Global Markets from a Foreign Perspective

As I write this 10 kilometers above Iran (on my flight back from India to the UK) I have time to consider the UK markets from a foreign perspective. Stranded in the floods in Mumbai for a week gave me chance to the Indian market hit new all time highs virtually each day, on above average volumes, even though many in the financial area could not get into work.

Why? It was off the back of real earnings. Earnings growth in company after company which makes the growth we are used to in the UK look embarrassingly small.

As I had dinner with the UK Education Minister at the High Commission in New Delhi, we discussed the cultural and attidinal differences between the UK and India to education. I pointed out that in my home State of Gujarat, police card wells at the time the exam results come out, because students are known to commit suicide if their results are poor. It is that attitude that drives corporate growth.

During the floods, I spoke to several Indians who had a 6 hour walk home, waste high in water and in pouring rain. They did not complain. The next day, they were out providing food and drink to those stranded. We in Britain rightly believe we have the 'bulldog' spirit, as exemplified post the recent terrorist bombings - but having seen Mumbai first hand - India's financial centre - they have it in bucket loads too - and it is that attitude that drives corporate earnings.

A fortnight ago I was in New York, and will be again in another 10 days. Finding myself in Time Square at that time, I was struck by how much financial information there is there - if you have been there you know about the stock price tickers, the Fidelity ads, the Nasdaq centre. That attitude to stock investments, equities, is what explains a large part of the American success.

What of the UK? On the plus side, we are successful in a very British way, there is not the brash expectation of superiority of the US, nor the fatalism of the Mumbai. We're somewhere in between, geographically too of course, in that UK corporate returns almost go unnoticed. They impact the FTSE to some extent, but the louder (volume, corporate impact etc) Dow gets a lot more attention and so moves the FTSE too. It is almost as if the results are a reflection of some kind of national culture - as one would expect.

So what do we do in the UK - 'giants to the left of us, tigers to the right of us, stuck in the middle with you'? For those who are into stock selection by examining fundamentals such as annual reports then you are of course looking for companies with a strong India (and China) business development corporate strategy. After all, whilst Indian and Chinese GDP growth may be 8-10% respectively, it is corporate earnings increasing at 40%-400% that caught my eye for numerous companies as I sat watching CNBC India in my hotel in Mumbai.

Direct investment into the Indian market, as I have covered in previous pieces, remains very difficult for non-Indians. But then again, right now, with all the talk of Indian economic growth you would be forgiven for feeling disadvantaged if you're not Indian anyway.

Value-Growth

On my value growth criteria which are based on stocks meeting revenue and profit growth and good value based on criteria such as price earnings growth, the following names come up. Remember they are for a 6 month outlook: Rolls-Royce (still), SAB Miller, BAe Systems, Michael Page (new one), Spectris, Premier Foods.

Remember I am targeting about 20-20% with the value growth criteria. Last year it produced 33% return. On my momentum value indicator I have: ICI, Paragon, Morgan Crucible, Prudential, Burren Energy, Tullow.

Crazy Small Stock

These are high risk volatile stocks which could move sharply higher or move sharply lower in my view, but will almost certainly not stand still. Names on the radar include: Langley Park, Pochin's, Blue Planet.

Also, if you would like a free multi-media CDROM on 'Investing Better', which covers spreadbetting, CFD trading and momentum indicators like the MACD, posted to you then drop me an email with your postal address to alpesh@tradermind.com.

Spreadbetters

Spreadbetters and futures traders often look at hard and soft commodities. Here's my quick take on the action for the week ahead:

• Oil: Higher
• Copper: Higher
• Gold: Higher
• £/$: Higher
• Dow: Mixed
• FTSE 100: Higher
• Soyabean Oil: Sideways