Curb the super-bull urge

Stock traders had a great 2014 and may fancy a repeat this year. Analysts agree there is plenty more opportunity to make money but its also wise to curb the super-bull optimism this year

By Echelon.

Published on January 19, 2015 with No Comments

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By any relative measures of returns, stocks outperformed other asset classes comfortably in 2014. Market gains in 2014 could top 25% compared to 6% in guilt and slightly higher rates in the money market, which was flush with liquidity. Sri Lankan investors joined frenzied buying in 2014 after portfolio investors, both local and foreign, had moved in earlier. In 2015 stocks may be harder to pick because of the already high valuations. Four equity analysts from some of Colombo’s important brokerages joined a roundtable to discuss the outlook for listed company profits and their impact on the stock market. Chethana Ellepola, Manager Research at Acuity Stockbrokers; Nikita Tissera, Head of Research at Bartleet Religare Securities; Purasisi Jinadasa, Chief Strategist at CAL Partners; and Sanjeewa Fernando, a strategist at CT CLSA Securities joined the discussion.

We’ve had a fantastic run of stocks. Should we be worried that things are getting frothy?
Nikita: The Colombo Stock Exchange (CSE), to some extent, is more retail-centric than we are comfortable with. This is one reason we saw this enthusiasm. The waves in the CSE are a little more volatile. The fall in interest rates affects the market – it pushes up valuations and brings down finance costs, and it decreases the attraction of investment alternatives like bonds. Even middle-level bond players who are uncomfortable making 6.5% a year on their portfolios are coming into the equity markets, increasing their risk appetite. So it’s a re-rating. It’s not driven by the performance of the corporate sector as much as we would like to see.

Chethana: I’m not worried. I think we were on a good path. I agree with Nikita that Sri Lankan markets are very sentiment-driven and not as fundamental-driven as we would like to see. As a result, going into 1Q, we’re going to see more nervousness. A lot is probably going to depend on what happens at the Presidential Election. Beyond that, things should get better because I think the market ran on three main factors in 2014. Firstly, low interest rates. We’ve had this since 2012, but there has been a lag in past sentiment. I think the Central Bank has brought in policies that aren’t just interest rates based, like giving credit to pawning loans and changing the number of times you can approach the Standing Deposit Facility window, and this is getting translated to market rates. So it’s finally reacting to that. Secondly, we’re seeing all market players coming into play – the local high-net-worth individuals, foreign players, retailers. In 2013, foreign players were much stronger, but 2014 was more about everyone coming together. Thirdly, we’ve had some good macro indicators, and I don’t see why that shouldn’t continue. So for these reasons, I’m not worried beyond 1Q.

Sanjeewa: The low interest rate environment fuelled this bull run, but if you look at earnings, I think investors (retail, institutional and foreign) weren’t worried about the short term, as they normally have an investment horizon of more than three years. So the issues we had in 2013, with real consumption growth falling to a 12-year low, didn’t filter through to company earnings. I also have to point out that the economy continued to grow, largely due to growth in investment by the government. Going forward, we’ll probably see real consumption picking up in a major way in 2015, including imports, given the fiscal incentives in the recent budget. So 2015 will be the year that private sector credit, which bottomed out in September, starts to pick up and real consumption and imports grow. Although there won’t be major investment growth as in 2014 or even 2013, we’re looking at better earnings growth for the stock market. As for interest rates, we believe they’ll adjust in the near term, but we’ll start to see a rising impact probably after the first half of 2015. We’ll see the markets start to stabilise only after that.

Purasisi: A few years ago, it was easy to identify undervalued stocks. There were some stocks that were trading very cheaply, but it’s different now. The market has run up, and the stocks we’ve recommended since January have risen about 50%. Now it’s become a little harder. If you think about it, in 2012-2013, the government had to make some difficult changes – it devalued the rupee, increased energy tariffs and slowed down credit growth by putting limits on bank lending. This had the effect of lowering inflation and interest rates but, because of the lack of consumption, there was an 8-12 month lag. Now we’re seeing a pick-up in consumption again. So what I’m now trying to do is look at the macro picture and identify stocks that are bound to outperform due to the changes at the household level. The recent budget included a 25% reduction in energy tariffs, 15% off for corporates and so on. With this budget, an average household would be able to save about Rs3,000 a month, depending on the household of course. That means those people are going to consume more. The savings rate in Slide1 - CopySri Lanka fell to 14%; it’s close to 20% now. In terms of savings, there might not be a large increase. Consumption is going to grow so M2B is going to grow as a result. We’re forecasting M2B growth at 17-21%, including the Rs3,000 saving and the Rs15,000 the government has promised for the private sector. This will reduce the pressure on inflation so we’re predicting inflation at 5-6% over the next two years. Interest rates are going to remain steady because of the M2B growth, and that’s probably going to be 5.6-6.9%. GDP growth is going to be at a floor level of 6.3% in 2015, depending on investment, which we don’t have regular updates on. This can increase to 7.8%. So looking at the changes, we see that we should pick stocks that are consumption-driven. Earlier, we could buy almost all the S&P stocks and they would rise over the next year or two. Now you have to be more careful. 2015 is going to be a consumption-driven stock-picking opportunity.

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Will the market be able to deliver at the forecasted 15-16x PERs?
Nikita
: It’s difficult to ascertain without looking at individual sectors.

Purasisi: We have a coverage universe that includes about 70% of ASPI. Based on this, we arrive at a figure for a sustainable level for the ASPI. Our band for the next six months is 6,800-7,200. That’s a sustainable band, and fluctuations can happen depending on the crossings that occur because some crossings occur at a premium. Based on that 70%, we have an earnings forecast for the market of about 18-20% on average for 2015.

Chethana: One area I look at is where our PER should be heading. If we take the MSCI frontier market index forward PER as our target – it’s currently about 11x and forecasted to be 10.4x for 2015 – and we assume the market is correctly priced and nothing is going to change in the market cap, in other words, there are no changes in the number of shares or in prices, total market earnings should ideally grow at about 37%. Trailing 12-month earnings grew about 9%. September to September it grew 52% and cumulative six-month it grew 33%. So I think we’re in the range – 37% may be very positive, but corporate earnings have been fairly good this year so earnings growth in the 20% range is possible.

Purasisi: I agree with Chethana if we’re looking at consumption. Looking at consumer stocks, we see EPS increasing at least 30-35% YoY over the next three years, which is significant growth. Then this 37% becomes achievable. I don’t know whether it’s possible; I’m sticking to a one-year forecast of 18-20% earnings growth. That’s for the entire market.

Sanjeewa: I’m not willing to disagree with that, but if you look at the overall market, the average daily turnover is still around $10 million. That really continues to be a worry for us to get big foreign investors investing in our market. I hope the regulators will do what they have stated in order to increase liquidity so we can get better investors coming into the market. But earnings growth wise, I agree that earnings growth has to increase from what it was in 2013-14. For various reasons, in the past few years, the private sector didn’t participate in economic activity in a major way. Now it should happen and, as Purasisi mentioned, consumption should be one of the main beneficiary sectors. Trade will also benefit because imports are also showing signs of picking up. As for market earnings over the next year, I was expecting 20-25%, with 25% being very optimistic. I may be wrong, but that’s a sustainable growth number for all the stocks to continue on a recurring basis. Of course, there will be a lot of companies reporting non-recurring items by way of share sales.

Chethana: Just to clarify. My target PER was 10x, which is a lot less than right now. So I’m going to agree with these guys. We get 40% if we want to come down to 10x. So it would probably be 20-25% for the year.

Nikita: Unlike the other panellists here, I have a bottom-up view. We turn around rocks. So I don’t have a view of the overall market. I buy into Purasisi’s argument of consumption-driven stocks doing better. And I also think the listed space in Sri Lanka as a percentage of total GDP is very small. If you look at the overall economy, we saw the most amount of action in retail. But the retails stocks we see on the CSE are the supermarkets that represent less than 10% of overall trade. So I don’t think we can factor overall economic growth into what is listed. Supermarkets have also been slapped by this VAT imposition, and they’re still recovering from that.

But what’s your gut feeling?
Nikita: Looking at savings and finance costs, possible savings from energy and a YoY increase in
Slide1consumption, I would say 15% plus.

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Sanjeewa: One sector I’ve worked in over the past few years is the financial sector. We’re looking at credit growth in the range of 18% for 2015. We should also see margins expanding when there’s demand, adding to earnings growth. That forms the basis of the number I said, 20-25%

How will the market react to this?
Chethana: According to Bloomberg’s Technical Analysis on Sri Lankan markets, if the ASPI falls below the 7,114 level, it will be the first negative signal and you could potentially see a double bottom. The current resistance level for the ASPI is 7,313. If the ASPI breaks that level it creates a new resistance level of about 7,560. So according to Bloomberg’s analysis, if the ASPI can break that 7560 level, then you’re on a very strong upward trend. The question of course is, are we really going to make that? I don’t have an exact value for the ASPI next year, but I think somewhere between 7,500-8,000 is very feasible over the next one year, especially if the current macro stability continues into 2015. Just to put this year’s performance in perspective, if you do a back-of-the-envelope calculation to see how much markets have gained this year, on average, they have gone up by about 100 points each month. If you assume somewhat simplistically that the market goes up 80 points each month over the next 12 months, and you add those 960 points to the current 7,200, you still hit a little over 8,000 points. This is obviously not the way to gauge where the Index will be next year, but it helps you get an idea of how markets on average have performed this year.

Nikita: If the market manages 25% YoY growth, then that’s a definite positive reaction because I don’t think that’s what the market is expecting. If the corporates manage 25%, that will be a boost to the market.

So you don’t feel the market is expecting this 25%?
Purasisi: I don’t think the clients we deal with expect this. We expect 30% plus earnings growth for the stocks we cover.

Do you feel the market has factored that in?
Purasisi: I don’t think the market has or else the locals would buy in at a rate. There are high-net-worth individuals and foreign investors who have done so because they’ve realised it.

Sanjeewa: I think the market has partly factored it in. In 2014, the first two quarters were very dull, but the markets started reacting in the middle of the second quarter or so.

Purasisi: I think the markets started reacting because of the interest rates.

Chethana: But the interest rates have been low for a long, long time. There’s a massive lag.

Sanjeewa: I agree that interest rates are the prime driver of stocks.

Purasisi: In the local market.

Sanjeewa: Yes. The argument is that when earnings are expected to grow, stocks should grow, but there is a lag effect. The issue is this: since we’re looking at interest rates as the prime mover of stocks, normally private sector credit growth with a one-year forward lag coincides somewhat with average weighted prime lending rates. Which means, when private-sector credit starts to pick up, eventually interest rates will rise. When there is higher demand for credit, typically interest rates will start to move up. I see this after the first half in 2015, because you can recall that private sector credit bottomed out in July-August. Slightly, not in a serious way. Maybe 200bps max.

Chethana: I agree the rates will go up, maybe not as much as 200bps though. Right now we aren’t thinking of what’s going to happen in the US. But once the US starts raising rates, which will probably happen towards the third quarter or second half of 2015, we’re definitely going to see it.

Purasisi: Actually that might take longer because of quantitative easing in Europe and Japan, which means people are taking money out of those markets and putting it in the US.

Purasisi, earlier you talked about where you expect M2B to be and how that’s going to filter down to consumption stocks. What do you like in the market for 2015 in terms of these stocks?
Purasisi: I can’t tell you what I like for 2015, but I’ll tell you what I liked for 2014 and you can make your own guesses on what I like for 2015. I like Hemas, Asiri and Dialog. Hemas rose significantly this year. Their PER is at about 12-13x, while similar regional consumption stocks are at 19-20x. So just on a PER basis, this stock is still attractive to foreigners.

Nikita: I think the foreigners are a lot more bullish on FMCG exposure. I think the value of Hemas would be unleashed to a greater extent if there is a possibility for them to spin off their FMCG sector. I like their FMCG sector and it has got some good brand strength, but the group focus needs to be streamlined.

Why do you say that locals wouldn’t be as bullish on FMCG as foreigners?
Nikita: I’m sure the fund managers looking into emerging markets have seen how FMCG companies took off in Vietnam, Cambodia and China versus Telcos or banks, but we still haven’t seen that.

Can we talk about Dialog? Does anyone like Dialog?
Purasisi: I love it.

Nikita: One of my issues with Dialog is their technology. They have always got into 2G and 3G before other South Asian counterparts, and my contention is that it was probably at the cost of the equity holder. They wanted to get into the best possible technology without necessarily looking at profitability. We need to know how they will roll out 4G, maximising the existing technology without high incremental
capex.

So it’s not a stock you like?
Nikita: I must say that I don’t cover Dialog. Not the best person here to have a view on it.

Sanjeewa: I like Dialog as a company. Its performance has a major link with the exchange rate. With imports picking up and expected to pick up further and given that there is a bond repayment by October 2015, if the government manages to hold the currency, that’s a stock to have. But I’m a bit sceptical about the stock because of increasing pressure on the currency.

Purasisi: You have to look at the macro picture now when you buy stocks. Some stocks carry higher risks with regard to the exchange rate, because their assets are financed by foreign currency loans and they can incur a significant loss if the currency weakens. But, at the same time, I don’t think the rupee will depreciate anytime soon. I think we can maintain it at its current levels, even for as long as the next two years. Once the casinos come up, we’ll see an improvement in foreign currency. I think Dialog is a very misunderstood company. On the cost side, one of the greatest concerns is capex. Over the next two years, capex will be slightly intense, but after that it should subside to about 15% of revenue, which would be maintenance capex. Next year, they’re going to save at least $12 million in operating costs, which is significant. This is based on very conservative assumptions based on their Bay of Bengal gateway being up and running, and lower frequency costs. Their GP margin on each new data sub is roughly 60%. If you bought a data package yesterday, you will be giving them a GP of 60%. Data penetration is roughly 12-15% in Sri Lanka. Within Dialog, it’s about 6-7% of their captive mobile base. So there is a significant amount of growth potential; the only issue is capex. So when we forecast Dialog, we have very conservative capex and depreciation to account for this and we take only a portion of the potential cost savings as flowing down to the company. Even based on that, you’re looking at EPS increasing 40% over the next three years.

Chethana: Don’t you think Etisalat has a substantial portion of the data market? It’s more competitive than
Slide2 - CopyDialog in terms of data rates.

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Purasisi: But how does Etisalat cater to their clients? What is their mode of transmission? They lease Dialog towers. Etisalat is probably losing money. There’s going to be consolidation anyway. There are rumours about Etisalat.

Sanjeewa: You mentioned that your financial cost forecasts are conservative for Dialog because of currency expectations. Where do you expect the rupee to end by 2015?

Purasisi: Rs133 max. I think it will be flat.

Construction has been a sector that’s driven the economy. Are expectations about construction priced into Access, Chethana? You’ve said that this is a stock you like?
Chethana: I think so. I think it’s been priced into Access since June because it ran up so much. The markets are pricing in construction growth. I think 2H14 GDP was basically driven by construction and manufacturing, so I do feel it has been priced in.

But there aren’t any significant opportunities besides Access and a few smaller companies to take advantage of this?
Chethana
: You can go into manufacturing, fields like ceramics.

Purasisi: If you look at Access, they’ve reached a level where they don’t have any further capacity for projects. So the only way they can improve is through higher value-added contracts, which they haven’t got. If you do a forecast, the margins are more stable – I think their stock price is Rs34 – until they can manage a larger number of projects.

Chethana: So it is priced in.

There are strong views about JKH because of its current stock price. Is it justified?
Nikita: Not anymore. If you’re asking me whether JKH is a good company, yes it is. But would I buy it at current prices? No. Then again, I had the same reasoning in the last quarter and I was proven wrong purely because of foreigners. I understand why they like JKH. It’s the single biggest free float-adjusted market cap and it’s got a good track record in terms of governance. And whoever is buying into JKH now is not buying it for the current business. Their current margins are flat. In transportation etc, they’re not seeing growth. Maybe in hotels, yes. But the reason they’re buying is purely due to the mixed development project. I see a range of very different valuations across consensus for the mixed development project. I think the valuations, no matter how big it is, are stretched. Those who’re buying into JKH right now are looking at the potential inflows from the casino, but right now I don’t know what the casino will be like. I have an idea as to who will operate it but we don’t know if it will be high-end gaming or like the Macau model, low-end, low-margin, high-volume gaming. So I don’t have much to go by on valuing a potential casino. Also, we need to factor in a long gestation period. The first inflow from this project will come in 2018. Plus the execution risks are very high. We also need to consider the $100 entrance fee that will affect the initial footfall we had in mind earlier.

Casinos are a long-term story, at least three to four years. Is there any logic in the valuation JKH is receiving?
Purasisi
: No. I think it’s really overvalued right now. Our valuation without the integrated resort is Rs190 odd. We can add another Rs40 for the resort and we’d still be overvalued. We’ve done quite an in-depth study. We’ve done sensitivities on average drops and footfall. We’ve done everything. We can’t find any scenario that can justify why it’s trading at this.

Nikita: This isn’t even our base case. This is our best-case scenario. This has gone about 20% above our best-case scenario.

Chethana: The current price is about 5% from our best-case scenario. I agree with both of them that it’s the expected future flows from the integrated results that are driving the value of the stock. We did a range. We assumed potential growth rates for the integrated results from about 19-21%, and this value of Rs242 is at a potential growth rate of 22%. I know why you did what you did, Purasisi, going into footfall and gross gaming revenue per square foot, but I personally think it’s really hard to do that. We don’t have any sort of indication. Where do you base it? We looked at what they’ve done in the past and saw what
their previous investments have drawn and came up with a range of values for JKH, and Rs242 is our best-case scenario.

Purasisi: If you want to evaluate the success of the integrated resorts, there are enough casinos in Colombo to look at the footfall and average spend/drop.

Chethana: It’s not the same scale, Purasisi, and the integrated resorts are not just casinos.

Purasisi: Absolutely. We’ve modelled it separately – the gaming factor and the MICE factor. For the gaming factor, you look at the average drop. The people who’re going to the current casinos, they’re spending an average of $1,200 per drop.

Chethana: We looked at regional models. When I say we didn’t model it on that, it’s not that we didn’t look at it entirely. We analysed each of those segments. I agree you can go to the local casino, get an idea of how they’re generating gaming revenue and use that as a proxy. We didn’t do that. We looked regionally, took that as a proxy and came up with a value. We just didn’t use that in our valuation.

Let’s talk about finance and banking stocks.
Sanjeewa: We use price to book when it comes to balance sheet-based stocks. Let’s take the most liquid traded stock, Commercial Bank. The price to book has surpassed 2x, nearing 2.3x. But one of our main picks for 2015 is Sampath Bank because it still trades on a 1.1x price to book, whereas all systemically important banks trade above 2x – Commercial, NTB at 1.6x and HNB at 1.3-1.4x. A lot of
Slide2stocks rose this year, but Sampath Bank is known to be volatile. It used to be a pawning-heavy bank, but that’s 10% of the book right now. With gold prices remaining volatile, management at all banks that have pawning is adopting various approaches to avoid impairment. So the stocks could become volatile because of earnings. But that story is over for Sampath Bank and 2015 will be a better year, with margins also expected to go up, starting from a low base. It’s one of our main picks for next year.

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Does anyone else see potential in the big banks?
Nikita: I agree with Sanjeewa that Sampath Bank will be the pick of the banking sector, but that doesn’t necessarily mean I’ll be banking-heavy next year, because I would’ve preferred if more of Sampath’s earnings from this quarter came from core earnings, but that wasn’t the case. I’m a lot less bullish on the big banks right now, particularly because of how the prime sector is no longer lucrative. If you chart the average weighted deposit rate versus the prime lending rate, these have almost been parallel, with a consistent gap, in the past 10 years. Over the past two years, at the end of October, the two lines almost met. This means big banks, particularly banks like Commercial Bank, are very comfortable lending to big corporates at zero risk at break-even levels. Of Commercial Bank’s lending, I estimate about 40% would be to prime lenders. If we take the prime lending out of the equation and just take the average weighted lending rate, then we see the same consistency in the gap between the deposit rate and the lending rate, which means there’s a lot of profit to be made in the non-prime sector. Understandably, the asset quality is low. But is it low enough to warrant such a discount? I think not. This is why I’m a lot more bullish on non-banking financial institutions, which cater to a layer that’s a notch below – not the Unilevers and JKHs of the world but sub-prime businesses. I’m talking about beneficiaries like Central Finance and CDB. Both of those have found the perfect niche in terms of finding the right profitability in lending their assets to and finding the right asset quality.

Sanjeewa: I agree with what Nikita said. Bank spreads were around 6% on average over 2000-2010. Now they’re at negligible levels. Even today the prime lending rate is lower than the AWDR. One thing I’ve heard from management is that they have to maintain the relationships so they have to lend. The issue with non-prime lending is that it comes at a cost. We saw rising non-performing assets in 2013. Whenever private credit falls, prime margins get squeezed and vice versa. Now that private credit is picking up, we’re looking at positive times with regard to earnings. Since I mentioned valuations also at 1.1x, we see that going up. I agree with the other panellists that the banking sector had a good bull run in 2014, so I guess there will be little left for the other main stocks. When it comes to non-banking financial institutions, the first half of 2015 will be okay, with leasing also expected to pick up on better imports. But the second half may not be that good for non-banking financial institutions. With some upside for interest rates expected, margins could come under slight pressure. But we’re positive on a YoY basis, because even though margins could come under pressure, it will still be better on a volume basis. On the question of whether banking or non-banking financial institution sector earnings will do better, I think banking sector earnings will do so. Stocks-wise, banking sector stocks have gone up.

Which banks or companies do the rest of you like?
Chethana: Of Tier 2 banks, we like NTB. One reason is, as Nikita said, NTB has higher-than-others exposure to the leasing side. Basically, it has much more exposure to higheryielding sectors like SMEs and particularly leasing – and the credit card segment of course. So we really feel they’re going to see an increase in their net interest margins. If you look at the nine-month figures, theirs are higher than those of the industry. If you look at them on a comparative basis, their ratios are much better. Except for their current and savings account ratio, all their ratios are higher. So given that they have in place a rapid expansion plan, one that shifts to a low-cost model as well, we feel their costs will also decrease and support their margins more. So we are very bullish on NTB. Textured Jersey is a company I like because it has a very dynamic strategy. Right now our garment sector caters to the basic cotton products market, but it has been said time and time again that if we want to move our garment sector to a better level, we need to get into the value-added segments because we can’t compete with regional players since our labour costs, for example, are much higher. So the garment sector needs to evolve to that higher-end niche segment, and we feel Textured Jersey has already done this. It’s focusing a lot on its value-added fabric segment. It has very strong demand dynamics. It’s looking into expanding productive capacity. Everything is in place for them to capitalise on this. There’s 10-12% expansion. They’re also looking at expanding outside the country. We feel this is possible; the potential for an acquisition abroad is very high.

Any other mid-caps you have a strong opinion on?
Purasisi: Going back to consumption, I agree with all the panellists here when they alluded to how we should look at the banking sector and at non-banking financial institutions that cater to the mass market because consumption is going to grow. But what about the insurance sector? Wouldn’t it also grow as people’s disposable income increases? That’s also a sector to look at. There are a couple of small companies that are quite attractive.

Nikita: The sector is underpenetrated. I agree with you.

Sanjeewa: One thing about the insurance sector is that by 2015 they will have to segregate and by 2016 they will probably have capital issues.

Nikita: In 2015, the insurance sector should be very exciting. One reason insurance has escaped our view all this time is the liquidity and the disclosure-related complexities. It will be very different with life and general going forward, and we will have a lot better access to the financials, making the sector more transparent. That will change the game.

Sanjeewa: This sector got beaten because of motor insurance – they started undercutting premiums. If we take the premium-to-cover ratio in general insurance, even today it’s at 1.5% versus some premium insurers offering 2.5%. Technically 2.5% means you pay a higher insurance premium to your cover value versus a lower ratio. This is better for the customer. A lot of new companies started undercutting on motor and fire insurance, which resulted in combined loss ratios of the segments, sometimes even above 100%.

Nikita: Motor insurance is like the new Telco. I don’t think they’re in it to make money in the short term; they’re just trying to build critical mass over a long period. But I really don’t see how taking a hit in motor insurance over the medium term would help build critical mass over the long term because that’s not a segment that values brand loyalty.

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So to close our discussion, please sum up.
Sanjeewa: The markets will continue to go up and come down. But the main point is, if we want to see the CSE growing as a market of importance in the world, the liquidity issue has to be taken seriously. The government has mentioned that they’re planning to increase liquidity in various ways, but they need to act fast. Even though we’re talking about stocks, we’re talking about only a few stocks. Purasisi mentioned that they cover about 70% of the market cap, which is 36 companies. At CT, we cover 50% of the market cap, which is only 28 companies. We have 290 companies and we cover a lot fewer than that, but we technically cover the market. I don’t think it has to be like that; we need to have more stocks in other markets.

The only way the government can do that is to list some of the big entities it controls.
Sanjeewa: That may be a good start. Maybe not list the whole thing, but about 20% should be enough.

Chethana: Like I said before, I think we’ll probably see some downside in 1Q. Beyond that, I think it should pick up. But I do hope markets become less sentiment-driven and more fundamentals-driven. I think that’s really important.

Nikita: The markets are a little more expensive than they were two years ago so stock picking is not as easy as it used to be. Still, if you look hard enough and just keep turning the rocks, there are enough stocks to be picked.

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