TODAY’S FAYRE – ASIAN EQUITIES ON FIRE!

TODAY’S FAYRE – Thursday 9th April 2015

 

“Now, God be thanked Who has watched us with His hour,

And caught our youth, and wakened us from sleeping,

With hand made sure, clear eye, and sharpened power,

To turn, as swimmers into cleanness leaping,

Glad from a world grown old and cold and weary,

Leave the sick hearts that honour could not move,

And half-men, and their dirty songs and dreary,

And all the little emptiness of love!

Oh! we, who have known shame, we have found release there,

Where there’s no ill, no grief, but sleep has mending,

Naught broken save this body, lost but breath;

Nothing to shake the laughing heart’s long peace there

But only agony, and that has ending;

And the worst friend and enemy is but Death.”

 

Rupert Brooke – soldier & poet – 1887-1915

 

I awoke this morning to some sad and dispiriting news – No! not the fact that Michael Fallon was forced to come off message with a personal attack on Miliband, which is out of character, but the news of the death of that all-time-cricket/commentator doyen – Richie Benaud – at the age of 84. RDB enriched the lives of all cricket acolytes since his first visit to these shores in 1956 as raw and effective leg-spinner/batsman. His under-cooked style of commentary with a few subtle remarks that flew over most people’s heads was a joy to behold. Loved his racing! Very poor tipster! Even ‘Athers’ has stopped passing on his racing tips! Also Mikey Holding certainly wouldn’t get publicly drawn on his selections! I understand Tony Abbott, Australia’s PM has offered Benaud’s family the option of a state funeral. What a tribute!

 

The Grand National meeting is a week later than normal. Unless we get rain on Saturday morning the ground should ride ‘good’ – ‘good to soft’ at worst. Saturday’s race will be an emotional occasion; possibly AP McCoy’s last race meeting, if he were to win on ‘Shutthefrontdoor’, who has a real live chance. JP McManus and Jonjo O’Neill have laid this fellow out for the race and he may go off the shortest priced favourite of all time. What a fairy tale if he were to win! There won’t be a dry eye in the house. I expect ‘Rocky Creek’, ‘First Lieutenant’ and ‘Pineau de Re’ to run well.

 

Any action of real note on equities yesterday took place in the Far-East where volumes in Shanghai and Hong Kong have hit record levels. This week has been the best week for Chinese stocks since 2011. The NIKKEI is flirting with the 20k threshold – up 45% in the last year. The Shanghai Composite is up a staggering 89% in the last year against modest gains by the Hang Seng in the same period – up 19%. Hence in recent days heavy traffic from mainland China to HK could see that market spike. However this has all the hallmarks of a bubble desperate to burst. China’s and Japan’s economy surely do not warrant such affection – QE and stimulus packages or not!

 

The Hang Seng Index rose like a grilse up by 6.5% in the opening minutes of Hong Kong trading yesterday, a day after soaring 3.8 per cent. Trading volumes in the first half-hour were 400 per cent higher than the 30-day average as retail investors from mainland China’s market piled in via the Shanghai-Hong Kong Stock Connect. The Hang Seng crossed the 27,000-mark for the first time since January 2008.

 

Yesterday in London the FTSE 100 breached the 7k threshold – up 1.1% to 7015. Burberry and Aberdeen scrapped for the ‘yellow jersey’, but frankly many were more interested on whether McCoy might ride a treble in his last visit to the Aintree festival. Greece beg, borrowed and stole E450 million to repay the IMF. Where it goes for gravy for its next repayment is anyone‘s guess – maybe Russia or China could throw some light on the subject? When being interviewed on Greece’s fiscal and economic future last night, Mme Lagarde was less than ebullient talking to CNBC. Normally super-confident, she struck me as reticent! The appointment of Alan Leighton and Richard Pennycook as chairman and CEO of the Coop Group was inspired. The group, having been forced to sell many assets, has returned to profits for its 8.4 million members. A profit of £214million was posted for 2014 against a loss of £2.3 billion the year before. The bank is only 20% owned by the Group – the rest by US hedge fund managers. It was good to see Mulberry coming back on track. Investors also seemed receptive to Hastings Insurance Group suggesting that it is close to agreeing terms for an IPO. Its CEO Gary Hoffman – ex Barclays and Northern Rock – seemed relatively upbeat about the future.

 

On the Street of Dreams on the back of firmer oil prices, with Exxon and Chevron blazing the trail and decent earnings from Walgreens Boots (profits up 33%), added some value to investors’ portfolios with the DOW adding 0.31%, the S&P 500 0.45% and the NASDAQ 0.45%. We go on Apple Watch today. There is huge interest to see what the reception is like.

 

UK equity markets have yet to reflect the uncertainty felt over the outcome of the General Election, perhaps due to the fact that 60% of earnings from the FTSE 100 come from Dollar related earnings. Not so the Pound, which in recent weeks has bobbed around like a cork in a bath. Though the gilt market looks relatively somnolent, any serious sign that Labour will form the next government or coalition could see gilt yields rally sharply. Labour is not seen as business friendly. Therefore it may not take much for investors to scoop a huge dollop of cream off the top of their portfolios.

 

UK February INDUSTRIAL PRODUCTION rose by 0.1% – EST. 0.3%.  Manufacturing was disappointing due to political uncertainty, though the economy continues to grow strongly, illustrated by the fact that the service sector is buzzing and constitutes 70% of UK GDP.

 

David Buik – market commentator

 

Panmure Gordon & Co

 

 

David Buik

Market Commentator

 

+44 (0)20 7886 2775

Panmure Gordon & Co  One New Change | London | EC4M 9AF | United Kingdom  www.panmure.com

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