>ASIA MACRO & STRATEGY OUTLOOK (CITI)

When it Rains, it Pours

■ The sharp rally in Asian assets is accompanied by both a rapid expansion of domestic liquidity and optimism about Asia prospects “relative” to the rest of the world. While relative growth optimism about the region is valid — strong fiscal, bank and household balance sheets are supportive — lingering risks need to be factored in. A sub-par recovery path in G2 on top of still significant inventory overhang would stall re-stocking momentum, and China’s investment-driven growth engine could worsen excess capacity.

■ Recent data confirm that economies are bottoming in the region. The growth rate bottomed in 4Q08, but even for countries still experiencing sharp contraction in 1Q09, like HK, SG and TW, we expect growth to turn sharply positive on a SAAR basis by 2Q09.

■ We remain fundamentally bullish on Asia FX over the medium to longer term. While we could see a near-term pull-back after a sustained run, we expect the longer-term appreciation story to remain intact on external flows, further anchored by CNY’s growing undervaluation as the dollar weakens. Our most aggressive FX appreciation expectations vs. spot in 12 months are in KRW, IDR and MYR.

■ Forces of “inflation” are currently winning over “deflation” – While we don’t foresee any monetary tightening in the near-term, we remain biased to pay rates (MY, TW) or steepeners (SG, TH) with the exception of IDR bonds, where we like being long on improving IDR sentiment, carry and BI accommodation.

■ Sovereign credit spreads are now close to or even tighter than pre-Lehman levels, so we see little value in going outright short protection on Asia CDS. We see more relative value opportunities with the Indonesia-Philippines CDS spread gap narrowing to 80-100bps and going long cash to play the negative basis.

To see full report: ASIA MACRO & STRATEGY OUTLOOK

>SESA GOA (ICICI SECURITIES)

Positives priced in...

Though we are confident on Sesa Goa’s ability to push incremental 1-2mnte sales annually in Chinese spot markets on: i) increasing market share at the cost of domestic private miners, ii) leveraging well established dealer and end-user contacts in Chinese markets and iii) given the increased Chinese dependence on imported ore after ~50% closure of domestic capacities, earnings surprise will be hard to come by as: i) margins get diluted since incremental ore is mined from high-cost Karnataka mines and ii) prices remain range-bound in the absence of demand recovery (with Chinese steel makers asking for a 45-50% contract price cut). The stock has run up ~100% in the past three months and trades at historically high FY10E P/E of 7.5x. We downgrade Sesa Goa to HOLD from Buy with revised target price of Rs152/share.

■ While volumes are secured… We do not expect significant downside risk to our FY10E and FY11E volume estimates of 17mnte and 18mnte respectively based on Sesa’s increased market share at the cost of small-scale domestic miners (which form 55-60% of India’s export share). Also, at the current iron ore price, 50% of Chinese iron ore capacities are loss making (operational costs at US$67-70/te). While increased spot exposure due to dealer inventory build-up might be
temporary, the management’s focus to increase contract sales (at ~20% with 3- 4mtpa in long-term contracts) via aggressive marketing push will at least help maintain Sesa’s current market share in Chinese exports.

■ …we expect no positive earnings surprise. We do not expect significant earnings surprise on: i) volumes as incremental volumes will flow in from low margin Karnataka mines (suffering from high transportation costs), lowering the earnings sensitivity to volumes and ii) prices as we expect spot market prices to remain mostly range-bound within ~US$60-66/te with little short-term upside, which translates into a blended realisation of US$44/te for Sesa. However, rupee appreciation (~7% post elections) is a key downside risk.

■ Downgrade to HOLD. The stock has run up ~100% in the past three months and is currently trading at historically high valuations – at FY10E P/E (cash adjusted) and EV/E of 7.5x and 4.7x respectively. Also, rupee appreciation is a key risk to revenues. While we are not lowering our volume estimates, we do not believe there is significant upside risk to our earnings. We maintain our benchmark valuations of 50% discount to global peers and value Sesa at FY10E EV/E of 4.2x. We downgrade Sesa to HOLD with target price of Rs152/share from Rs141/share.

To see full report: SESA GOA

>GLOBAL BANKS RANKING

Global Banks
1999-2009

"Changing of the Guard"

■ Global view since 1999 - 2009
■ Top 20 financial institutions by market capitalisation, $bn, 1999-2009


Source: Financial Times of London

To see report: GLOBAL BANKS RANKING

>INDIA MEDIA MONITOR (HEERNET VENTURES)

News stories
■ ZenithOptimedia forecasts advertising revenues for Indian media
■ Pudhari newspaper launches in Mumbai
■ Balaji announces annual financial result for the year 2008-2009
■ Aegis Group launched OOH media company Hyperspace.
■ Diamond Comics expands into children’s television
■ Zee Entertainment acquires a 40% stake in Zee Studio from Resource Software Ltd
■ Facebook launches Indian language interface
■ Ybrant acquires Latin American online advertising network, Dream Ad.

Data
■ Share price data
■ Radio audience analysis
■ Leading newspapers in English and Hindi language

To see full report: INDIA MEDIA MONITOR