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Market round up: EM bulls cooling off after impressive rally

LiveMint logoLiveMint 01-06-2017 Livemint

After a surprisingly good run in emerging markets (EMs) that sent equities to a fifth monthly gain, some bulls are easing up. Credit Suisse Group AG forecasts developing-nation equities will underperform in the short term, while Deutsche Bank Wealth Management said it’s not as positive on EM bonds as a year ago. Goldman Sachs Group Inc. said strong returns have partially eroded a previously compelling valuation signal, and BNP Paribas SA said the best gains in markets such as India and Indonesia may already be behind us.

Carbon black industry in a sweet spot

Profitability of the domestic carbon black industry can remain firm in the medium term as the companies benefit from better pricing power and utilization levels, CARE Ratings said in a note. According to the ratings company, the industry’s operating margin has improved from 8.2% in 2014-15 to 11.5% in 2015-16. This is projected to improve to around 15% in 2016-17, thanks to reduction in competitive intensity from Chinese firms. With no major capacity additions coming on stream, CARE Ratings expects industry utilization levels to remain high. Utilization levels of the sector are estimated to have improved from 81% in 2014-15 to around 92% last fiscal year.

Dividend declaration last priority for CFOs

Dividend declaration is the last priority of Indian chief financial officers (CFOs) for the next six months, showed a Dun and Bradstreet (D&B) survey. The D&B Composite Business Optimism Index for April-June of calendar year 2017 found that reducing cost (57%) followed by cash flow management (49%) and risk management (37%) have been considered by CFOs to be their strong priorities during the next six months. In the services sector, around 36% of CFOs consider expansion through mergers and acquisitions to be their priority during the next six months as compared to 22% of CFOs in the industrial sector. Meanwhile, optimism among CFOs remained at the same level during the April-June quarter of 2017 as compared to the previous quarter and the same quarter in previous year.

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