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Paul Harper
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Having spent a fair amount of time in the international telecom market, I have developed a taste for Emerging Markets. My interests tend to be focussed on telecoms, energy & commodity stocks (mostly ADRs) & country sector ETFs
My blog:
Far Side Stocks
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  • Kudrin Upbeat on oil, should we upbeat on Market Vectos RSX ?

    Russia has been hard hit by the current economic crisis & especially by the decline in oil prices this year. According to Economics Ministry data, Russia's GDP declined by 9.3% in July 2009 year-on-year and 10.2% in the first seven months of the year. Energy products, including crude oil & natural gas, accounted for 65.5% of exports in the first half, while metals made up 12.1%.

    According to Finance Minister, Alexei Kudrin, the Russian economy will be on the rise again as early as in the third quarter of 2009.

    "We still do not have the final data for the second quarter, but we expect Russia's economy to grow in the third quarter compared to the second quarter, and the third quarter will mark the end of recession," Kudrin told a news conference whilst in London attending the G20 summit

    Russia has recently raised forecasts for the price of oil and is now looking at revising its views on gross domestic product (GDP), Kudrin said last week. The Economy Ministry now sees Urals oil averaging $57 a barrel this year, up from the $54 forecast previously & the average price of crude is projected to increase gradually to $58 in 2010, $59 in 2011 and $60 in 2012.

    With 40% of  the Market Vectors Russia ETF Trust (NYSE:RSX) predicated on energy, it is plain that energy prices need to remain stable if not advance in the light of the news above, if it is to become more attractive to risk averse investors. Trading at $23.54 off of a 52 month low of $10.34, it is still a long way off of its high of $40.75.



    Standard & Poors retained it's BBB rating on Russia last Thursday, which would seem to allay some fears, as it was widely expected that the rate would be cut. The ratings agency also noted that by the end of 2012, with net debt levels at 14% of GDP, Russia's public balance sheet remains superior to the BBB rating median of 42% of GDP.

    The government is also now tapping its $85.7 billion Reserve Fund & $90.7 billion National Wellbeing fund, which were built on windfall oil revenues, to pay for an “anti-crisis” program that is worth about 2.5 trillion rubles ($79 billion).

    Personally, I am positive on Russia long term & feel that this ETF offers value for a long term portfolio, year to date, it has returned 75.4% & I reckon it has further to go. Lately it has been trading in a choppy pattern & has suffered a significant retrace, but with S&P confirming it's rating, I'll be looking closely at the price of crude & natural gas over the next month or so, any gain there & I'll be adding with an expectation of an additional 25% gain this year.

    Author holds a long position in RSX


    Tags: RSX, Russia, ETF
    Sep 07 7:41 AM | Link | Comment!
  • Hedged In on SDS, FXI & FXP as bears wake up early
    Normally at this time of year, bears are getting their stores in & looking at hibernation, but the recent market has turned that around, with bears dozing most of the summer & now waking up & looking hungry.

    Followers of our Twitter account, will know that we have been taking a good look at China over the past 10 trading days & have a very bearish outlook on China going into the 3rd Quarter & by default on the S&P 500. Signals have been coming for a while with the BDI declining at an alarming rate from it’s June highs, flagging up the possibility that China’s economy & associated infrastructure drive are starting to run out of steam.

    Having looked at three well traded ETFs , we are placing a trade that is mixing it up a little, SDS :Ultra Short S&P 500, FXI :iShares FTSE/Xinhua China 25 Index & FXP ProShares UltraSh FTSE/Xinhua China 25. The following chart shows the last 5 trading days of SPY, FXI & FXP. As can be seen, there was a clear signal on Tuesday last, that there was a divergence in FXI / FXP, with the S&P 500 mainly trading sideways.



    Now using the Morgan Stanley A Fund CAF as a sentiment monitor for the Shanghai market over the same period against SPY (NYSE: SPY), it would seem that there has been some pretty good correlation over the last 6 months of trading. For me CAF is one of the best tickers to use for real sentiment, as it trades in China A Shares, whilst FXI (NYSE: FXI) is predicated on 25 stocks traded on the Hong Kong market (mostly ADRs). From looking at the charts, it would appear that CAF (NYSE: CAF) actually front runs FXI by a two to three day period & this has helped me immensely in trading Chinese ADRs this summer. At the same time, SPY has followed the FXI trend reasonably faithfully for the last 3 months, until August 17th, when FXI began to dip.



    So our feeling is that with China declining at such a rapid rate, Long FXP  (NYSE: FXP) short FXI is a no brainer & we are looking to make some good returns over the next few weeks, we are also adding in a soupcon of SDS for interest & to confirm our bearish sentiment on the S&P 500. With a ratio of 2:1:1 we feel that this is a well hedged play, with a good upside potential.

    We are looking to hold this trade for a minimum 10 day period & I have set this trade up on kaChing.com in our test account in order to track it. The idea being that we can give a visual on the performance of the trade & also  a good term of reference when we close out the positions & reblog.

    At time of writing, no position in any stock mentioned



    Aug 31 7:11 AM | Link | Comment!
  • PALM about to hit the rails ?
    From IT Pro Portal : http://www.itproportal.com/portal/news/article/2009/8/14/palm-pre-sales-tumble-after-3gs-release/



    Basically, not in good shape as sales of Pre fall dramatically.
    Aug 16 4:23 AM | Link | Comment!
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