|
by Elvin Thean
J.P. Morgan Investment Analytics & Consulting
elvin.x.thean@jpmorgan.com
AS OF JULY 2009
- The consensus remains cautious about the sustainability of the earnings, while technicals are less favourable. Investors are still out of equities and equity funds reported limited inflows YTD. In the two years spanning the recession, the total flows in global equity funds fell by half, from $6 bn to $3 bn ending 1Q 2009. The current figure for July 2009 stands at $3.8 bn. Earning indicators are troughing now, and analysts are moving to a phase of outright upgrades. Equity valuations remain attractive. The 12 month forward P/E ratio had reached an all time low of 7.8 in Nov 2008. Since then, it has been gradually moving towards the fair value of 14, reaching 11.2 in July 2009. On most valuation measures, European equities are trading attractive to the US (and also to EM and Japan). The EBIT margins for Europe ending Dec 2008 were 11.6% compared to 10.3% for US. (Morgan Markets, J.P. Morgan Equity Research)
 |
- Japan's economy slumped to an unprecedented extent in 2H FY2008 but then grew again in 2Q 2009. Industrial production growth may be close to 40% annualized, a postwar high, based on the June Survey of Production Forecast in Manufacturing. As the economies in China and other nearby Asian countries rebounded and inventories declined worldwide, consumer spending and public investment started to grow again thanks to the government's economic stimulus measures. (Morgan Markets)
 |
- China's economy grew by a strong 14.9% (QoQ; seasonally adjusted; annualized) based on official data that have already come out. June economic data show weak exports but further, solid growth in domestic demand. Industrial production increased by a record 14% QoQ, helped by inventory trends. (Morgan Markets)
- Australian house prices surged 4.2%q/q in 2Q 2009, the first quarterly rise in five quarters and the largest gain since 3Q 2007. Retail sales values in Australia collapsed in June 2009, falling 1.4%m/m, the biggest decline since February 2009. Consumer confidence improved, equity prices meandered higher, and AUD remained elevated. Sales, however, fell markedly, particularly in discretionary areas of spending. Australia's trade balance improved in June, though remained in deficit, coming in at A$441mn. (Morgan Markets)
 |
- South Korea's jobless rate unexpectedly dropped to 3.7% in July from 3.9% in June, but only because labor force declined more than employment. Consumer prices rose 0.4%m/m, nsa, more than reversing the 0.1% decline in June. Domestic consumption has slowly been improving since late 1Q 2009. (Morgan Markets)
|
print