The Sensex edged higher this week, bringing its 6-week move to a gain of 7%, and its YTD advance to 28%. The big gain this week came amid a rare visit from China's premier and the pledging of $20B in investments in India over the next five years.
Credit Suisse this week says India's banks - despite maybe being the most richly valued in Asia - have upside. They trade at 3x trailing book value, but that's inline with their 10-year average. What they have going for them now is improved governance, an accelerating economy, and interest rate hikes now in the rearview mirror. The team's favorite plays (trading in the States): ICICI Bank (IBN -1.8%), HDFC Bank (HDB -0.8%).
A check of European closing prices finds the euphoric early reaction to the "No" vote from Scotland mostly faded by day's end. The Stoxx 50 (NYSEARCA:FEZ) closed just 0.2% higher, with the U.K.'s FTSE 100 (NYSEARCA:EWU) gaining 0.3%.
Looking at U.K. bank ADRs: RBS (RBS +1.2%), Barclays (BCS -0.9%), Lloyds (LYG +0.5%), HSBC (HSBC -0.2%).
Dealing with its own separatist movement, Spain (NYSEARCA:EWP) managed just a 0.1% gain.
If a mega-merger occurs inside the beer industry, it could advance the debate on the corporate tax law structure in the U.S., reasons WSJ's Ronald Barusch.
Though Anheuser-Busch InBev (NYSE:BUD), Heineken (OTCQX:HEINY), and SABMiller (OTCPK:SBMRY) are all domiciled outside of the U.S., and any combination wouldn't involve a tax inversion move, Barush notes the heavy influence of the brewers in the U.S. will highlight again the advantage of setting up headquarters outside U.S.borders for global sellers.
Stocks in Madrid (NYSEARCA:EWP) also breath a sigh of relief following Scotland's vote not to secede from the U.K. Earlier this month, 1.8M rallied in Barcelona to demand a vote on independence for Catalonia - something the Spanish government says is illegal.
Despite warnings from Madrid, the pro-separatist Catalan government plans to hold a non-binding independence referendum on Nov. 9, and a bill approving this vote is could be approved today. Scotland's "No" vote, however, just might halt, or at least slow the process. "There will not be a legal referendum now, in my view, which is positive for Spain and Europe," says CM Capital Markets' Predrag Dukic.
Arkema (OTC:ARKAF) has made a €1.7B ($2.2B) offer for Total's (NYSE:TOT) adhesives business Bostik, which follows last week's reports that the French oil major was looking to sell the business. Arkema itself was spun out of Total in 2006.
In recent years Total has announced its plans to sell between $15B-$20B of non-oil-producing assets and others with falling profitability by 2015, as part of a program to improve its cash flow and profitability.
European equity futures (NYSEARCA:EWU) indicate positive opens following Scotland's "no" vote. Euro STOXX 50 futures is up 1%, while FTSE 100 futures indicates U.K. markets could open up 1.1%. Pound futures (NYSEARCA:FXB) are up about 0.5%.
With 31 of 32 constituencies now final, unionists had won 55% of the vote and separatists had 45%.
Shares of stocks exposed to Scotland like Royal Bank of Scotland (NYSE:RBS) and Lloyds (NYSE:LYG) indicate early gains of 2-3%.
Just two of thirty-two regions have reported, but those in favor of Scotland staying in the U.K. have a comfortable lead. The story of the evening so far is remarkably high turnout - most regions are in the 80-90% range; this compared to the 60% range for recent general elections.
It's still very early and results from the heavily populated areas of Edinburgh, Glasgow, and Aberdeen aren't due until midnight eastern daylight time.
The pound (NYSEARCA:FXB) is higher by 0.7% to $1.6510, and FTSE 100 (NYSEARCA:EWU) futures are up 0.45%.
India's largest trade deficit with any single country is with China, and Chinese President Xi Jinping - visiting PM Modi in New Delhi - pledged to invest $20B over five years to help narrow the difference.
China is India's largest trade partner, with the two doing $68.5B of business last year, and India posting a trade shortfall of $34.4B. Xi's visit follows one from Japanese PM Shinzo Abe at which he pledged more than $30B in Indian infrastructure investments.
The Sensex gained 1.8% overnight. EPI +3.1%, PIN +2.5%.
ICICI Bank (IBN +3.1%), HDFC Bank (HDB +1.3%), Tata Motors (TTM +1.6%)