stock market

Companies buy back shares to funnel excess cash to shareholders and/or prop up the share price. But they can also just announce a buy-back plan, with no intention of following through, to enjoy the artificial boost to their share price that usually follows.

The Securities and Exchange Board of India is now cracking down on these phantom offers. 

In March, India’s benchmark Sensex index was promising to rise above 20,000 points. In May, the Nifty index breached its own high-water mark of 6,200 points. How the mighty have fallen.

By lunchtime in Mumbai on Friday, the Sensex was at a meager 18,765 while the Nifty hovered around 5,675. But how much further will Indian markets fall? 

Ratings agency S&P has warned that the chances of India’s sovereign credit being downgraded to junk is more than one in three, as the economy battles with unsustainable current account and fiscal deficits.

But foreign institutional investors (FIIs) see reasons for cheer as growing inflows send Indian equity markets soaring. On Monday, India’s benchmark Nifty index surged 31 points to 6,229.45, its highest since November 2010. The Sensex too gained 163 points to 20,443.62, its highest since January 2011. Both indices have gained in every session in the past week. What’s going on? And will this rally last? 

By Ben Aris of bne

The management of Russia’s MICEX exchange arrived in London on Tuesday on a roadshow ahead of its IPO on Feburary 15. What they are selling is not just a stock exchange but a diversified business that is in many ways unique.

Widely seen as Russia’s leading stock exchange, MICEX is actually a unusually diversified business for an exchange, which means it has managed to earn steadily increasing profits that have been largely unaffected by the 2008 crisis, let alone the notorious volatility that plagues portfolio investors into Russian stocks. 

A strong market rally and improved regulation could tempt up to 20 companies to list on the $54bn Nigerian Stock Exchange in 2013, according to its chief executive officer Oscar Onyema.

The NSE has struggled since a crash in 2008 wiped more than two-thirds off the value of the All-Share Index and damaged investor confidence. Since 2009 there have been only a handful of small listings, compared to 88 between 2006 and 2008.

But in the year to date, the All-Share Index is up 28 per cent – and so is corporate sentiment about coming to market. 

Who owns the Russian equity market and how does ownership affect company performance? A new research note from Troika Dialog sheds some light.

The short answer to the first question is, the state, which is the single largest player with 30 per cent of equity ownership. This compares with a free float of 27 per cent owned by institutional and private investors. The answer to the second question is a bit more complex. 

For all of you out there who can’t get enough of the Mexico versus Brazil debate, here’s something else to chew over: the diverging fortunes of the countries’ two stock markets.

Mexico’s benchmark IPC  index on Tuesday hit a record high for the third consecutive session while Brazil’s Bovespa continues to languish, having dropped 27 per cent since mid-March. 

The toughest task in being an analyst in Korea seems to be to put a “sell” call on a stock. You have to be extremely brave to tell your clients to sell their shares in a company, according to Korean analysts.

The numbers bear that out. According to statistics from Korea Financial Investment Association, there was only one “sell” recommendation last year out of about 80,000 research reports. Analysts rated most Korean stocks they cover as a “buy,” issuing “buy” recommendations on more than 80 per cent of stocks. 

If the Taiwan government needed any indication of how sensitive investors are to talk of a potential capital gains tax, it need look no further than the performance of the island’s shares on Thursday. The benchmark Taiex index fell by over 200 points in morning trading, the biggest fall since the beginning of this year, closing down 2 per cent at 7872.66. 

It was not as if the bankruptcy of Japan’s Elpida, the world’s third-biggest D-ram chip maker, was totally unexpected. Yukio Sakamoto, its president, warned two weeks ago that debt talks with creditors had stalled.

Still, investors were shocked when it actually happened on Monday, and nowhere was this more apparent than in the Taiwan stock market, which only resumed trading on Wednesday after a four-day long weekend. 

Like other frontier stock markets that took a beating in recent years such as Egypt and Hungary, Vietnam has rallied this year, up more than 25 per cent since early January.

While sceptics reckon this rally represents the triumph of hope over experience – what traders prefer to call a “dead-cat bounce” – Citi thinks differently, arguing in a 20-page note sent to clients this week that Vietnam “should form a core part of a frontier market portfolio.” Easier said than done? 

On the face of it, it looks like investors believe the risks associated with Russia’s wave of protests have already had their day.

Russia’s stock indexes have surged this year with the dollar-denominated RTS up 20 per cent and the rouble-based Micex up 11 per cent year to date. Both have recovered the steep 11 per cent losses they saw in December when unprecedented demonstrations spooked investors. Of course, the general recovery in global sentiment has helped – but it does seem that investors have stopped worrying so much about Russian political risk. 

Which Latin American market racked up the most equity offerings in the second half of 2011?

Not Brazil, the regional behometh, with seven deals worth $1.6bn, but Colombia, with seven fatter deals totaling $4.9bn, according to data compiled by Dealogic. 

Investors looking for an immediate stock market bounce from Taiwan president Ma Ying-jeou’s successful re-election might be a bit disappointed on Monday.

The benchmark Taiex index opened up 60 points, or nearly 1 per cent, on Monday morning to reach 7250 points, bucking a broadly down Asian market, but quickly fell back into negative territory. By mid-morning it was down by 60 points. 

China and the US have welcomed Beijing-friendly Ma Ying-jeou’s re-election on Saturday as president of Taiwan. So should investors.

Taiwan business favoured the liberalising Ma in advance of the poll. So his clear victory – by 51.5 per cent against 46.5 per cent for Tsai Ing-Wen, the main opposition candidate – should be good news for the stock market.