The Zacks Analyst Blog Highlights: Honda, Toyota, NetEase, Telstra and
CHICAGO, May 30, 2013
CHICAGO, May 30, 2013 /PRNewswire/ --Zacks.com announces the list of stocks
featured in the Analyst Blog. Every day the Zacks Equity Research analysts
discuss the latest news and events impacting stocks and the financial markets.
Stocks recently featured in the blog include Honda (NYSE:HMC), Toyota
(NYSE:TM), NetEase (Nasdaq:NTES), Telstra Corp. (OTC: TLSYY) and Luxottica
Group Spa (NYSE:LUX).
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Here are highlights from Wednesday's Analyst Blog:
What's a Global Investor to Do?
When it comes to global markets, there are enduring reasons to doubt these
equities can shake underperformance.
oAnalysts deeply in the know urge investors to remain overweight developed
oAnalysts remain particularly cautious on emerging markets -- due mainly to
worries about China's growth prospects. Are significant stock bargains to
be had as a result of emerging market index underperformance? Could
overdue portfolio rebalancing toward emerging world indexes, specifically
country indexes like Russia and China, be on its way?
Here are the three big enduring reasons to stay away:
1. A Slowing China
Emerging-market investors came into 2013 partly buoyed by expectations
China's GDP growth was intact. But signs the Chinese economy is slowing
has helped push down commodity prices.China is just one part of the
broader slump in commodity prices. The drop in oil, precious and
non-precious metals, and agricultural commodity prices is making life
rough for lots of emerging-markets investors. The MSCI emerging markets
index is heavily weighted toward Energy and Materials sectors, which has
hurt its performance.
It's spelled trouble for funds heavily weighted toward country indexes
like Brazil or Russia too. These countries have commodity-dependent
economies that offer major Materials and Energy stocks to international
investors. Funds that had been more focused on the so-called BRICs --
Brazil, Russia, India and China -- had a leg up when commodities were
booming. They have been left behind compared with funds exposed to booming
emerging stock markets without major Energy and Materials companies, like
as Indonesia and Turkey.
2. Aggressive Easing in Japan
Japan's leaders get some blame for ongoing stagnation in emerging markets'
shares.Aggressive monetary and fiscal stimulus has sent the Japanese yen
plunging. Japan's benchmark Nikkei stock index has rallied nearly +70%
since November -- even after a recent big correction.
The slumping yen -- down more than -15% versus the U.S. dollar YTD -- aids
Japanese exporters. But it works against competing Asian companies outside
Japan. In response, South Korea's KOSPI Composite Index is down -1.2%.
For example, a weak yen hurts South Korean automakers Hyundai and Kia, who
compete directly against Japanese companiesHonda (NYSE:HMC) and Toyota
(NYSE:TM). The weak yen is not an obstacle for Asian, European, and U.S.
firms that are part of Japan's automotive supply chain.
3. A Strident Germany
Germany's leaders don't look much better.
In Europe, the irony of the situation is there may be a
"beggar-thy-neighbor" condition playing out inside Europe. An entrenched
fiscal/balanced budget situation and an overvalued real effective euro
currency in terms of internal European trade buttress the German
economy.This may be part of what is holding back the rest of Europe.
What About Global Markets Value Catalysts?
A few savvy pundits contend it is time for investors to scale up global
market exposure. Why?
• There are signs Europe's GDP slide is at least slowing.
• The U.S. economy may be building up GDP growth. Global spillovers could
These two catalysts could lead to institutional portfolio rebalancing
towards global markets.
oPonder whether a domestic move out of expensive, defensive sectors into
cyclical stocks could be replicated or tracked inside emerging markets.
oAnother stealthy conclusion? Watch specific global Info Tech and Health
Care shares and find a nice entry point.
Global Info Tech companies offer value priced cyclical stocks with less
downside risk than global/macro driven sectors like Energy and Materials. A
good example would be NetEase (Nasdaq:NTES), a mainland Chinese Internet
Certain global shares can be cash-rich. Look at Australian fixed and wireless
telecommunications company Telstra Corp. (OTC:TLSYY). Australia's principal
telco offers a 6% dividend yield.
Global Health Care shares can also deliver on strong and stable earnings
growth expectations. Look at Italian Luxottica Group Spa (NYSE:LUX). The
company is a leader in premium, luxury, and sports eyewear with approximately
7,000 optical and sun retail stores in North America, Asia-Pacific, China,
South Africa, Latin America and Europe. Proprietary brands include Ray-Ban,
the world's most famous sun eyewear brand, Oakley, Vogue Eyewear, Persol,
Oliver Peoples, Alain Mikli, Arnette and REVO.
Inside the Zacks Rank world, global Info Tech and Health Care consumer stocks
deliver low double-digit earnings growth annually.
And more earnings surprises!
The stocks I mentioned in this last section are Zacks Rank #1 now.
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