For Immediate Release
Chicago, IL – July 9, 2009 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Colgate Palmolive (CL), China Mobile (CHL), ICICI Bank (IBN), Tele Norte (TNE) and Toyota Motor Corp. (TM).
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Here are highlights from Wednesday’s Analyst Blog:
IMF Grows More Optimistic
While the U.S. is gaining share of the world economy relative to the other advanced economies, it is losing share to the developing parts of the world, most notably China and India. While the two emerging giants have not been immune to the world economic slowdown, they have held up much better than most.
This year the IMF expects China to grow 7.5% and for India to post growth of 5.4%. Next year, both are expected to see their growth accelerate to 8.5% and 6.5%, respectively. Without a doubt, that is much slower than they were growing a few years ago — in 2007, China grew 13.0% and India grew by 9.4% — but is still extremely healthy relative to everywhere else.
In other words, the pace at which they are picking up share of the world economy has actually accelerated during the downturn. In 2007, China grew 7.9% percent faster than the world as a whole (and more than that ex China), while this year it will (assuming the IMF projections are accurate) grow 8.9% faster. For India, the relative acceleration is even more significant, growing from a 4.3% lead in 2007 to a 6.8% lead this year.
This suggests to me that gaining some exposure to China and India in your portfolio is still a good thing to do. This can be done indirectly through buying U.S. multinationals such as Colgate Palmolive (CL).
China Mobile (CHL) might be a firm to investigate for exposure to China, and ICICI Bank (IBN) is a good way to get exposure to India.
The other two BRIC countries have not fared as well in the downturn, with Russia being particularly hard hit due to the decline in Oil prices from a year ago. It is expected to see a decline of 6.5% this year before rebounding with 1.5% growth next year. The IMF cut this year’s forecast for Russia by 0.5% relative to April, but raised its outlook pretty sharply by 1.0% for next year.
Brazil has held up relatively well in the downturn but it is not immune, with an economic contraction of 1.3% this year, then a rebound of 2.5% positive growth next year. Brazil can also be played through individual ADRs such as Tele Norte (TNE).
Toyota Gears Up on Highlander Plant
Toyota Motor Corp. (TM) is reportedly spending $500 million on retooling its southwestern Indiana plant (Princeton) for production of the Highlander sport utility vehicle. The total investment on this facility now rises to about $3.7 billion. The company, which is the largest automaker in the world in terms of sales and production, plans to begin production at the facility in October 2009 with 300,000 vehicles per annum.
According to the Associated Press, Toyota plans to spend $500 million entirely on acquiring new equipment at the Princeton facility. The company has no intention of spending on expansion or job creation at the facility. About 300 employees at the plant opted for voluntary retirement on payment of $20,000 and other incentives. The plant currently employs about 4,200 employees.
Last year, Toyota had announced major changes in its production mix on the back of changing consumer demand from large-size trucks to smaller vehicles. The production of Tundra full-size pick-up truck is planned to be shifted from the Princeton facility to the San Antonio plant in the second half of 2009.
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