A view of financial markets

We finished a see-saw week for equities with ups and downs through out the week. We will update the indicators in this blog as things look right now.

The NYTimes reported that the construction spending is up 5.1% this year compared to the prior year. This growth has slowed down somewhat but has been increasing since 2001. The personal savings rate is negative and continues to be in that trend. The manufacturing index is also showing an expansion at 54.5 in August. This is down from July value of 54.7. The housing supply meanwhile has increased significantly in the meantime. This should mean continued good fortune at the construction related manufacturing such as USG.

The SP500 finished at 1300 at trailing P/E of 18. The US companies overall are doing well and index should have some upside in the next year. The emerging market index had a slow week with its value falling. It is currently trading at a slight discount to its NAV.

Among the BRICs, Indian market did well moving up on the back of optimistic prognosis for economic growth. The Brazilian index went down significantly similar to EEM. The Chinese index went up slightly. The Korean, Taiwan and Singapore exchanges all declined slightly last week.

From trailing P/E stand point, the different markets were priced as follows. This shows an upside for emerging market funds such as EEM and VWO.

India - BSE Sensex - 20
China - 21
Brazil - 10
Korea - 11
Taiwan - 11
Russia - 13
Singapore - 10
South Africa - 8
Israel - 14
Hongkong - 12

The canadian index also went down from a high of 12200 to a low of 11900 by Friday. The US index also had a down week.

Looking at everything in total, the downside correction last week looks like a temporary blip. The reduction in oil and commodity prices bodes well for growth in the emerging markets as it does in the developed countries. It doesnt look like the growth train is going to stop anytime soon.