The choppiness in global markets continued this week, defying expectations of a traditional Santa Claus rally. But with the world awash in liquidity, and big money making its bets for 2008 (hint: it probably won’t be on the United States) the weight of money still is behind our Global Stock Investor picks. With our global megatrends still intact, it’s a good time to add to your positions. As Warren Buffett advises, “Be greedy when others are fearful. Be fearful when others are greedy.”
PORTFOLIO UPDATE
Anglo American (AAUK) is looking at a possible major acquisition, with both Alcoa and Freeport in Anglo’s sights. With Anglo’s new CEO, Cynthia Carroll, having come out of Alcan, (recently acquired by commodity giant Rio Tinto), rival Alcoa would make an especially tempting target. Your play on the commodities supercycle remains a BUY.
ABB Ltd. (ABB) had a big week as it won contracts worth $440 million from China’s State Grid Corporation to build the world’s longest power link, running 2,000 km across the country. Scheduled for completion in 2011, the link will provide electricity for about 31 million people. This should lend some support to the stock. ABB is a BUY.
Barrick Gold (ABX) fell this week as the dollar strengthened against several major world currencies. The dollar and gold usually trade inversely, as each is treated as a hedge against the other. The stock remains a BUY.
America Movil (AMX) bought a license to provide Internet service in Brazil. TV stock-picking pundit Jim Cramer last week called America Movil a “Bernanke-proof stock” (whatever that means). America Movil is a BUY.
Coca-Cola Hellenic Bottling (CCH) is seeking small- to medium-sized buyout opportunities in Central Europe and Russia to broaden its product range, Chief Executive Doros Constantinou said this week. CCH’s growth in emerging markets is a key driver in terms of sales volume. Coca-Cola Hellenic is a BUY.
iShares MSCI Brazil Index (EWZ) dropped back from record highs when both Brazilian stocks and the currency fell sharply as hopes faded that the U.S. Federal Reserve will cut interest rates again any time soon. The Brazilian currency — the real — slipped as the dollar hit a two-month high against a basket of six major currencies. This is all just noise. Yale Professor Robert Shiller’s favorite market is a BUY.
CurrencyShares Japanese Yen Trust (FXY) weakened as the dollar strengthened. This pick is a good hedge against downturns in the markets and remains a defensive BUY.
ICICI Bank’s (IBN) venture unit led Indian investors in buying 9.55% of Multi Commodity Exchange of India Ltd. to secure a share in the world’s third-biggest gold exchange. With the Indian market selling off this week, it’s a good time to enter a position here. “India’s Citibank” is a BUY.
Millicom International (MICC) sold off this week on the back of news in Colombia, as the Colombian regulatory authorities reduced the interconnect rate with immediate effect from approximately 12 cents to six cents. In the short term, Millicom’s Colombian operations will see a negative effect on revenues and margins in Colombia — although average EBITDA margins in Colombia over time remain unchanged. This is an opportunity to get a second bite at the Millicom apple. The stock remains a BUY.
ArcelorMittal (MT) is building its first new steel plant in Russia by spending an initial $100 million. Work will begin in the first half of 2008 to build a furnace capable of churning out one million metric tons of long carbon steel a year. Separately, ArcelorMittal management said it concluded a share buyback program, in which it spent 1.354 billion euros ($1.95 billion) for 27 million shares at an average price of 50.15 euros ($72.18). The company now plans another share buyback to purchase up to 44 million shares during the next two years to be used in "future corporate opportunities or for cancellation." ArcelorMittal is a BUY.
Potash (POT) sold off this week even though the company announced a range of price increases for its products that will take the granular price of potash from $257.00 in December to $387.00 by March 1, 2008. That’s pricing power! Potash remains a BUY.
Tesco’s (TSCDY) 50-year-old chief executive of U.S. operations, Tim Mason, has ruled himself out of the top job as CEO of Tesco saying it would go to a younger candidate. Mason has long been considered a frontrunner to replace Sir Terry and was picked three years ago to lead Tesco’s rollout of the company’s Fresh & Easy brand of convenience stores in the United States. The recent weakness in the stock is an opportunity to add to your positions. Tesco is a BUY.
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