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Global View
Rosie Lambert profile
Author status: Educatee
Author country: Italy
Author company: Investment Firm
Job title: Trader Junior
Expert Area: Alternative Investments, Economics, Equity Investments, Financial Statement Analysis, Fixed Income, Portfolio Management
Geografical Area: Asia, Middle East, North America
Economics Area: BRIC, Developed, Emerging, G10, G20, MENA, MIST, N11, OPEC
Country
Brazil (Real GDP)
- Despite recent stabilization in Brazilian economy after recession in 2015-2016, I assume that this recovery will be short-lived. The thing is, budget deficit remains high and its reduction might lead to both growth lowering (due to reduction of government spending) and social instability (due to unpopular measures such as raise the retirement age). As a result, political crisis is quite possible and, if so, that will lead to second wave of recession
Company
Brazil (Real GDP)
- Despite recent stabilization in Brazilian economy after recession in 2015-2016, I assume that this recovery will be short-lived. The thing is, budget deficit remains high and its reduction might lead to both growth lowering (due to reduction of government spending) and social instability (due to unpopular measures such as raise the retirement age). As a result, political crisis is quite possible and, if so, that will lead to second wave of recession
O'Key Group SA
- Despite recent stabilization in Brazilian economy after recession in 2015-2016, I assume that this recovery will be short-lived. The thing is, budget deficit remains high and its reduction might lead to both growth lowering (due to reduction of government spending) and social instability (due to unpopular measures such as raise the retirement age). As a result, political crisis is quite possible and, if so, that will lead to second wave of recession
- I think that the sale of the supermarket business to X5 will negatively affect the O'Key's sales. Anyway the Company will focus on improving the efficiency of compact urban hypermarkets and accelerating the growth of discounters' business. So my advice is to monitor the situation, that's why my rating on Okey's shares is neutral.
Sandfire Resources NL
- Despite recent stabilization in Brazilian economy after recession in 2015-2016, I assume that this recovery will be short-lived. The thing is, budget deficit remains high and its reduction might lead to both growth lowering (due to reduction of government spending) and social instability (due to unpopular measures such as raise the retirement age). As a result, political crisis is quite possible and, if so, that will lead to second wave of recession
- I think that the sale of the supermarket business to X5 will negatively affect the O'Key's sales. Anyway the Company will focus on improving the efficiency of compact urban hypermarkets and accelerating the growth of discounters' business. So my advice is to monitor the situation, that's why my rating on Okey's shares is neutral.
- Market is focusing on company's positives: strong free cash flow, near term production growth and Monty project commissioning. However, my outlook is more negative because (1) increased FCF is a consequence of reduction in mine development, (2) as a result, DeGrussa Mine life < 4 years.
Banco Bilbao Vizcaya Argentaria S.A.
- Despite recent stabilization in Brazilian economy after recession in 2015-2016, I assume that this recovery will be short-lived. The thing is, budget deficit remains high and its reduction might lead to both growth lowering (due to reduction of government spending) and social instability (due to unpopular measures such as raise the retirement age). As a result, political crisis is quite possible and, if so, that will lead to second wave of recession
- I think that the sale of the supermarket business to X5 will negatively affect the O'Key's sales. Anyway the Company will focus on improving the efficiency of compact urban hypermarkets and accelerating the growth of discounters' business. So my advice is to monitor the situation, that's why my rating on Okey's shares is neutral.
- Market is focusing on company's positives: strong free cash flow, near term production growth and Monty project commissioning. However, my outlook is more negative because (1) increased FCF is a consequence of reduction in mine development, (2) as a result, DeGrussa Mine life < 4 years.
- I recommend to buy BBVA's shares, because Bank has positive earnings and asset quality momentum in Spain, profitable banking franchise in Mexico and perspective of increase in cash dividend payout by 40% in the nearest future, in terms of an 11.1% B3 FL CET1 and 6.7% B3 FL leverage ratio at 4Q 2017.
Ceylon Tobacco Company PLC
- Despite recent stabilization in Brazilian economy after recession in 2015-2016, I assume that this recovery will be short-lived. The thing is, budget deficit remains high and its reduction might lead to both growth lowering (due to reduction of government spending) and social instability (due to unpopular measures such as raise the retirement age). As a result, political crisis is quite possible and, if so, that will lead to second wave of recession
- I think that the sale of the supermarket business to X5 will negatively affect the O'Key's sales. Anyway the Company will focus on improving the efficiency of compact urban hypermarkets and accelerating the growth of discounters' business. So my advice is to monitor the situation, that's why my rating on Okey's shares is neutral.
- Market is focusing on company's positives: strong free cash flow, near term production growth and Monty project commissioning. However, my outlook is more negative because (1) increased FCF is a consequence of reduction in mine development, (2) as a result, DeGrussa Mine life < 4 years.
- I recommend to buy BBVA's shares, because Bank has positive earnings and asset quality momentum in Spain, profitable banking franchise in Mexico and perspective of increase in cash dividend payout by 40% in the nearest future, in terms of an 11.1% B3 FL CET1 and 6.7% B3 FL leverage ratio at 4Q 2017.
- I think that the key risk for the Ceylon Tobacco Company is a decline in sales, due to significant increase in cigarette prices against the backdrop of the reduction in consumer purchasing power. As a result, we see the legal market contraction. Cheaper beedi and illicit cigarettes continue to be direct threats to legal cigarette sales, given the substantial disparity in price. Therefore my rating on the CTC's stocks is negative for at least until we see the stability on the legal market of cigarettes.
Heidelbergcement AG
- Despite recent stabilization in Brazilian economy after recession in 2015-2016, I assume that this recovery will be short-lived. The thing is, budget deficit remains high and its reduction might lead to both growth lowering (due to reduction of government spending) and social instability (due to unpopular measures such as raise the retirement age). As a result, political crisis is quite possible and, if so, that will lead to second wave of recession
- I think that the sale of the supermarket business to X5 will negatively affect the O'Key's sales. Anyway the Company will focus on improving the efficiency of compact urban hypermarkets and accelerating the growth of discounters' business. So my advice is to monitor the situation, that's why my rating on Okey's shares is neutral.
- Market is focusing on company's positives: strong free cash flow, near term production growth and Monty project commissioning. However, my outlook is more negative because (1) increased FCF is a consequence of reduction in mine development, (2) as a result, DeGrussa Mine life < 4 years.
- I recommend to buy BBVA's shares, because Bank has positive earnings and asset quality momentum in Spain, profitable banking franchise in Mexico and perspective of increase in cash dividend payout by 40% in the nearest future, in terms of an 11.1% B3 FL CET1 and 6.7% B3 FL leverage ratio at 4Q 2017.
- I think that the key risk for the Ceylon Tobacco Company is a decline in sales, due to significant increase in cigarette prices against the backdrop of the reduction in consumer purchasing power. As a result, we see the legal market contraction. Cheaper beedi and illicit cigarettes continue to be direct threats to legal cigarette sales, given the substantial disparity in price. Therefore my rating on the CTC's stocks is negative for at least until we see the stability on the legal market of cigarettes.
- I don't see any positive signs for Heidelbergcement's EBITDA growth in 2018, due to very negative FX and higher comparison base vs 2017. Also the Company's cash flow remains low in spite of low CAPEX, which will probably make negative impact on the Net Debt. So I bet on bearish trend of the Company's shares.
Commodity
Aluminum, $/mt
- The aluminium market had been inactive in 2017-2018 until the US imposed sanctions against Russia?s Rusal in April. I expect a deficit this year for the global aluminium market, but next year it will return to a moderate surplus. At this case I expect positive trend of the aluminium prices in the near term, which will start to decline in 2019. In addition the possibility of removal of sanctions from Rusal leaves room for downward trend of aluminium prices. So my long-term outlook on aluminium prices is negative.
Zinc, $/mt
- The aluminium market had been inactive in 2017-2018 until the US imposed sanctions against Russia?s Rusal in April. I expect a deficit this year for the global aluminium market, but next year it will return to a moderate surplus. At this case I expect positive trend of the aluminium prices in the near term, which will start to decline in 2019. In addition the possibility of removal of sanctions from Rusal leaves room for downward trend of aluminium prices. So my long-term outlook on aluminium prices is negative.
- After mine closures, Zinc prices hit their highs (from ~$1,500/t in 2015 to current ~$3,400/t), competition for concentrate intensifies. I expect that zinc has a little further to run, however already in 1 year market will start to return to balance and price will begin to unwind. On the supply side, we have Gamsberg, Dugald River, and Castellanos coming in over the next 12 months, as well as the specter of possibilities for Glencore to restart its operations. On the demand side, I expect substitution of Zinc by other metals (historically high ratio to aluminum), for example, diecast alloys in many low-end areas are vulnerable to substitution. As a result I expect that there will be a surplus in 2019-2020.
Exchange
Bitcoin | XBT/USD
- I think we shouldn't doubt about the stability of the crypto currencies over the mid-term. However, Bitcoin still has strong downside potential and I don't rule out its sharp fall in the near-term. For a new bullish trend of BTC will require high demand from a both retail and institutional investors, which we saw in Q4 2017. But taking into account the BTC's trajectory in the past six months, I think that Bitcoin's best times is in the past. So my view on BTC is bearish.
Brazil Real | BRL/USD
- I think we shouldn't doubt about the stability of the crypto currencies over the mid-term. However, Bitcoin still has strong downside potential and I don't rule out its sharp fall in the near-term. For a new bullish trend of BTC will require high demand from a both retail and institutional investors, which we saw in Q4 2017. But taking into account the BTC's trajectory in the past six months, I think that Bitcoin's best times is in the past. So my view on BTC is bearish.
- I think that the main risk for the Brazil Real is current uncertainty about presidential elections. The result of the presidential run could turn to any directions, so we need to be prepared for riots, protests and strikes. The political risk would cause a reduction in foreign direct investment and loss of asset managers' trust in Brazil Real's fair value. So I have a negative outlook for BRL.
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