Bhutto Assassination Weighs On Indian ADRs, ETNs

Includes: EEM, INP, TTM
by: Judith Levy

Indian ADRs and ETNs fell Thursday following the assassination of Pakistani opposition leader Benazir Bhutto on fears the crime could worsen instability in Southeast Asia. "We can't think of a more scary situation in the region, and believe that the fate of Pakistan could have a much bigger impact on geopolitics than anything Iran could do right now," said Win Thin, strategist at Brown Brothers Harriman. The Barclays iPath MSCI India Index ETN (NYSEARCA:INP), which is linked to the MSCI India Total Return Index, dropped 5.3% to $96.15, while the Bank of New York India ADR Index (.BKIN) shed 4.4% to 1195.06. Heading the decliners were commercial vehicle maker Tata Motors (NYSE:TTM), down 6.4% to $18.18; Indian lender ICICI Bank (NYSE:IBN), down 5.8% to $59.67; and Indian telecom Videsh Sanchar Nigam (NYSEARCA:VSL), down 5% to $37.60. The iShares MSCI Emerging Markets ETF (NYSEARCA:EEM) also shuddered, losing 1.7% following news of the killing. The ETF's shares are trading at $152 -- within 7% of their 52-week high -- but as Andrew Wilkinson observed, 13,000 lots of January 135 puts were bought on Thursday (full story). Crude futures were up $1.30 to $97.28 a barrel. Markos Kaminis suggests the UltraShort S&P 500 ProShares ETF (NYSEARCA:SDS) for investors who wish to hedge Pakistani unrest in the wake of the assassination (full story), while J. Christoph Amberger recommends buying Indian ADRs that dip the most in the next few days (full story). "If violence does not escalate and spill over into India, the focus will once again shift to the long term fundamentals of [the] Indian economy and the market will stabilize," said Pankaj Vaish, equities head at Lehman Brothers.

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