Overall, our Global Stock Investor portfolio had a strong week. Six of our seven stocks were up and four of our picks also hit record highs.
The big news of the week was that the Chinese stock market has begun its long-expected correction. On Monday, the Shanghai Composite Index fell 8.3% to 3,670.4, its largest one-day decline since Feb. 27. So far, the damage has been limited to the domestic Chinese market. But remember, financial contagion is not rational. You can never predict which event, small or large, will spark Mr. Market’s moodswings. Until then, we must always remain vigilant — and stick to our stops.
PORTFOLIO UPDATE
Mining group Anglo-American (AAUK) had a strong week, with the stock up 5.4%, as mining stocks soared across the board. Consolidation in the industry continues with Russia’s Norilsk Nickel trumping London-listed Xstrata’s bid for Canadian nickel producer, Lion Ore. M&A activity in the market will continue to act as a catalyst for the mining sector as a whole. Anglo-American is now up a solid 7.47% since our recommendation last month. The stock remains a STRONG BUY.
Latin American cell phone giant America Movil (AMX) also soared 5.4% this week to hit a record high of $63.68. Mexican stocks closed higher five consecutive sessions, driven by optimism that the government will soon unveil a tax reform plan. America Movil is now up a hair under 30% since we recommended it in February. This stock has serious momentum and remains a STRONG BUY. Move your stop to $49.50.
Home Inns & Hotels Management (HMIN), our Chinese hotel play, bucked the market trend in China. On Monday, when Shanghai experienced its huge swoon, Home Inns actually rose $2.93, or 10.2%, to $31.70 — and ended the week up 4.2%. The fundamental story on Home Inns remains strong. But its erratic price performance makes this a challenging stock to own. With the growing jitters in the Chinese market, Home Inns remains a HOLD.
ICICI (IBN) was up 1.8% for the week, as it hit a record high of $48.78. Although it pulled back ever so slightly from this level, "India’s Citibank" remains a BUY.
S&P Ratings Services upgraded Millicom International’s (MICC) corporate credit rating this week from to "BB" from "B+." The two-notch upgrade reflects Millicom’s continuing strong growth in revenues and operating cash flow. Millicom’s shares rose $7.14, or 8.4%, to a record high of $92.69 on the news. Even though the stock has since dropped back to $88.66, the price still was up 3.5% for the week and remains a STRONG BUY.
Global retailer Tesco (TSCDY) and the Swedish ETF (EWD) were flat for the week. Both remain our steadiest, long-term BUYS.
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