News Column

Investors shy of firms with Bric exposure

February 3, 2014

INVESTORS may crave a quiet market this coming week to digest the recent volatility in stocks and rehash yesterday's Super Bowl, but the prospect doesn't look likely. The catalysts that drove the Dow and the S&P 500 to their worst monthly performances since May 2012 have not gone away. The retreat from emerging markets - and stocks in general - appears to have more room to run as the factors that helped propel the market to record highs in mid-January aren't providing enough support. Calls for a market correction have become louder, with the S&P 500 down 3.6 per cent from its alltime closing high and the Federal Reserve's announcement on Wednesday that it will keep trimming its monthly bond buying. More than 80 S&P 500 components are set to report earnings this week, but the issues surrounding emerging markets remain at the forefront for investors. Among the companies with large emerging markets exposure set to report earnings this week are General Motors and Yum Brands . Yum, in fact, gets more than half of its sales from the Bric nations - Brazil , Russia , India and China . Yum's stock lost 11.2 per cent in January, while GM shares dropped 11.7 per cent. With half of the S&P 500 companies having reported earnings so far, almost 70 per cent have topped earnings expectations, above the long-term average of 63 per cent, according to Thomson Reuters data. Two-thirds have exceeded estimates on revenue, above the historical average of 61 per cent.

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Source: City A.M. (UK)

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