Both Wall Street and global stocks fell this past week as a seemingly relentless rise in bond yields unnerved stock investors around the globe. The benchmark 10-year Treasury note’s yield passing 5% exacerbated jitters about mortgage rates rising, and hitting an already sluggish housing market.
After their relentless climb over the last two months, global equity markets have been due for some sort of a correction in any case. But sentiment-driven, short-term swings such as this past week’s sharp moves in bonds tend to fade as quickly as they come.
I found it particularly encouraging that two of our most volatile plays, China’s Home Inns & Hotels Management (HMIN) and India’s ICICI Bank (IBN), held steady over the past week. That indicates that investors aren’t heading for the exits just quite yet.
From the standpoint of our Global Stock Investor portfolio, I would look at the recent sell-offs as an opportunity to enter or add to our positions.
This week’s sell-off in mining group Anglo-American (AAUK) offers a perfect opportunity to get into our #1 play on the global commodities supercycle. I recently spoke with the head of marketing at De Beers — the world’s #1 producer of diamonds — in which Anglo-American has a 40% stake. De Beers is opening new stores all over Asia, the United States, and Moscow, as part of a large retail push. The diamonds are flying off the shelves. The stock remains a STRONG BUY.
Home Inns (HMIN) was the big surprise of the week. Bucking the weak global trend, our Chinese hotel play was actually up 3.55% since its close last Wednesday. Nevertheless, with sentiment turning against China, Home Inns remains a HOLD for now.
ICICI (IBN) expects to sell shares in India and the United States next week to raise up to $5 billion to fund its expansion. ICICI said it expects to raise 87.5 billion rupees ($2.1 billion) of that amount in India, and the balance through a sale of ADRs to American investors. ICICI bank also announced it was selling 5.9% of ICICI Financial Services Ltd., which holds stakes in insurance and mutual fund ventures, for 26.50 billion rupees ($650 million). All this is bullish for the stock and "India’s Citibank" remains a BUY.
U.K.-based global retailer Tesco (TSCDY.PK) announced this week that it is set to open three stores a week in the United States every week between November and the end of February, after debuting in four cities — Los Angeles, Las Vegas, Phoenix and San Diego — in November. The company has over 100 stores in the pipeline that include 30 in Phoenix and 14 in Las Vegas. Tesco is also set to announce Q1 results June 19, so watch for more on that next week. This Warren Buffett-favorite remains a BUY.
Swedish ETF (EWD) sold off over this past week. But not to worry. Sweden is a stable, long-term story that will continue to do well. Our Swedish ETF includes some of the top global companies around. The #1 company in the Swedish ETF is telecom equipment maker Ericsson, which accounts for 21% of the ETF. Ericsson is a company with global reach, and just over 40% of all telephone calls worldwide go through an Ericsson system. The ETF also boasts a 25% return on equity and a much stronger balance sheet than its peers. Other top companies in the Swedish ETF are Sandvik, Volvo, and Atlas Copco. With a line-up like this, Sweden remains a BUY.
With the drop in share prices, our two telecom plays, Latin American cell phone giant America Movil (AMX) and Luxembourg-based Millicom International Cellular (MICC) went "on sale" this week. So if you are a new subscriber, or have some extra cash to put to work, consider these two stocks — my two favorite plays on the global cell phone megatrend. Both stocks are STRONG BUYs.
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