Month: June 2012

Article by Investment U

iShares Japan (NYSE: EWJ) hit a 52-week low Friday. Could this be the greatest contrarian investment of the year?

Japanese companies have a problem. Several of them, in fact.

Their nation’s fiscal situation, in many ways, is worse than that of Greece or Spain. (Debt as a percentage of GDP, for example, is more than 225%.) The Japanese economy is growing at an anemic 1% – and has been for decades. To top things off, the country’s population is not just aging, but dying off. That means less demand for everything from sushi to golf clubs to industrial equipment.

So what are Japanese companies doing about it? They’re diversifying outside their national border, buying up companies at fire-sale prices around the globe. And that’s creating an opportunity for investors like you.

For example, last week Japanese trading house Marubeni Corp. agreed to buy U.S. grain handles Gavilon Group LLC in a deal worth about $5.6 billion. Japan Tobacco Inc. offered to buy Belgian tobacco maker Gryson NV for $600 million. And Takeda Pharmaceutical said it would acquire a Brazilian drug maker for $246 million.

These aren’t isolated examples. With more than $34 billion in foreign investment this year, Japan is likely to exceed last year’s record $84 billion, a total that propelled the country to the number three spot in global deal rankings.

What’s going on here? After decades of frugality and debt-slashing following the 1980s asset bubble, Japanese firms are flush with cash, more than $2.6 trillion. That’s even more than U.S. corporations’ record $2.2 trillion in cash.

But aside from this treasure chest, the Japanese have a surging yen that gives them increased purchasing power around the world. With limited opportunities for growth at home, tons of cash and an appreciated currency, Japanese companies are in the midst of the biggest boom in overseas investment the country has ever seen.

But hold on… didn’t this end badly for the Japanese in the 1980s when they bought up trophy properties like Universal Studios, Rockefeller Center and the Pebble Beach Golf Course? Indeed, it did. Many of those purchases were both too rich and ill timed. But recent deals are taking place against a starkly different backdrop.

In previous mergers and acquisitions, Japanese companies often failed to do thorough due diligence or bargain hard enough. But not any more. M&A specialists routinely report that Japanese firms are executing deals quickly, efficiently and effectively. Unlike before, they aren’t reluctant to bargain hunt at auctions or make a hostile bid if friendly takeover offers are rebuffed.

Japanese firms are busy buying gas, oil and mining projects around the globe as global corporations struggle to lock up natural resources and get more control over operations. Japanese retailers are buying foreign firms to capture new markets. For example, toy maker Tomy Co. paid $640 million last year to buy the U.S. maker of Thomas the Tank Engine railroad sets. (They didn’t have much choice with birth rates went down sharply in Japan.) And Japanese drug maker Astellas recently paid $4 billion for OSI Pharmaceuticals in the United States.

What does this mean for you as an investor? Plenty. You now have the opportunity to buy dirt-cheap, cash-rich Japanese companies that are, in turn, buying up depressed and undervalued assets around the globe.

The easiest and most liquid way to play this is to invest in iShares Japan (NYSE: EWJ), a broad index of Japan’s leading companies.

Only contrarians need apply, however. Japan is cheap because the market is almost completely out of favor. The fund hit a 52-week low Friday.

Good Investing,

Alexander Green

Article by Investment U

Article by Investment U

Thanks to the shale gas boom in the United States, a special type of sand has become one of the most sought after commodities among energy companies.

And analysts are calling demand for it, “A modern day gold rush.”

In 2002, there were just 58 horizontal drill rigs in North America. Today, that number has skyrocketed to over 1,100 and growing.

If there’s one thing that has made America’s natural gas boom possible… it’s the eruption in hydraulic fracturing, or fracking.

To extract natural gas out of shale, miners use a fracking solution that contains water, various chemicals and sand.

Frac Sand: Not Your Average Pebbles

It doesn’t really matter where the water or chemicals come from. It does matter, however, where the sand comes from.

And the best sand is perfectly round white quartz sand that comes from a 500-million-year-old sandstone formation stretching across the Upper Midwest region of the United States.

It’s known as silica sand – or frac sand.

Today, nearly three-fourths of all the frac sand produced in America comes from this part of the country.

And since the shale gas boom began, there has been increasingly more and more of a shortage of frac sand among shale gas drillers.

Some energy companies like EOG Resources (NYSE: EOG) and Pioneer Natural Resources (NYSE: PXD) have even gone so far as to buy their own sand mines in the hopes of locking in long-term supplies.

One of the reasons behind this shortage is there simply aren’t enough railcars nationwide to deliver the sand to natural gas drillers.

Another problem is nobody could’ve expected such a huge jump in demand for silica sand.

So despite production doubling more than five times in the last decade, there still aren’t enough operating mines to keep up with demand.

As a result, and as Reuters reports, “Those who have sand or access to sand can pretty much charge what they want for that sand.”

Below, you can see that’s exactly what companies have been doing.

These companies are obviously cashing in. But the problem for investors has been finding a way to take advantage of this development.

The top five sand-mining firms in the country have always been private firms. Yet earlier this year, one of these companies became the first publicly traded pure play industrial sand producer. And now it appears to be sitting at a pretty nice discount.

Introducing U.S. Silica Holdings

U.S. Silica Holdings (NYSE: SLCA) has been in business for over 100 years. But January was the first time it became a publicly traded company.

In the first quarter, SLCA reported record revenue and earnings, and also reaffirmed its guidance for the rest of 2012. For the rest of this year, the company expects to rake in just about $400 million. That’s up from $295 million in 2011.

Yet even though sales have grown rapidly and profit margins are widening, the company’s stock hasn’t headed in a similar direction.

Since its IPO, SLCA fell 31%.

However, it appears investors don’t understand the main reason behind its initial drop. The main culprit behind SLCA’s plunge is the fact that company executives cashed in on their holdings. In February, 45 million shares of the company were sold off by insiders.

Since then, SLCA has continued its decline. And now it appears to be oversold.

At the end of the day, U.S. Silica is growing four times faster than the rest of its peers. And it has a strong customer base with longtime clientele like Owens Corning (NYSE: OC), Halliburton (NYSE: HAL) and The Sherwin-Williams Company (NYSE: SHW), among others.

Lately, insiders have started changing their attitude, as well. They’ve purchased nearly 10,000 shares since early May.

Analysts at Dahlman Rose even increased their price target on shares of SLCA from $25.00 to $27.00, despite shares currently sitting at just about $11.

Right now, that’s a potential gain of 145%. If you ask me, that’s an opportunity worth looking into.

The Bottom Line

Companies that continually increase their earnings and revenue will eventually see their share prices head the same direction. It’s practically a physical law…

So if you’re expecting natural gas drilling to continue for many years to come, you’ll want to take a look at a company like U.S. Silica Holdings. It certainly looks to be a solid contrarian play and at a major discount with its recent sell-off.

Good Investing,

Mike Kapsch

Article by Investment U

The foreign direct investment into India is a process for facilitating people to invest in India. If you are really interested in doing business in India with the help of foreign capital then make sure that you are investing in the right source and you can do this in a number of ways. Even when India was going through tough times, it was still a good financial breeding ground for all foreign investors. They have never felt the pressure as their genre of investment has always been unleashed for the purpose of ushering more capital within the country.

There have been several Indian infrastructures who may have suffered in the field of production and manufacturing due to lack of essential capital. However, a good way for them to survive is by offering FDI equity to companies or individuals who would be interested in making huge capital investments. With overseas investors maintaining a sustained focus on investing in emerging markets such as India, the country continues to beget a good share of the world’s investment inflows, despite the dismal economic scenario as prevailing in Greece and other European countries.

Foreign direct investment in India is done in several ways. Investment can take place through effective financial collaborations. In this case the common interest is the yearly financial turn over and to make this work out two or more companies come in association and they share much in contributing towards a common financial consensus. The effort has to be there from both the ends, from the part of the investor and also from the part of the collaborator. When collaborating, you can keep the leadership factors aside and think about a healthy togetherness contributing towards a bigger financial platform.

As a way towards FDI equity is also a joint venture and a technical collaboration. Once the company delivers the plan of taking things technically ahead then other can contribute in a different way. It is more technical and less of financial collaboration.

Foreign direct investment in India is not permissible in all industrial sectors as it is not allowed in the domain of arms and ammunitions. You cannot invest in the field of atomic energy. You cannot invest anything related to railway and transport and you cannot even put your money in the field of coal and lignite. It is even not permissible to invest money in matters of metal mining. Thus, keeping aside these domains you still have a huge scope for investment.

About the Author

Harjeet is an Indian – born mass-market novelist, who covers the world internet related topics . He writes columns and articles for various websites and internet journals in the domain of Investments and Investing in India.

By TraderVox.com

Tradervox (Dublin) – The recent risk aversion in the market seems to have loosened its grip as commodity currencies are showing some strength since the start of the month. The current surge of the Canadian and Australian dollar is as a result of measures by the respective central banks to use available resources to curb the effects of crisis in Europe. The Bank of Canada policy makers indicated that they may raise interest rates as domestic economy is within the projected range.

This led the strongest advance of the loonie from a six month low. On the other hand, after the RBA policy makers decided to lower the interest rates, the Aussie has gained against the yen and dollar as investors placed bets the euro will not decline. The Australian dollar rallied to its strongest in a week as the New Zealand currency increased against the yen as global stocks advanced. The Reserve Bank of Australia decided to cut interest rates by 0.25 percent to 3.5 to spur growth in the country’s economy.

Economists are predicting further reduction in the future as measures to protect the economy from the effects of euro area crisis. The market is also expecting a report from the central bank to show that the country’s gross domestic product grew by 3.3 percent in the first three months of the year. In Canada, loonie advanced against the US dollar after the BOC governor, Mark Carney, stated that the bank may withdraw from the current monetary policy increasing the demand for the loonie.

The loonie increased by 0.1 percent against the dollar to exchange at C$1.0381 per US dollar, it had fallen by 0.3 percent yesterday. The Australian dollar increased by 0.1 percent to 97.42 US cents by the end of trading yesterday in New York where it had touched 98.04 US cents the strongest it has been since May 30. The Aussie was up by 0.7 percent against the yen to trade at 76.72 yen.

Disclaimer
Tradervox.com is not giving advice nor is qualified or licensed to provide financial advice. You must seek guidance from your personal advisors before acting on this information. While we try to ensure that all of the information provided on this website is kept up-to-date and accurate we accept no responsibility for any use made of the information provided. Opinions expressed at Tradervox.com are those of the individual authors and do not necessarily represent the opinion of Tradervox.com or its management. 

Article provided by TraderVox.com
Tradervox.com is a Forex News Portal that provides real-time news and analysis relating to the Currency Markets.
News and analysis are produced throughout the day by our in-house staff.
Follow us on twitter: www.twitter.com/tradervox

By Central Bank News
ECB holds rate steady at 1 percent, acknowledges growing risks

By TradersVideoPlaybook.com

London Gold Market Report
from Ben Traynor
BullionVault
Wednesday 6 June 2012, 08:50 EDT

U.S. DOLLAR gold prices climbed to a one-month high at $1640 an ounce ahead of Wednesday’s US session – a gain of more than 7% from May’s low – while stocks, commodities and the Euro also ticked higher and major government bond prices fell, with London markets open again after a two-day public holiday.

Silver prices climbed to over $29.50 an ounce – a 3.3% gain on the week so far, and a near 10% rise from last month’s low.

“[Gold] is consolidating last Friday’s aggressive move from $1546 to $1629,” says the latest technical analysis from bullion bank Scotia Mocatta.

Barclays Research meantime note that gold prices have broken above its “2012 bear channel”, adding that gold has hit “strong demand [in the] “1522-33 area” on downswings over the past 12 months.

“This week there will be plenty of opportunities for gold to either pass the safe haven test or reverse back into its old risk-on shell,” added a note from UBS this morning.

The European Central Bank announced its latest monetary policy decision on Wednesday, which saw the ECB leave its main interest rate on hold at 1%.

Following Wednesday’s ECB decision and press conference, the Bank of England makes its latest policy announcement on Thursday, shortly followed by US Federal Reserve chairman Ben Bernanke’s testimony to Congress.

When Bernanke appeared before Congress at the end of February, gold prices dropped $100 an ounce in less than an hour.

Back here in Europe, “the ECB might want to wait for further corroborating data to conclude that its second-half-of-the-year recovery expectations are challenged,” reckons Royal Bank of Scotland economist Silvio Peruzzo.

“The problem in the Eurozone,” adds Steve Barrow, currency analyst at Standard Bank in London, “much more than the US and UK, is that the banking sector is broken. As it fights for its survival, so credit growth to firms and individuals is sacrificed.”

“European institutions must open up and help us facilitate bank recapitalizations,” said Spanish Treasury minister Cristobal Montoro yesterday.

“The market is no longer open. The risk premium is telling us that Spain as a state has a problem accessing the market when we need to refinance our debt.”

Yields on 10-Year Spanish government bonds breached 6.7% last week, and despite easing since remain above 6%.

European leaders agreed last July that the European Financial Stability Facility, the Eurozone’s temporary bailout fund set up two years ago, should be able to make loans for the purposes of bank recapitalization, although such loans would go to sovereign governments rather than to banks directly.

Ratings agency Moody’s meantime cut its credit rating for six German banks on Wendesday, including Commerzbank, while it also cut its rating for the German arm of Italian bank UniCredit. Three Austrian banks also had their ratings cut.

“Today’s rating actions are driven by the increased risk of further shocks emanating from the Euro area debt crisis in combination with the banks’ limited loss-absorption capacity,” said a Moody’s statement.

The European Commission today announced its plans for a resolution regime to deal with failing banks, including “early supervisory intervention” and powers to sell all or parts of banks deemed to be failing.

In addition, the Commission states, “if market funding is not available…supplementary funding will be provided by resolution funds which will raise contributions from banks proportionate to their liabilities and risk profiles.”

Opposing the so-called banking union, one German politician today described it as “a new, admittedly creative, way to tap German solvency.”

“Our savers cannot be liable [for other countries’ banks],” added another, Michael Fuchs, who is a member of Chancellor Merkel’s CDU party.

Following a conference call on Tuesday, G7 leaders said they will coordinate their response to the Eurozone crisis.

“[They] said they will speed up their efforts to resolve those problems, which was encouraging to us,” said Japanese finance minister Jun Azumi, adding that “Japan is ready to provide support if there is anything we can do.”

The Bank of Japan was one of six central banks that took part in a coordinated action on November 30 last year, when the cost of overnight Dollar funding to banks was cut by 50 basis points (0.5 percentage points).

Despite the ongoing crisis, the Euro rallied this morning, at one point trading above $1.25, 1.7% up on last week’s two-year low.

Euro gold prices meantime hit their highest levels since the end of February, rising to €42,290 per kilogram (€1315 per ounce).

The gold price in Euros has only been higher than €42,000 kilograms on 36 previous trading days, first in September 2011 and then again in February of this year.

Over in the US, the so-called speculative net long position held by gold futures and options traders on the Comex fell just over 5% in the week ended last Tuesday, data published Friday by the Commodity Futures Trading Commission show.

The spec net long – defined as the difference between bullish and bearish contracts held by noncommercial traders, as opposed to industry players such as gold mining companies – fell by the equivalent of 17.2 tonnes of gold bullion, hitting its lowest level since December 2008.

Since last Tuesday, gold prices have rallied back above $1600 an ounce, following Friday’s disappointing nonfarm payrolls report.

“We are positive on gold,” says Nikos Kavalis, global banking and markets analyst at RBS.
“To regain traction [though], we need the professionals to go back in.”

Ben Traynor
BullionVault

Gold value calculator   |   Buy gold online at live prices

Editor of Gold News, the analysis and investment research site from world-leading gold ownership service BullionVault, Ben Traynor was formerly editor of the Fleet Street Letter, the UK’s longest-running investment letter. A Cambridge economics graduate, he is a professional writer and editor with a specialist interest in monetary economics.

(c) BullionVault 2011

Please Note: This article is to inform your thinking, not lead it. Only you can decide the best place for your money, and any decision you make will put your money at risk. Information or data included here may have already been overtaken by events – and must be verified elsewhere – should you choose to act on it.

By TraderVox.com

Tradervox (Dublin) – The 17-nation currency was up against most majors yesterday before the G7 conference call meeting aimed at discussing the current debt crisis in the region. This has brought some risk appetite in the market with the current Asian currency surge leading to the strengthening of the Asia Pacific currencies.

Yesterday’s reduction in the interest rate by the Reserve Bank of Australia also caused the Australian dollar to increase against the US dollar and the euro. However, attention was given to the G7 talk held yesterday by seven finance ministers and central bank governors as they deliberated on the European crisis leading to euro advance.

Some currency strategists had indicated that the conference call would touch on the ongoing crisis, which increased investor confidence in the region leading some buying of the euro. According to Lee Wai Tuck who is a Currency Strategist at Forecast Pte in Singapore, this is set to bring short covering in the euro that is set to stop last week’s decline. Investors will, however, keep an eye on the proceeding and look for any new measures that might be suggested. Any new measure proposed from the G7 conference call meeting will end bets that the euro will continue to decline.

Prior to the meeting the 17-nation currency strengthened against the greenback by 0.2 percent to exchange at $1.2522 from the previous day close of $1.2499. The euro had fallen to new lows as crisis in Spain and Greece continued to escalate. The euro was also strong against the yen, adding 0.1 percent to trade at 98.06. The yen was little changed against its safe haven counterpart, the US dollar, exchanging at 78.32 yen per dollar.

It has been revealed that the G7 nations have been holding conference calls in preparation for the G20 meeting to be held later in the month. According to Canadian Finance Minister Jim Flaherty, the meetings were focusing on the European debt crisis.

Disclaimer
Tradervox.com is not giving advice nor is qualified or licensed to provide financial advice. You must seek guidance from your personal advisors before acting on this information. While we try to ensure that all of the information provided on this website is kept up-to-date and accurate we accept no responsibility for any use made of the information provided. Opinions expressed at Tradervox.com are those of the individual authors and do not necessarily represent the opinion of Tradervox.com or its management. 

Article provided by TraderVox.com
Tradervox.com is a Forex News Portal that provides real-time news and analysis relating to the Currency Markets.
News and analysis are produced throughout the day by our in-house staff.
Follow us on twitter: www.twitter.com/tradervox

Video courtesy of ForexCT – A leading Australian forex broker, liscensed by the Australian Securities & Investments Commission, offers the MetaTrader4 and PROfit Platform to retail traders. Other services include Segregated Accounts, Trading workshops, Tutorials, and Commodities trading.

Source: ForexYard

The euro erased most of its recent gains in trading yesterday, as investors once again shifted their attention to Spain’s debt issues, which in turn led to risk aversion in the marketplace. Additionally, investors had little hope that a meeting among G7 ministers would lead to any breakthroughs in new way to stimulate growth in the euro-zone. Turning to today, traders will want to pay attention to the European Minimum Bid Rate and the subsequent ECB Press Conference. While no changes to euro-zone interest rates are expected to occur, the press conference may provide clues as to what the ECB plans to do to combat the region’s debt crisis.

Economic News

USD – USD Resumes Bearish Movement against JPY

After steadily increasing during the beginning of the week, the USD/JPY once again turned bearish during trading yesterday. Analysts attributed the dollar’s downward reversal to the perception among many investors that the US economic recovery has stalled following last week’s disappointing Non-Farm Payrolls figure. The USD/JPY dropped as low as 78.09 in the early morning session before staging a slight upward recovery to stabilize at 78.24. The news was not all bad for the dollar though. The EUR/USD once again turned downward yesterday, dropping over 100 pips to reach as low as 1.2409.

Taking a look at the rest of the week, dollar traders will want to pay close attention to a speech from Fed Chairman Bernanke on Thursday. Any signs that the Fed is planning on a new round of quantitative easing to help grow the US economy could weigh down on the dollar. That being said, Friday’s US Trade Balance is forecasted to have improved over last month’s figure. If true, the dollar may be able to recoup some of its recent losses against the yen.

EUR – Minimum Bid Rate Could Impact EUR

Fears’ regarding Spain’s banking sector as well as the possible impact of Greece’s upcoming election caused investors to revert back to safe-haven assets during trading yesterday. As a result, the euro fell against several of its main currency rivals, including the British pound and Japanese yen. The EUR/GBP dropped more than 50 pips over the course of the day, eventually reaching as low as 0.8087. Against the Japanese yen, the euro was down over 100 pips during early morning trading, eventually hitting 97.03 before staging an upward correction later in the day.

Turning to today, traders will want to pay attention to the European Minimum Bid Rate and ECB Press Conference, scheduled for 11:45 and 12:30 GMT, respectively. While most analysts are fairly certain that euro-zone interest rates will stay at 1.00%, the possibility exists that the ECB will lower rates as a way to stimulate growth in the region. Should this occur, the euro may drop against its safe-haven currency rivals during the afternoon session.

AUD – Aussie Sees Mixed Trading Day

The Australian dollar saw a mixed session yesterday against the USD and JPY. The AUD/USD fell from a high of 0.9801 during early morning trading, eventually reaching as low as 0.9708 before staging a slight upward correction. The pair was able to then stabilize at 0.9750. Against the yen, the AUD had more luck. After falling over 90 pips during the first part of the day, the AUD/JPY rebounded and eventually reversed all of its earlier losses by the end of European trading.

Turning to today, aussie traders will want to pay attention to news out of the euro-zone, as it is likely to dictate the level of risk appetite in the marketplace. If the ECB unveils any new strategies to stimulate economic growth in the euro-zone, the AUD may be able to rebound during afternoon trading. That being said, any additional negative European news could cause the AUD to turn bearish.

Crude Oil – Crude Oil Gives Back Some of its Earlier Gains

Crude oil gave back some of its gains from earlier in the week yesterday, as risk aversion in the marketplace due to worries that the global economic recovery is stalling drove the price of commodities downward. The price of crude fell from a high of $84.89 a barrel as low as $83.31 during mid-day trading.

Turning to today, traders will want to note this week’s US Crude Oil Inventories figure, set to be released as 14:30 GMT. Part of the reason the price of oil has fallen so much in recent weeks is because of record high crude stockpiles in the US, which investors take as a sign of decreased demand in the world’s largest oil consuming country. Should today’s figure again show US crude inventories increased, the price of oil could fall further.

Technical News

EUR/USD

The Williams Percent Range on the weekly chart is in the oversold zone, indicating that this pair could see upward movement in the coming days. This theory is supported by the Slow Stochastic on the same chart, which has formed a bullish cross. Going long may be the wise choice for this pair.

GBP/USD

In a sign that this pair could see an upward correction in the near future, the Relative Strength Index on the daily chart has dropped into oversold territory. Furthermore, the Williams Percent Range on the weekly chart is currently at the -90 level. Opening long positions may be a good idea for this pair.

USD/JPY

While the Williams Percent Range on the weekly chart is pointing to a possible upward correction in the coming days, most other long term technical indicators are in neutral territory. Traders may want to take a wait and see approach for this pair, as a clearer picture may present itself shortly.

USD/CHF

The Relative Strength Index on the weekly chart is approaching the overbought zone, indicating that this pair could see a downward correction in the near future. Additionally, the Slow Stochastic on the same chart appears to be forming a bearish cross. Traders will want to monitor these two indicators, as they may point to an impending downward correction.

The Wild Card

Dow Jones Industrials

The daily chart’s Slow Stochastic has formed a bullish cross, meaning that upward movement could be seen in the near future. This theory is supported by the same chart’s Williams Percent Range and Relative Strength Index, both of which are in oversold territory. Forex traders may want to go long in their positions ahead of a possible upward breach.

Forex Market Analysis provided by ForexYard.

© 2006 by FxYard Ltd

Disclaimer: Trading Foreign Exchange carries a high level of risk and may not be suitable for all investors. There is a possibility that you could sustain a loss of all of your investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with Foreign Exchange trading.