak monsoons have also hurt earnings in a few sectors. Other domestically oriented stocks have had reasonable earnings growth even this year. All in all, even if there was no earnings visibility in 2015 at the consolidated level, the difference in different groups was very large, allowing investors to add significant alpha. Going forward, these differences between sectors may become less as commodity earnings bottom out, government-induced spending improves the health of many sectors, India has a normal to good monsoon and favourable base effect optically helps earnings growth. We would expect 12-15% earnings growth for the market in 2016-17.
Within emerging markets the Indian market should definitely do well. However, overall emerging market investing will have less interest for the world. Today, China is around 26.5% of the index and India is 8.6%. Taiwan and Korea—which could easily be classified as developed markets, or at least developed economies—are approximately 27%.
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