Friday, July 1, 2011

Emerging Stocks Poised for Second-Half Surge

Emerging-market stocks are due for “a strong rally” once there’s a plan in place to assist Greece
financially, according to Geoffrey Dennis, a strategist at Citigroup Inc.
Timing has much to do with the call, judging by a report that Citigroup put out two days ago. The MSCI Emerging Markets Index is faring relatively poorly for the third year of a bull market. Its 4.3 percent gain since October trails a 30 percent rally that started in October 2002, as well as a 51 percent surge that began in January 1991.

Dennis said the MSCI index will climb 31 percent in the next six months, based on his year-end projection of 1,500.

     Even a temporary fix for Greece will lead to stock gains by enabling investors to cast aside concern about the European Union’s finances, he wrote in another report this week. Greece moved closer to an agreement yesterday when lawmakers approved an austerity plan.
“Market fears have grown recently of a ‘summer accident’ in Greece,” he wrote. A default would trigger a flight toward less risky investments, a rising dollar and falling commodity prices, which would hurt emerging-market stocks, he wrote.

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