Zurich 19 August, 2010 After being affected by product worries, management changes and regulatory issue in China, there appears to be a stabilization in the image of US tech stocks. This is especially so for the high profile Google, Microsoft and Apple. Brazil continues to drive up BRIC sentiment despite a relatively weak third quarter for Chinese analyst sentiment. Gold and Silver are closely tied and are driving up metals sentiment, although the differences in market fundamentals have not escaped analysts. And finally, there is good news for Euro bonds, with the high profile Irish, Portugese and Spanish sovereign bond markets receiving some praise.
The US technology sector has had a good month in September with a stabile picture development in the quotation of analyst sentiment. Oracle, HP, Apple, Microsoft and Google have all been relatively well received with all companies attaining more than 10% positive sentiment. However, the key result appears to be the closeness of the competitors on the analysts´ agenda. No one company is dominating, and the overall growth scenario is being viewed as a general one for the industry. Media Tenor´s research director, Matthias Vollbracht, notes that the lower coverage on reputational problems facing Apple a few months ago have led to a general stabilization. “The prospects for the industry in general can often be influenced by one big player in crisis. But with the Apple i-phone problems off the agenda, there is less scope for criticism. As a result, growth and innovation are back on the agenda."
The strong surge in Gold prices and sentiment has impacted upon silver markets. The parallel rise in both metals, however, shows a key distinction in that the demand for silver from industry is a stronger factor than the fear driven flight to safety for Gold. Vollbracht draws a parallel with the financial crisis in his concern for the sentiment driven gold rush is based on the experience of the financial crisis: “5 years ago it was a simply assumed that Real Estate prices don´t fall, and now we have the basic assumption that Gold is impervious to the economic situation – one has to worry that perhaps we have not learnt our lesson.” The situation for Silver, Copper and Tin, however, has fundamental differences. For Tin the demand for soldering in Asia and supply shortfalls in Indonesia are clear reasons for record prices.
Overall BRIC sentiment has boomed in the 3rd quarter despite a more neutral view of Russia, India and China. The reason is the soaring sentiment towards Brazil. Commodities demand, Petrobras share issues, and the continuing search for investment opportunities outside the Euro/US markets, are supporting the Brazilian rise. In pure volume terms, however, the Chinese economy remains the key concern of analysts cited in the press. The Chinese dominance is reflecting in the importance of the US-China currency story in the media with the Remnimbi´s value a key point in analyst discussion.
Finally, there was a small amount of positivity in the monthly bond sentiment with Portugal, Ireland and Spain bucking the overall negative trend on bonds in the international media. The acceptance of bond issuances was a relief for most analysts and led to a small distraction in the peripheral crisis agenda. Vollbracht points out that the positivity of analysts towards peripheral bond markets is an important step, but that sentiment towards full EU recovery is still being dragged down by this area. “Germany is leading the perception of a European recovery, and yet here we are still looking at Ireland´s debt problems. This shows that the repercussions of the Euro debt crisis will be long term, and will require a unified recovery, not just single member states.”
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