Welcome, Guest |
Login |
China’s state-owned car maker Chery Automobile Co. and Israel’s biggest conglomerate, Israel Corp., are revamping their joint venture with the goal of targeting foreign markets amid slowing sales at home.
The world’s biggest gas company is “carefully” looking at opportunities to expand into Israel in order to continue growing out its global distribution network.
China may be having trouble buying a fertilizer company like PotashCorp, but it is trying to get its hands around insecticide thanks to a $2.72 billion offer for MA Industries.
Israel’s MA Industries (MAIXY, quote), more formally known as Maktheshim Agam, makes bug-killing chemicals and other “crop protection” products. Although it is not usually considered part of the fertilizer group — names like POT (quote) or MOS (quote) — it is definitely a big name in the agricultural space.
Privately held ChemChina is offering 22.7 shekels a share or $12.14 per ADR for a 70% controlling stake in the company. If the deal goes through, current majority shareholder Koor Industries (thinly traded in the United States as KOORF, quote) will retain the other 30%, so the deal takes one of the best names in the agrichemical space out of the investment universe.
Say it until you are blue in the face. Say it until you turn purple: soft commodity prices are going higher. Even after Friday’s price action in the corn and sugar markets, you have not seen anything yet.
Demand for food supply and the companies that cater to the agricultural industry — potash suppliers, chemical makers, even the overdone farm equipment names — is rising. This feels like the 2008 food war, only sustainable.
Thoughts on Israel from Aaron Levitt of Investopedia.
Israel: An Overlooked Market
By
J.P. Morgan is out with its review of fund managers’ weightings across global emerging markets, gaging consensus views as of the end 2009. Because this is a backward dated assessment of where managers were going to allocate their capital in early 2010, some of the findings are not a surprise after watching the year trade so far.
Russia is the consensus overweight (best performing BRIC) and the lack of strong conviction on India and China has manifest itself in the last two weeks as uncommitted market players have sold positions with a difficult macro outlook.
Here is what J.P. Morgan found:
Consensus did not change their views going into the year end. December end Positions were similar to November. The divergence between the commodity bulls continued with Russia retaining the highest net overweights followed by Mexico while net overweights in Brazil remained at zero.
The herd continues to be undecided about its position on China+HK and India. Managers remain underweight the Asian export economies of Taiwan, Malaysia and Korea. Net underweights are the highest in Israel.
Net underweights in Israel increased from 16 to 21. This is likely a reflection of the reclassification of Israel as a developed market in MSCI indices as of May 2010 and the defensive nature of the market.
- China and India have net marginal underweights. Note that the gross overweights and gross underweights for both countries are higher than the October levels. This highlights the more polarized views on the countries. We are overweight India and underweight China.
- Net UW in Korea have reduced to 14 from a peak of 29 in December 2008. Mexico net OW have increased to 10 from 2 in July 2009. See pages 7and 8 for charts on the fund manager survey history.
- Total EM equity funds had US$64.4 billion subscription in 2009, the highest since the start of the data series in 2001, this compares with US$39.4 billion of outflows in 2008.
Time to buy oil?
Morgan Stanley has set a 2010 year-end price target of $95/bbl, and it raised its 2011 annual average forecast to $100/bbl.
The call here is that supply disruption and inflation fears are back in the mix. I agree and think we started to see signs of supply disruption in the last six weeks in the Russia-Belarus spat, Iran-Israel and good old Nigeria.
From the new report:
“The argument that oil is pricing in a robust resurgence in demand is undercut by weakness in forward spreads and product cracks. Instead, we believe that oil prices have found support from non-traditional supply/demand factors – including rising inflation expectations. Geopolitical tensions (relating to Iran) and significantly colder-than-normal temperatures globally have also supported oil prices in recent weeks.”
High beta oil plays include:
Israel’s Teva Pharmaceutical Industries Ltd. (TEVA) is acutally U.S. pharma but is growing globally. Teva released blowout 2Q numbers yesterday with the key figure being the guidance.
Management has raised the 2010 EPS growth guidance from 30-35 percent to more than 35 percent and now expects synergies from the Barr integration to be $500 million (vs $400 million previously) in year three. It reiterated its previous 09 revs/EPS guidance. UBS commented that on the mergers and acquisitions front, that it indicated interest in three types of assets; specialty pharma, generics and biosimilars. It is still committed to the current biz model and doesn’t expect generic/branded mix to change much from the current 75/25 percent.
The mix shift to a higher percent of branded sales is helping GMs. Growth overseas continues (constant currency) even in a difficult global economic environment due to market share gains.
This large U.S. generics business amazingly keeps growing.
In a move I did not expect, MSCI Barra announced Monday to re-classify Israel as a “developed market” from “emerging market.”
The change will be effective May 2010, when the MSCI Israel Index will be included in the MSCI World Index and MSCI EAFE
