GOLDMAN NUMBERS SPREAD GLOBAL CHEER

Emerging Markets May Be Back In Focus

 WORLD markets cheered the much-hoped rebound in the first quarter earnings of US bank Goldman Sachs, sparking hopes that other key financial houses would also follow suit.
    Asian investors are holding on to it like a ray of hope, while money managers, though confident the development will lower the risk aversion to emerging markets, are looking for clues to figure out whether it is a one-off case. "More than anything, such positive events in recent weeks have changed the risk perception of overseas investors and triggered some flow of money into equities. But a bit of caution is certainly warranted," said Kotak Asset Management VP — equity funds Krishna Sanghvi.
    After the Goldman results Monday night, Asian markets such as Hong Kong and Singapore on Tuesday rose 4.5% and 1.1%, respectively, while European indices gained roughly 1-2%. Investors in Indian equities were denied an opportunity to extend gains to Tuesday on the back of positive Goldman earnings since markets were closed for Ambedkar Jayanti.
    US markets, at the time of going to press on Tuesday, were trading marginally lower on an unexpected fall in retail sales and producer prices there. Back home, market participants said Indian markets on Wednesday would mirror the trend in other Asian markets, though they do not rule out some 'catch-up gains' for domestic equities. The fourth quarter earnings of Infosys Technologies, before market hours on Wednesday, will also play a key role in determining the market trend.
    The scepticism among market participants, even after the better-than-expected Goldman earnings, stems from concerns that the indices have risen close to 35%, despite no concrete evidence of the global and domestic economy improving. "All the positives of the Goldman earnings already reflect in the prices and one needs to keep in mind that trading gains have been responsible rather than any major change in underlying," said Ambit Capital CEO-equities Andrew Holland.
    Roger Groebli, the Singapore-based head of financial market analysis at LGT Capital Management, said, "There has been a slight improvement in sentiment although the road to economic recovery is still long and bumpy. We've probably seen the worst. We won't come back to the lows." Indeed, the US markets, which were banking on spin-offs from the Goldman numbers and Federal Reserve chairman Ben Bernanke's statement that the slump may be slowing down, slipped. Stocks fell in early trades. GOLD DUST
On Monday,
Goldman announced earnings of $1.81 billion in Q1 as a surge in trading revenue outweighed asset writedowns
Buoyed by the earnings and a 54% gain in its stock price, it raised $5 billion in a share sale to help repay $10 billion in government rescue funds The bank said it sold 40.65 million shares at $123 each, 5.5% less than Tuesday's closing price of $130.15 After AIG bailout, banks that bought credit-default swaps got $22.4 billion in collateral and $27.1 billion in payments to retire contracts Goldman was most profitable Wall St firm before it converted to a bank in 2008 & posted its first quarterly loss since going public in 1999
If Goldman returns the money, it may pressure other banks to follow suit or risk appearing dependent on the government
The Impact
World markets cheer rebound in Q1 earnings of Goldman Sachs After the Goldman results Monday night, Asian markets such as Hong Kong and Singapore on Tuesday rose 4.5% and 1.1%, respectively, while European indices gained roughly 1-2%. Asian investors are holding on to it like a ray of hope Money managers confident the development will lower the risk aversion to emerging markets, but are looking for clues to figure out if it is a one-off case