Index
Market in General
Stocks
Currencies
Last Week's Views
| Investment Views (October
5th 1998) |
Instead of writing my clients
individually I thought I might as well
do a weekly summary of my views
on the markets, the currencies,
the economy, the world, and
life in general.
Markets in General
As we have remarked last week, the European markets have decoupled
from the US. Because of the weak dollar, European markets have
been seeing
lower lows all the way. The fact that the Fed only cut the Fed
funds by 1/4%
had disappointed the markets. There has been a massive hysteric
reaction in
Europe because of the LTCM bailout plans. The bank shares sold
off across
the board in Europe. UBS the first European bank to acknowledge
their
involvement in LTCM had lost more than half of its value from its highs
in
July. Now UBS is selling at a PE of around 9. We find this
selling overdone.
UBS is a well diversified bank. We do not see it going under
because of
hedge fund exposures.
Germany's Dax did not quite like the idea of a red-green coalition.
The Dax
fell more than 6% two days in a row. Friday saw the decline slowing
a bit.
But the mini-crashs is repeating at an alarming rate. But we
all know that
there is a lot of hedge fund liquidation in Europe. We also know
that Soros
is short dollar relative to the European currencies and short the European
stocks. Therefore no one dares to go against the hedge funds.
The US markets recovered after the European markets closed. So
we expect
the European markets to recover a bit early next week. But with
nobody on
the buy side, we shall not expect any strong recovery more than one
or two
days. We expect the Dax to recover to about the 4500 level and
the SMI maybe
to the 5600 -6000 level, since we have finally reached some major support
levels on
both markets.
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Stocks
Our favorite stocks remains SAP, Nokia, Raisio
Group, Ericcson, Cable and Wireless, Orange
and Bachem.
| High of the Year |
Low of the Year |
Stock |
Last Week's
Close |
Daily high |
Daily low |
This Week's Close |
| SFr. 1495 |
1351 |
Bachem |
1825 |
1850 |
1730 |
1740 |
| Gbp 8.13 |
4.67 |
C&W |
5.44 |
5.53 |
5.21 |
5.25 |
| SFr. 51 |
25 |
Ericsson |
26.75 |
24 |
22.95 |
23.25 |
| FIM 509 |
182 |
Nokia |
404 |
383 |
359 |
363 |
| Gbp 8 |
2.40 |
Orange |
5.83 |
5.20 |
4.60 |
4.64 |
| FIM 1080 |
640 |
Raisio Group |
67 |
79 |
72 |
76.50 |
| SFr. 1029 |
419 |
SAP |
647 |
535 |
461 |
480 |
| SFr. 2350 |
1820 |
Stratec |
1520 |
1550 |
1500 |
1500 |
|
The telecom equipment business got hit last week again. The worries
about slowing
sales in Asia and Latin Americas hit the headlines again. The
European investors
seem to expect a world-wide recession next year.
We do not agree. Asia is
recovering quite nicely. We see growth in South Korea and Thailand
and
possibly Malaysia. The worst is over in Asia!
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Currencies
With the G7, IMF, World Bank all meeting in Washington this weekend,
we do get the feeling that
the world leaders are finally getting the message: the world
financial system needs reflationary measures
as a stop-gap measure to counter the massive deflationary pressures
resulting from the global
currency and stock markets turmoil. But we still doubt that the
total reform of the present
currency system could be achieved within such a short time. We
still see that the world
financial system limping along with the stop-gap measures pulling it
back from a total
collapse, but no reforms in place to counter its fatal systemic problems.
The dollar will
remain weak as long as the Fed is leading in lowering the interest
rates.
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| *The stock prices are provided
for informational puruposes only and not intended for trading
purposes. The opinions expressed in these pages are what they are:
opinions! |
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