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Across the Spectrum - 29th April 2009

Charts predict a new Asian bull market, according to Robin Griffiths, technical analyst at Cazenove Capital. "While western stock markets struggle to a rally in an overall bear market, their emerging counterparts are set to enjoy the real thing. Asia and China and emerging markets are where the new bull markets are being signalled. In the mature western markets, we're having rallies in bear markets on the classic definition," he said. "Asian and emerging markets have finished a cyclical bear market and are giving all the signs of going into a new cyclical bull market. We do indeed have some bull markets on the planet, there in places like China and India, they're definitely not in the western world. It is possible for western indexes such as the FTSE-100 to turn the current bear market rally into a bull market," he added. If the FTSE starts to make a pattern of rising highs and lows above the 200-day moving average, "most technicians around the world would accept it is now called a bull market," Griffiths concluded.

The International Monetary Fund ("IMF") is considering selling its first bonds to several developing countries to raise money to combat the global economic downturn. China and Brazil are among the handful of nations that have expressed interest in purchasing the securities, which would give member states a different way to contribute to the Washington-based fund. The IMF, an agency of the United Nations that monitors the global economy and makes loans to members, has never issued bonds. The IMF is seeking more cash to finance loans and aid to member states. Bonds would offer "flexibility," said IMF Managing Director Dominique Strauss-Kahn, and their interest would be pegged to the value of the IMF's basket of currencies, known as Special Drawing Rights or SDRs.

Russia plans to borrow money on the international market next year and may arrange loans from the World Bank to help cover its budget shortfall, Finance Minister Alexei Kudrin said. Banks and pension funds are likely to be the chief buyers of Russian bonds, Kudrin said today. Russia's budget deficit may be wider than the government's estimate of 7.4% of GDP which has been caused by an expected 30% drop in government revenue.

German consumer confidence unexpectedly held steady for a third month as slower inflation boosted household purchasing power and the recession showed first signs of easing. GfK AG's confidence index for May, based on a survey of about 2,000 people, was unchanged from April at 2.5%, the Nuremberg-based market-research company said in a statement today. Italian consumer confidence unexpectedly rebounded in April to the highest since December 2007 as the benefits from slowing inflation offset concerns about rising unemployment. The Isae Institute's consumer index rose to 104.9 from 99.8 in March, the Rome-based research centre said today. "The slowing inflation across Europe boosts consumers' available income," said Laura Cavallaro, economist at Aletti Gestielle in Milan. "On top of this, households enjoy some of the benefits coming from governments' stimulus plans and interest rate cuts."

Gold, little changed in London today, may rise for a fourth day to post its longest winning streak since December as falling equities increase the metal's appeal as an alternative investment. "As global stocks retreat on profit-taking and flu fears, gold prices could gather pace," Pradeep Unni, an analyst at Richcomm Global Services DMCC in Dubai, said. "Steady investment demand and Chinese gold appetite have added to the momentum." Bullion for immediate delivery fell 11 cents to USD 913.09 an ounce earlier today.

Crude oil fell the most in a week on concern the US economy will keep shrinking and the flu outbreak will curtail air travel. The economy in the world's largest oil consumer will continue to contract "for some time" Lawrence Summers, director of the White House National Economic Council, said yesterday. Increased output by non-OPEC producers has left the market oversupplied by about 720,000 barrels a day, Algerian Oil Minister Chakib Khelil said. Crude oil for June delivery fell as much as USD 2.90 or 5.6%, to USD 48.65 a barrel on the New York Mercantile Exchange earlier.

The same concerns that have depressed the price of crude oil have also caused the yen to rise to a four-week high against the dollar. The euro fell the most in a week against the dollar and the yen after Liberation reported that Societe Generale SA, France's third-largest bank, may post a loss after risky investments by its alternative asset-management unit. The yen strengthened to 96.54 per dollar in London earlier from 97.17 last week in New York. The yen appreciated to 127.03 per euro from 128.66. The dollar climbed to USD 1.3151 per euro from USD 1.3242.

Spotlight on water

With the yearly Earth Day celebration stretching into its fifth decade, water seems to have risen in the public consciousness as one of the planet's chief environmental concerns. There is growing recognition that this resource, which has no substitute, may turn out to be the hot commodity of the 21st century, much as oil has been for much of the past century.

The higher value ascribed to water has less to do with depletion and scarcity than cost. While there's as much water on the planet as there has ever been, cheap water is in short supply. "All the easily tapped sources have already been tapped," by damming up rivers and other methods, says Neil Berlant, lead manager of the PFW Water Fund, the only open-end mutual fund focused exclusively on water-related stocks. What remains are more expensive sources of water, from oceans, groundwater, or reclaimed used water, which require either desalination, chemical disinfectants, or other processes to be made suitable for drinking.

There's plenty of technology available to clean up water to meet increasingly strict public safety standards, but consumers will have to get use to paying higher rates to local water systems to pay for the necessary treatment. People in the developing world have long had little access to clean drinking water because of how much it costs.

Berlant predicts that water prices across the U.S. will double or triple over the next few years, though that's not as scary as it sounds because the increase will come off a fairly low base. He expects the higher cost to unleash a wave of business opportunities as people shop for products and services to improve water quality. This is compounded by the need for water of much higher purity than in the past for such sensitive manufacturing processes as the production of semiconductors, whose optimal performance depends on cleaner chips, he says.

One of the most pressing environmental issues concerns farm runoff of storm water loaded with nitrogen and other chemical fertilizer compounds and urban runoff of water full of oil and other pollutants washed off dirty streets and parking lots. Excessive runoff that can't flow back into groundwater ends up in the nearest rivers, lakes, and oceans, resulting in a profusion of algae and other plant life that suck up oxygen when they die, creating so-called dead zones that can no longer neutralise pollutants.

A wellspring of creative solutions has emerged in response to this problem, from rooftop rain gardens to permeable asphalt to underground cells that allow tree roots to grow to full capacity and thereby absorb more rainwater, but most are in the early stages of development and not yet available for investment.

The Artemis Project, a San Diego consulting firm focused on the water industry, is trying to make private equity investors more aware of opportunities in new technologies aimed at solving complex water issues. This week, Artemis launched an annual competition that will give awards to companies judged to have the most investment potential. Its top choice this year went to Scottsdale (Arizona) -based AbTech Industries, a privately held company that makes a relatively low-tech smart sponge that removes oil and grease from runoff water before it can harm large bodies of water.

Among other companies creating innovative technologies on the brink of public consciousness is BPL Global, which uses smart sensors to marry electronic devices that can measure a community's carbon and water footprints and enable better management both of water flow and energy consumption.

If the 120 international companies that the Artemis Project has identified as having promising water solutions are any indication, the tide of innovation, and investing opportunities, should continue to rise for many years to come as the world's water worries grab the spotlight.

The information set out herein has been obtained from various public sources and is published by way of information only. The Spectrum IFA Group can accept no liability of any sort in relation there to and readers should obtain their own verification of any statement before making any decision which may have any financial or other impact.

 

Neither the information nor the opinions herein constitute, or are they to be construed as, an offer or a solicitation of an offer to buy or sell investments.

 

This information is only provided as a guide and, if you need assistance in this area you are strongly advised to seek the help of a specialist in this field as each individual case is different.

 


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