Cover story: Four emerging market stock fund managers discuss the best sectors for investors, identify risks that could be of concern, and offer stock picks: Taizo Ishida of MPACX and MEASX (BZUN, Indus Motor, Shenzhou Intl Group Holdings, China Lodging Group, PC Jeweller), Rejiv Jain of GOGPX (Sberbank of Russia, Bank Central Asia, Qualicorp, Interglobe Aviation), Howard Schwab of DREGX (Titan, Samsung Electronics, China Shenhua Energy), and Leon Eidelman of JFAMX (BABA, Kroton Educacional, Hangzhou Robam Appliances, JD).
Feature: 1) Positive on VZ: Price wars with rivals have sent down shares, but company is on track to bring in about as much revenue this year as 2016, and could return to modest growth, making the shares a bargain; 2) Positive on VMC, FLR, MLM, ACM, JEC, GVA, EXP, USCR, CAT: Among companies that would benefit if the Trump administration manages to get a $1T infrastructure building program under way, or even a compromise measure on a smaller scale; 3) Positive on MDLZ: Investors think the packaged-food company could return to growth under new chief executive Dirk Van de Put, especially if it leverages its strength in Europe and developing economies.
Tech Trader: AMZN, MSFT, and GOOGL dominate cloud computing, but a rapidly evolving new “serverless” technology pioneered by AMZN called Lambda requires far less work from programmers, gets dramatically better results--and could either solidify their position, or undermine it.
Trader: Nomura Instinet analyst Joseph Mezrich says the market is expecting earnings growth of 11.7%, well above the long-term average of 7%, a sign the market is overvalued and may undergo a correction; With quantitative easing ending, borrowing costs should rise, and high stock valuations mean companies will get less bang for their buck with buybacks; A market “melt up” would cause concern because it could entail a sharp climb followed by a painful drop.
Profile: Daniel Chace, manager of the Wasatch Micro Cap fund, picks through the less-trafficked corners of the market and focuses on about 80 potential growth companies (top 10 holdings: SGC, LGIH, HQY, IBP, V-Mart Retail, FRPT, ENSG, ENV, TREX, EXAS).
Follow-Up: Cautious on HPE: Chief Meg Whitman has made improvements at the company, but many of the challenges it faced after she took over remain, despite her efforts to reshape the business.
European Trader: Positive on Hapag-Lloyd: With the global container shipping industry seeing an uptick, the German company appears to be a good way for investors to play the revival.
Asian Trader: Positive on Tencent Holdings: Chinese giant is the world’s best-performing large-cap stock this year, bypassing the FANGS, and the shares still look good as the company continues to grow.
Commodities: “A brutal cold snap in December is likely, according to some forecasters, and it could lift winter wheat prices higher than $5 a bushel, up more than a dollar from recent prices.”
Streetwise: Uber’s decision to delay releasing news of a data breach last years is the latest example of its history of playing by its rules—and that isn’t likely to change as long as it remains a private company.-
