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<TABLE border=0 cellSpacing=0 cellPadding=0 width=452><TBODY><TR><TD vAlign=top width=452 colSpan=2>
</TD></TR><TR><TD vAlign=top width=452 colSpan=2>Markets still struggling to make up for 'lost year'
Recovery in 2009 has still not offset losses suffered in 2008, BCG says
By LYNETTE KHOO
(SINGAPORE) Only about one-third of large-cap global companies have recovered the losses suffered during the downturn to generate a net positive total shareholder return (TSR) in the two-year period 2008-2009. And only five emerging markets managed to fully recoup their 2008 losses.
<TABLE class=picBoxL cellSpacing=2 width=100 align=left><TBODY><TR><TD>
</TD></TR><TR class=caption><TD></TD></TR></TBODY></TABLE>Asian markets like Singapore, Hong Kong, Indonesia and South Korea still have some way to go before fully offsetting their TSR losses in 2008. China remains far from its breakeven TSR level even with one of the largest returns in 2009.
These facts have emerged in a new study by Boston Consulting Group (BCG).
The report, which looked at TSR of over 2,000 companies across 40 countries, analysed the impact of the massive stockmarket rebound in 2009.
It noted that the burgeoning returns from global market rebounds in 2009 were due largely to the low base effect in 2008, when hefty losses were incurred during the financial crisis.
<TABLE border=0 cellSpacing=0 cellPadding=5 align=left><TBODY><TR><TD bgColor=#ffffff>[FONT=Geneva, Helvetica, Verdana, Arial, sans-serif]<!-- REPLACE EVERYTHING IN CAPITALS WITH YOUR OWN VALUES --><TABLE class=quoteBox border=0 cellSpacing=0 cellPadding=0 width=144 align=left><TBODY><TR><TD vAlign=bottom>
</TD></TR><TR><TD bgColor=#fffff1><TABLE border=0 cellSpacing=0 cellPadding=0 width=124 align=center><TBODY><TR><TD vAlign=top>Last year, the top five value creators in S'pore were Noble Group, Genting S'pore, Jardine Cycle & Carriage, Golden Agri-Resources and Olam Int'l.
</TD></TR><TR><TD vAlign=top>[/FONT]
</TD></TR><TR><TD vAlign=top>
</TD></TR></TBODY></TABLE></TD></TR><TR><TD height=39>
</TD></TR></TBODY></TABLE></TD></TR></TBODY></TABLE>After posting a sterling return of 70.8 per cent last year, Singapore's Straits Times Index (STI) is still some 10 per cent below its 2007 year-end level, BCG said. Similarly, the main indices for Hong Kong (Hang Seng Index) and China (Shanghai SE Composite Index) were also 16 per cent and 38 per cent below end-2007 levels respectively.
Last year, the top five value creators in Singapore were Noble Group, Genting Singapore, Jardine Cycle & Carriage, Golden Agri-Resources and Olam International, according to the BCG study.
Dinesh Khanna, head of BCG corporate development practice in South-east Asia, said the 'flight from equities' that caused valuation multiples to fall steeply in 2008 had also set the stage for rebound in 2009.
'Once the worst of the crisis had passed, the money that had been pulled out of the market began to flow back in again,' Mr Khanna said. 'As long as they survived the crisis, those companies with the highest leverage benefited the most.'
Markets like Russia, China, Indonesia, Brazil and Argentina marked the highest returns last year. Developed markets such as the United States and Germany posted much weaker rebounds. The only five emerging markets that recovered their 2008 TSR losses were Argentina, Brazil, Mexico, South Africa and Turkey.
Daniel Stelter, head of BCG's worldwide corporate development practice, believes that significant financial risks persist and this could lead to 'a period of sustained volatility'.
Notwithstanding such volatility, many reports are now pointing to potential upside in markets globally.
In a global report, Citi targets a further 7 per cent rise in the MSCI AC World Index by the end of this year on the back of a 65 per cent increase in global earnings per share over 2010-2011.
CIMB is 'overweight' on Singapore and Indonesia, and has upgraded its end-2010 index targets to 3,300 points and 3,230 points respectively. It is 'neutral' on Malaysia and 'underweight' Thailand, based on its regional market report last week.
For Singapore, analysts said they expect TSRs to be positive this year but are not optimistic that the market here can fully regain the lost ground of 2008 by the end of this year.
'We expect the markets to grind up in 2010, and so we do expect TSR to be positive,' said CIMB head of research Kenneth Ng.
'But for TSR to recoup 2008 levels, share prices need to return to those highs,' he added. 'At this moment, it does not look likely as 2007-2008 demand-supply imbalances that helped push up corporate profits do not seem repeatable. In many industries, new supply has already come onstream.'
The upside in Singapore is likely to come from stronger-than-expected economic growth, improvement in the job market, immigration growth and a recovery of office demand, Mr Ng added.
Citi head of Singapore research Chua Hak Bin said he expects TSRs in Singapore to fully recover only some time in 2011 and pegged his end-2010 target for the STI at 3,250 points, still below the highs of the over-3,800 level reached in late 2007.
Analysts predict that any downside risk here is likely to come from external sources - subpar growth in the US and Europe or a blow-up of sovereign risks in highly leveraged countries.
The BCG report also noted that even among the top 10 performers of the 182 large global companies (with at least 30 billion euros or US$43 billion market cap), not all of them clawed back their 2008 losses as they were also often among the biggest losers that year.
Those that succeeded in doing so were Amazon. com, Apple, Brazilian beverage company AmBev, and Russian oil-and-gas company Rosneft.
The best-performing sectors last year were mining, industrial metals, and oil equipment and services, which were also among the hardest hit in 2008. But those that recouped their 2008 losses were the non- cyclical sectors, such as providers of consumer staples like food, beverages and tobacco.
For this year, however, it appears that cyclicals may be back in play. Citi said it remains 'overweight' on cyclical sectors and believes it is too early to switch back to defensives despite their cheap valuations.<SCRIPT language=javascript> <!-- // Check for Mac. var strAgent; var blnMac; strAgent = navigator.userAgent; strAgent.indexOf('Mac') > 0 ? blnMac = true:blnMac = false; if (blnMac == true) { document.write('
'); } //--> </SCRIPT>
</TD></TR></TBODY></TABLE>
</TD></TR><TR><TD vAlign=top width=452 colSpan=2>Markets still struggling to make up for 'lost year'
Recovery in 2009 has still not offset losses suffered in 2008, BCG says
By LYNETTE KHOO
(SINGAPORE) Only about one-third of large-cap global companies have recovered the losses suffered during the downturn to generate a net positive total shareholder return (TSR) in the two-year period 2008-2009. And only five emerging markets managed to fully recoup their 2008 losses.
<TABLE class=picBoxL cellSpacing=2 width=100 align=left><TBODY><TR><TD>
</TD></TR><TR class=caption><TD></TD></TR></TBODY></TABLE>Asian markets like Singapore, Hong Kong, Indonesia and South Korea still have some way to go before fully offsetting their TSR losses in 2008. China remains far from its breakeven TSR level even with one of the largest returns in 2009.These facts have emerged in a new study by Boston Consulting Group (BCG).
The report, which looked at TSR of over 2,000 companies across 40 countries, analysed the impact of the massive stockmarket rebound in 2009.
It noted that the burgeoning returns from global market rebounds in 2009 were due largely to the low base effect in 2008, when hefty losses were incurred during the financial crisis.
<TABLE border=0 cellSpacing=0 cellPadding=5 align=left><TBODY><TR><TD bgColor=#ffffff>[FONT=Geneva, Helvetica, Verdana, Arial, sans-serif]<!-- REPLACE EVERYTHING IN CAPITALS WITH YOUR OWN VALUES --><TABLE class=quoteBox border=0 cellSpacing=0 cellPadding=0 width=144 align=left><TBODY><TR><TD vAlign=bottom>
</TD></TR><TR><TD vAlign=top>[/FONT]
</TD></TR><TR><TD vAlign=top>
</TD></TR></TBODY></TABLE></TD></TR><TR><TD height=39>
Last year, the top five value creators in Singapore were Noble Group, Genting Singapore, Jardine Cycle & Carriage, Golden Agri-Resources and Olam International, according to the BCG study.
Dinesh Khanna, head of BCG corporate development practice in South-east Asia, said the 'flight from equities' that caused valuation multiples to fall steeply in 2008 had also set the stage for rebound in 2009.
'Once the worst of the crisis had passed, the money that had been pulled out of the market began to flow back in again,' Mr Khanna said. 'As long as they survived the crisis, those companies with the highest leverage benefited the most.'
Markets like Russia, China, Indonesia, Brazil and Argentina marked the highest returns last year. Developed markets such as the United States and Germany posted much weaker rebounds. The only five emerging markets that recovered their 2008 TSR losses were Argentina, Brazil, Mexico, South Africa and Turkey.
Daniel Stelter, head of BCG's worldwide corporate development practice, believes that significant financial risks persist and this could lead to 'a period of sustained volatility'.
Notwithstanding such volatility, many reports are now pointing to potential upside in markets globally.
In a global report, Citi targets a further 7 per cent rise in the MSCI AC World Index by the end of this year on the back of a 65 per cent increase in global earnings per share over 2010-2011.
CIMB is 'overweight' on Singapore and Indonesia, and has upgraded its end-2010 index targets to 3,300 points and 3,230 points respectively. It is 'neutral' on Malaysia and 'underweight' Thailand, based on its regional market report last week.
For Singapore, analysts said they expect TSRs to be positive this year but are not optimistic that the market here can fully regain the lost ground of 2008 by the end of this year.
'We expect the markets to grind up in 2010, and so we do expect TSR to be positive,' said CIMB head of research Kenneth Ng.
'But for TSR to recoup 2008 levels, share prices need to return to those highs,' he added. 'At this moment, it does not look likely as 2007-2008 demand-supply imbalances that helped push up corporate profits do not seem repeatable. In many industries, new supply has already come onstream.'
The upside in Singapore is likely to come from stronger-than-expected economic growth, improvement in the job market, immigration growth and a recovery of office demand, Mr Ng added.
Citi head of Singapore research Chua Hak Bin said he expects TSRs in Singapore to fully recover only some time in 2011 and pegged his end-2010 target for the STI at 3,250 points, still below the highs of the over-3,800 level reached in late 2007.
Analysts predict that any downside risk here is likely to come from external sources - subpar growth in the US and Europe or a blow-up of sovereign risks in highly leveraged countries.
The BCG report also noted that even among the top 10 performers of the 182 large global companies (with at least 30 billion euros or US$43 billion market cap), not all of them clawed back their 2008 losses as they were also often among the biggest losers that year.
Those that succeeded in doing so were Amazon. com, Apple, Brazilian beverage company AmBev, and Russian oil-and-gas company Rosneft.
The best-performing sectors last year were mining, industrial metals, and oil equipment and services, which were also among the hardest hit in 2008. But those that recouped their 2008 losses were the non- cyclical sectors, such as providers of consumer staples like food, beverages and tobacco.
For this year, however, it appears that cyclicals may be back in play. Citi said it remains 'overweight' on cyclical sectors and believes it is too early to switch back to defensives despite their cheap valuations.<SCRIPT language=javascript> <!-- // Check for Mac. var strAgent; var blnMac; strAgent = navigator.userAgent; strAgent.indexOf('Mac') > 0 ? blnMac = true:blnMac = false; if (blnMac == true) { document.write('
'); } //--> </SCRIPT>
</TD></TR></TBODY></TABLE>
