Yuan continues to appreciate v/s USD....

The Chinese Yuan has seen a one-sided movement against the USD. Over the past one and a half years, it has witnessed an appreciation of close to 7 per cent. How significant is this? News reports suggest that it is quite significant, so far as the Chinese garment industry is concerned. Came across a few articles that highlight the same:

1). "China's textile industry says it loses 8.2 billion yuan ($1.1 billion) of annual profit for each percentage point rise in the currency"

2). "The textiles sector, with average gross profits of five to 10 percent will cease to be as lucrative once the yuan appreciates by 5 percent"

3). Growth in China's textile industry slows

Does this bode well for Indian textile companies? Maybe, especially if the sharp appreciation in Yuan forces Chinese companies to raise prices. However, one important thing that can nullify the above is a continuation in the appreciation of the rupee vis-a-vis the dollar, as seen in the last one month or so.















Watch the currency movements closely over the next few months as also the export numbers, both from India and China to the US.

Textile scrips have been big underperformers on the bourses over the past one year. Scrips like Arvind Mills, Alok Industries, Gokaldas Exports, House of Pearl Fashions, etc. all are down by anything between 15-50 per cent. With prices at their 52-week lows and valuations looking down the barrel, it wont be a bad idea to invest into some of these. A Contrarion Call.

Its Showering Takeover Deals !

1). Barclays takeover of ABN Amro - USD 91 bln

2). AstraZeneca to buy MedImmune - USD 15.6 bln

3). Bank of America to ABN's LaSelle - USD 21 bln

4). Mittal Steel takesover Sicartsa for USD 1.4 bln

Research house recommendations? Crack'em!

Was reading a research report by a firm called - First Global (does it sound like a familiar name?? flash back 2001!!!). Was awestruck with their latest recommendation.

Petronet LNG - Long-Term Moderate Outperform.

Wonder how many of their clients wud have understood what is to be done with Petronet LNG, given the kind of recommendation??? You either say - BUY/HOLD/SELL. What on this earth does LONG-TERM-MODERATE-OUTPERFORM mean??

FG usually offers ratings from the list of following recommendations (which in itself is quite a long list of recommendations):

Positive ratings
- Buy
- Buy at Declines
- Outperform

Neutral ratings
- Hold
- Marketperform

Negative ratings
- Sell
- Sell into strength
- Underperform
- Avoid

Long-Term-Moderate-Outperform........is a new addition to the list. All the best FG clients.

Subros: A Value pick.

Have written about Subros in the past. Link 1 & 2.

Came across an article on the same in the Hindu Business Line. Here.

My view on the scrip remains intact (Value Pick) and I continue to hold the scrip with a price target of Rs.300+.

Control Raj making a strong comeback?? (First commodities, industrial goods and now cricket)

Here's the [BANNED] list (pls add more in case i've missed out a few):

1). Raw jute futures
2). Export of Pulses
3). Sugar exports
4). Futures trading in Tur & Urad
5). Futures trading in Wheat and Rice
6). Freeze on Cement prices

There is also a [pending] list:

1). Futures trading in Maize
2). Natural rubber futures
3). The Big One - Ban on futures trading in all commodities

Well, if we thought that control-raj is restricted to agro-commodities and industries goods, think again! The Board of Control for Cricket in India recently released a few guidelines, primarily to save its face following the humiliating defeat of the Indian cricket team at this year's Cricket World Cup. Some of the guidelines, which are similar in nature to the above cases are:

1). No. of endorsements per player restricted to THREE
2). No brand can hire more than two cricketers
3). Players to take prior permission from the Cricket Board before signing endorsement deals

What the BCCI aims to do by this is really questionable?

Because, the problem of non-performance in no way can lie with endorsement deals. Cricketers who get a lot of endorsement deals are the ones who are seen as good players or who have performed well in recent times. So really speaking if a player aint playing well, will the sponsor still continue paying top dollars to the underperformer? I think not. Its simple advertising economics. And to top it all, if the Cricket selection committee were to think that a player is not giving his best and is instead concentrating more on sponsorship deals, then they can simply DROP HIM from the next series. Once dropped, a player holds not much of a brand value for the sponsor. Earnings from sponsorship deals will automatically drop and the pressure to perform will mount.

But ofcourse, the BCCI needs to be seen to be doing something....and thats precisely what it is doing, much like some of the Ministeries at the Centre.

CONTROL RAJ coming back with all the expected (read: Anti-Market Economy) effects!