In this briefing:
- Bharti Airtel Buy on Short Lived Breach Below Support
- Embassy Office Parks REIT – Comparison with AIT and a Look at the Required Yield
- Receding Political Gains to the Ruling Party, Possible Threat to the Markets
- EM Equity Strategy: Cyclicals Leading, China Surging
- Monthly Geopolitical Comment: Waiting for Trump and Xi to Clinch a Deal
1. Bharti Airtel Buy on Short Lived Breach Below Support
Bharti Airtel (BHARTI IN) corrective cycle does not appear complete with risk of a final spike lower below key pivot support. It is this crack lower that we want to take advantage of.
Sell volume spike implies the flat range will break lower.
Daily cycle triangulation sides with a press below pivot support. An upside break of this triangle would trigger a tactical long but would lack needed gas for a sustainable drive.
Weekly MACD is seeking a bottoming/basing cycle that will turn the cycle higher once we see a final capitulation spike below pivot support as we did back in 2008, 2010 and 2012.
2. Embassy Office Parks REIT – Comparison with AIT and a Look at the Required Yield
Embassy Office Parks REIT (EOP IN) plans to raise around US$1bn in its India IPO. EOP will primarily hold office assets in Bengaluru, Pune and Noida with a total portfolio size of US$4.2bn.
In my previous insight, Embassy Office Parks REIT – Good Assets but Projections Might Be a Tad Too Bullish I covered the company background and its projected growth. In this insight, I’ll compare it to its closest listed peer, Ascendas India Trust (AIT SP) and add in the performance of other yield driven listings in India.
3. Receding Political Gains to the Ruling Party, Possible Threat to the Markets
Post the downing of the Indian Air Force (IAF) MIG-21 by Pakistan over its territory and the capture and subsequent return of the pilot, the narrative which was strongly in favour of Narendra Modi and the ruling Bharatiya Janata Party (BJP) rapidly spiralled downwards. Whether the Pakistan Air Force (PAF) entered Indian air space to deliberately attack Indian targets and was driven back, or it was a lure to ambush the IAF aircraft over Pakistani airspace, is not yet clear, but the stark acknowledgement that the IAF MIG-21 had been downed and the pilot captured, and a video of his capture and interrogation broadcasted on social media, were setbacks to the Indian government and its military. Although the Indian government claimed that a PAF F-16 was brought down (although some Indian defense commentators are stating that this is evidence of the downed PAF F-16), Pakistan is denying any loss of its aircraft.
If the market was banking on a decisive Modi victory in the 2019 national elections in the immediate aftermath of the IAF strike on Bagalkot that has been dissipated with the capture and return of the IAF pilot. Unless another such event arises (or is generated), the outcome of the national elections in India will be determined by political alliances and the socio-economic conditions of the electorate; national security concerns may play a secondary role
4. EM Equity Strategy: Cyclicals Leading, China Surging
Broadly speaking, RS for MSCI EM is currently exhibiting some mild deterioration vs. MSCI EAFE following four months of clear outperformance. Nonetheless, the MSCI EM index is bottoming and remains attractive from a price perspective. In today’s report we offer a technical appraisal of major EM markets, and offer a host of technically attractivec bottoms-up stock ideas across the EM universe.
5. Monthly Geopolitical Comment: Waiting for Trump and Xi to Clinch a Deal
In the past month, positive announcements from both sides stoked hopes for a trade deal between the US and China. Meanwhile, global security deteriorated, with two more regions finding themselves on a brink of war. A major terrorist act in Kashmir provoked a sharp increase in tensions between India and Pakistan. Venezuela’s opposition leader has called for foreign powers to intervene after deadly clashes on the Colombian border. On the other hand, investors should be relieved by the relatively calm situation in Nigeria where incumbent president Buhari won the election last weekend. In Brazil, newly elected president Bolsonaro hopes to push through radical pension reform.
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