GS-The BRICs Nifty 50-the EM DM winners-091105.pdf
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1、November 5, 2009 Global: Portfolio Strategy Goldman Sachs Global Economics, Commodities and Strategy Research 1 November 5, 2009 Global Portfolio Strategy The BRICs Nifty 50: The EM we believe they remain on a trajectory that will see their combined output reach 50% of the G7 level by 2020 and parit
2、y between 2030 and 2050. The economic downturn of the last 24 months has accelerated that realignment of the global economy; while growth slowed in all major regions, it has rebounded most quickly in emerging economies, widening the disparity between emerging market growth and that of developed mark
3、ets. In this paper, we outline how continued strength in emerging economies is driving growth in consumer classes as well as continued infrastructure investment in the BRICs. We identify two groups of companies that can help investors own this theme one from the developed markets, the other within t
4、he emerging markets. Exposure to those fast growing economies is increasingly becoming a sine qua non of global portfolios. Investment opportunities exist in both emerging market equities and through developed market equities with significant exposure to those economies. We have developed two new ba
5、skets to help identify the potential winners in this exciting realignment of global growth opportunities. We describe both as a New Nifty 50. The concept harks back to the so called Nifty 50 US stocks the leading group of global multinationals that dominated the US markets in the 1960s and early 197
6、0s. This new Nifty 50 offers a vision of 50 companies from the developed markets that we believe are best placed to benefit from the BRICs super cycle, as well as a Nifty 50 of BRICs companies that are likely to emerge as the new winners in the global markets. This piece is a joint analysis between
7、the Goldman Sachs regional strategists in Global ECS together with the Goldman Sachs Global SUSTAIN team. The GS SUSTAIN framework identifies long-term industry leaders that are well positioned to benefit from structural trends within their industry, including global economic realignment. Leaders ar
8、e identified through analysis of objective, quantifiable measures of performance across the key drivers of corporate performance: 1) returns on capital, 2) industry positioning and 3) management quality (with respect to environmental, social and governance issues). The developed market basket includ
9、es 12 GS SUSTAIN focus list leaders and the emerging market basket includes nine focus list leaders. The emerging market listed basket is likely to benefit from continued growth in capital markets and the increasing international competitiveness of companies in those countries as well as from the ta
10、ilwind of rising domestic demand, particularly in those sectors where international competition is limited. The developed market basket provides less focused but more stable exposure through well placed developed market companies. There are two reasons why we identify both EM and DM Nifty 50 BRICs b
11、askets. Over time the two groups of companies may diverge in valuation and growth, providing a useful hedge or switch opportunity between one basket and the other. Many investors may be limited regionally to an investment area. US or European fund managers, for example, may not be able to buy into t
12、he EM growth story directly, but could outperform their domestic indices by buying these companies. We find that our DM BRIC basket (GSSTDM50) has a very high correlation with the MSCI EM indices, so investors who are not able to buy EM stocks directly might find this an attractive alternative. 迅嘉机构
13、内参 - http:/ November 5, 2009 Global: Portfolio Strategy Goldman Sachs Global Economics, Commodities and Strategy Research 4 Both baskets currently look attractive In terms of attractions of these baskets currently: The EM Nifty 50 (GSSTEM50) trades at a similar 2011E earnings multiple to the MSCI EM
14、 but offers stronger growth. Although the Price to Book is higher than for MSCI EM (2.0 vs. 1.6 using 2011E data), this is matched by a meaningfully better ROE (20% vs. 16% using 2011E data). The basket also has a high EBIT margin, above 20%, which is twice the margin analysts forecast for the MSCI
15、EM in 2011. The DM Nifty 50 BRICs basket (GSSTDM50) has performed in line with the MSCI Emerging Markets and tracks this index closely. Over the last three years, investing in these companies would have returned 16% in US dollar terms. This compares very well with a broad developed index like the MS
16、CI World, which over the same period lost some 20%. We think this outperformance reflects the diverging economic paths between emerging and advanced economies. Investing in the global BRIC basket provides investors an emerging market-like return with possibly less corporate governance risk and less
17、political risk. In terms of valuation, GSSTDM50 is cheaper on an EV/EBITDA basis than MSCI EM and has a higher EBIT margin than either MSCI World or MSCI EM for both next year and the year after. While the P/B is higher than for the other main indices, the basket has a premium 2011E ROE of over 16%.
18、 Revisions have also been higher for our basket over the last month than for MSCI EM or MSCI World. The DM Nifty 50 basket offers an EM-like return with a lower volatility. Although it has a higher volatility than the MSCI World developed, the 3-month realized volatility has been on average 1.2 vol
19、points below the MSCI EM realized volatility over the last three years (Exhibit 52). We believe that our DM Nifty 50 basket offers a liquid vehicle through which to gain exposure to Emerging Markets. This differs meaningfully from some Emerging Markets where the fluctuation of liquidity could provid
20、e a significant hurdle for investors. The median market cap in our DM Nifty 50 basket is $18 bn and the median liquidity, measured as the last six months average daily liquidity, is $112 mn. To investors whose investment universe is limited to developed markets, we recommend a long position in our D
21、M Nifty 50 basket (GSSTDM50) that could potentially be paired against a short position in the MSCI World index. For global investors with a strong positive view on emerging markets, we believe a long position in our EM Nifty 50 basket (GSSTEM50) paired against the MSCI World index offers a high-beta
22、 implementation of that view. On balance, while we expect both baskets to do well over the long run, we think that GSSTDM50 currently offers the best mix of liquidity, value and premium growth. Exhibit 1: Annualized volatility and beta for our baskets and MSCI indices BetaVolatility EM Nifty 501.453
23、8.39 DM Nifty 501.2629.32 MSCI EM1.2530.08 MSCI World124.00 Source: Goldman Sachs Research estimates, Goldman Sachs Global ECS Research. 迅嘉机构内参 - http:/ November 5, 2009 Global: Portfolio Strategy Goldman Sachs Global Economics, Commodities and Strategy Research 5 Exhibit 2: Our DM since 2005, the B
24、RICs economies have already become the dominant drivers of global GDP growth (Exhibit 9). Exhibit 9: The BRICs has become the main contributor to growth In US$ terms, 2009 and 2010 based on GS forecasts -1 -0.5 0 0.5 1 1.5 2 2004200520062007200820092010 BRICsUSAEuroland percentage points Source: Gol
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