Friday Email: 15 January 2016
Every Friday morning our lead analyst Mark Riding sends out his weekly run-down and upcoming events in the investor calendar, like this one:
The past week saw the FTSE 100 hit a low of 5834 on Thursday as the markets continued with their irrational misery. Quite a number of the big investment houses are telling clients to sell into any strength. I cannot see why they would say that now when they were not saying it when the market was over 7000. Overall, the market looks fair value to me on fundamentals with some stocks in the resources sector looking very good value indeed on a medium term view of two to three years. The model portfolio is underperforming slightly at this stage as you would expect with what we have seen so far this year.
The week ahead sees IG Group report and that always signals to me that the main reporting season is just around the corner and I for one am looking forward to it more than any that I can remember since the financial crisis. That's because markets have been acting like there is another scare of that magnitude, but there just isn't in my view. Remember that there were big gains to be had for those that took the plunge back then and there may well be big gains for those that take the plunge now. When you look at the share price of Aberdeen Asset Management you would think that China had disappeared off the face of the earth, when in fact the reality is that GDP growth in the 4th quarter has slowed to 6.8%, the lowest since the finacial crisis when it hit 6.2%. Is that really a disaster? Surely when you become the worlds second largest economy, GDP growth has to rationalise over time and head towards the 2-3% norm seen in developed economies. Aberdeen have fallen 17% in the first two weeks of the year; their dividend (unlike BHP's) is covered and the yield is now up to 8.5%.
Short term the market remains extremely difficult to call as there seems to be a bit of panic setting in. The panic throws up opportunity and as always good management should be sought out by investors.
New into DividendMax this week we have Avesco.
The Friday email is delivered to over 20,000 subscriber’s every week, and remains a widely read run-down of recent events and what investors can expect in the week ahead written by our chief analyst Mark Riding.
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Read next: 08 January 2016
The UK Stock Market has made a very bad start to the year with both the FTSE 100 and the FTSE 250 well down since January 4th. The FTSE 100 began the year at 6242 and is now 5975, down 4.3%. The FTSE 250 began the year at 17441 and is now 16826, down 3.5%. The main causes of this are the weakness of the Chinese economic data and the collapse of the oil price.
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