Good News from All Over

04/15/2010 11:55 am EST


Igor Greenwald

Chief Investment Strategist, MLP Profits

Spring is in the air and in the gait of the stock bulls once again—hard to believe that less than a year ago we were having the green shoots vs. brown weeds debate.

Few controversies get settled so decisively, so quickly: The green shoots have sprouted into an Amazonian rainforest of good news. Here are but one night's gleanings (but feel free to extrapolate):

—Singapore's economy zoomed at a record 32% annualized rate in the first quarter, forcing the government to bump its 2010 growth forecast from 7% to 9%

—The jobless rate fell sharply in South Korea, thanks to government stimulus

—Australian consumer confidence hung in near a three-year high

—The lure of rapid growth in China trumped currency and business climate worries, driving direct foreign investment in Asia's linchpin economy 12% higher year-over-year

—European industrial output surprised to the up side, boosted by exports to Asia

With the bad-news bears in danger of losing on the mercy rule, one has to wonder how many skeptics remain to be won over. Investment sentiment surveys suggest this cautious species is far from extinct, albeit depleted a year into the market's surge.

Certainly, Europeans can't be accused of excessive exuberance, despite the improving posture of their stocks. Nor will that charge stick to the millions of Indians lacking access to basic banking services, never mind brokerage margin accounts. They might become more ebullient down the road, though good luck market-timing that development.

It may well be, as Sharat Shroff suggests in this week's interview, that the emerging markets in general and India in particular are at the upper bound of their historic valuation range. But there's also no mistaking Shroff's enthusiasm for the long-term opportunity in India and Indonesia. So far this year, Shroff's had one of the emerging markets' hottest hands, thanks to bets on some of the smaller and more dynamic Indian companies.

The Indian rupee has been rising of late alongside other Asian currencies on expectations that China will permit the yuan to appreciate against the dollar. Singapore stoked such talk with a surprise revaluation of its own this week. The trend could spur stronger inflows into emerging markets. It would also make commodities more affordable for Asian consumers. Indian retail demand is already a key variable for gold prices, write David and Eric Coffin.

A higher yuan would certainly strengthen the profits (while lowering costs) for a leading Chinese toiletries maker, though there are weightier reasons to scoop up the stock, according to Yiannis Mostrous.

Meanwhile, Andrew McHattie spotlights a London-traded trust that had waded into UK growth stocks well ahead of the herd, yet continues to trade at a discount. (Fund managers remain underweight European equities despite their strong recent performance, a bullish sign. Even Japan is getting more love.)

Australia, Korea, and Singapore are barely up on the year. Given these economies’ fundamental strength, one has to suspect their stock markets have more room to run.  Russian equities continue to look cheap for crude fetching $85 a barrel. Vietnam's Ho Chi Minh index remains down 17% since October; a rising yuan figures to boost Vietnam as a lower-cost manufacturing center.

The risk/reward is less lopsided than it was a year ago, when many doubted a real recovery was on the way. But it usually doesn't pay to argue with progress. And there has been an awful lot of that.

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