Emerging markets better developed nations in stock

Robust growth in India and China has helped to pull the markets up and thus the stocks in these countries outshine the rest of the developed nations during the year 2009. But there is a bad news for these two countries as per the report of “Survive and Prosper – Emerging Markets in the Global Recession” which predicts that these two economies would contract in the later part of this year.

Another report says that with the exception of Eastern Europe, the emerging market economies fare better than the developed countries which are definitely a silver lining in the offing. The report further adds that emerging Asian Tigers including India will remain the favorite investment destination in the years to come. Asian markets figured in the top ten list of the preferred destinations among the non-BRIC countries which is inimical to the growth of the stocks in the Eastern Europe.

The market movement in India and China showed that there is a degree of independence from developed economies as far as stock growth in concerned but the GDP gap between the developed and emerging nations remained at about 6 percentage which shows that there is a certain degree of dependence. But there is no second opinion in that the emerging markets support the global profitability. Global companies which had their branch office in emerging nations reported brisk business even during recession compared to that located in developed nations.

However, the investors are prepared to stay the course and are of the opinion that the investment from emerging markets would be better in the long run and the wait would be worthy.

Stocks on low ahead of Fed meet

Most of the markets remained closed on Monday due to holidays and the investors are keenly watching about the moves of the Fed Chairman Ben Bernanke whose reported remarks about the recession in the US as ‘likely over’ which helped the stocks to move northward during the past week. The Dow Jones industrial and Standard and Poor’s 500 index went down by 0.6 per cent in early trading.

US Recession - On the end?

The recession that has been sweeping across the globe did come to a full circle. Didn’t it? The grip of the recession on the global economy, especially that on the U.S. had come down but not yet ended at all. A survey conducted by the National Association for Business Economics’ industry found that though the demand is stabilizing, but a small majority of the respondents said that the bottom is yet to be seen.

There is a conflicting version about the degree of the deleterious effect of the recession among the industrialists. While one school of thought advocates the theory that the U.S recession is abating with few signs of immediate recovery, another group simply advocates the opposite. The results for the industry demand still declining in the second quarter of 2009 but the rate of decline has reduced considerably.

While the sector that showed tremendous recovery prospects is financial services with the index bench mark reading at +15, transportation, communications and information sectors fared poor.

The recession in US that started during December 2007 might be considered the longest one since the Great Depression that wreaked havoc across the globe. The optimists in the financial business look forward to see a recovery during the second half of this year but going by the present trend, the recovery process may take more time and further it is likely to be sluggish. But one can find solace in the rate at which profits are shrinking is slowing.

CIT in trouble?

Last Sunday saw hectic activity that culminated in a deal in which the CIT Group Inc's board signed off an agreement for $3 billion and it is hoped that this move will help to stave off bankruptcy. The bondholder group, which comprises Pacific Investment Management Company (PIMCO) and some other top CIT holders, is expected to provide the financing with a 2 1/2-year term to ease out the situation.

The $3 billion financing plan will be backed by CIT's remaining unsecuritized assets, which likely exceed $10 billion, the second source familiar with the matter said.

The problems of the CIP can be tracked back to the sub-prime crisis when its Chief Executive Jeffrey Peek decided to expand its activities into sub-prime mortgages and student loans which are lucrative and highly profitable but fraught with danger and added risk.

As per the independent research firm CreditSights, CIT has about $40 billion of long-term debt. It is worth to note that about $1.1 billion of debt will come due in August, followed by about $2.5 billion by the end of the year.