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Now into the second week of Lent, the Portuguese faithful find themselves immersed in two types of austerity: religious fasting and budget cuts. Just on Tuesday, however, the “troika” — that is, the European Commission, European Central Bank (ECB) and International Monetary Fund (IMF) — gave Portugal a nod of approval.
Shares of legacy wireline phone carrier Brasil Telecom have plunged 14% since the end of May amid fresh boardroom intrigue and sluggish mobile phone subscriptions.
Now that European central bankers have all but admitted Greece may need to default on its debt after all, traders are headed for the doors in Spain and Italy.
With earnings season behind us and the fall quarter looming, investors are free to catch up to some emerging markets stories that got lost in the news flow.
BRAZIL: Now that Telefonica’s (TEF, quote) bitter fight with one-time partner Portugal Telecom (PT, quote) over Brazilian wireless network Vivo (VIV, quote) is over, the clear winner is . . . Telesp (TSP, quote).
But if there are winners, there are also losers, and one name stands out in particular. (subscriber content)
INDIA: Vedanta’s troubled $9 billion bid to add Cairn India to its list of subsidiaries has caused unintended consequences to U.S.-traded Sterlite Industries (SLT, quote).
SLT is down 23% so far this year. But analysts say traders are overreacting to news that does not affect this Indian mining company’s fundamentals at all. (subscriber content)
CHINA:: China Life (LFC, quote) is the world’s biggest life insurance company, with $26 trillion in premiums on its books. So why is this giant down 18% so far this year?
LFC blames a sour Shanghai stock market for its disappointing second quarter. However, smaller Chinese insurance companies have not had nearly as much trouble. Perhaps LFC is not too big to fail, or other factors may be involved. (subscriber content)
ETFs in the Spotlight
EEM (quote) is the $40 billion grandfather of all emerging markets portfolios. It will be hard to collect all 668 stocks in this admirably diversified ETF on your own, but how close can you get?
Let
Now that Telefonica’s bitter fight with one-time partner Portugal Telecom over Brazilian wireless network Vivo is over, the clear winner is . . . Telesp.
Since July 29, when Telefonica (TEF, quote) won the right to pay $9.7 billion to add Vivo (VIV, quote) to its empire, Telesp (TSP, quote) — normally considered TEF’s somewhat boring fixed-line subsidiary — shares are up 10%.
The reason? Expectation that TEF will follow through on promises to merge VIV into TSP to create a single strong full-spectrum telecom company.
But more than that, TSP is benefiting from old-fashioned fundamental improvement. The company is finally adding to its subscriber rolls again after four agonizing years of no growth at all.
And as banks like Barclays have started to point out, broadband subscriptions are at an all-time high.
Broadband, wireless and even the conventional wireline business: TSP seems to be a Brazilian telecom ticker to watch.
And as for the losers of the VIV fight, one peripheral name stands out. Tele Norte (TNE, quote), better known as “Oi” in Brazil, is down 3% since the deal, even though spurned VIV co-owner Portugal Telecom (PT, quote) turned around and bought a $4.8 billion stake in the company.
In the strategic war for Brazilian phone subscribers, TEF may have proven that an active general is better than a somewhat silent overseas partner. Clearly, TSP shareholders agree.
