Canaccord Genuity Morning Coffee on Market Vctrs. Egypt ETF (EGPT) and SPDR Emerging MidEast ETF (GAF): And You Think The Line In Your Bank Is Long?
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Canaccord Genuity Morning Coffee on Market Vctrs. Egypt ETF (NYSE: EGPT) and SPDR Emerging MidEast ETF (NYSE: GAF): And you think the line in your bank is long?
Canaccord analyst says, "With protests seeking the removal of Egyptian President Hosni Mubrak and his cabinet continuing, the country’s financial markets have resumed operations. Egypt’s banks opened for the first time in more than a week, and despite initial media reports indicating there were hundreds of customers waiting to take their cash, the banks did not face the $8-billion run that was originally estimated. Central Bank Governor Farouk el-Okda had previously stated that the banks would have enough liquidity to satisfy a run of that size, noting that there were larger runs during the financial crisis in 2008 and that the country held approximately $36 billion in reserves as of the end of December. However, the run did not materialize and according to Hishan Ess al Arab, the head of Egypt’s largest bank, outflows were only about 20% of the original forecast. Additionally, the central bank was able to sell 13 billion Egyptian pounds ($2.5 billion) to local banks in a debt auction after protests had derailed an auction planned for January 30. The 91-day notes carry a yield of 10.97%, up 147 bps from the last auction held on January 27. Fixed income traders in Cairo generally viewed the auction as a positive for the country, noting that the central bank was able to keep yields below 12.0%. Some are speculating that the risin not deliver in Q4. Sales in Latin America, the company’s largest market, were up 8%, slower growth than the three previous quarters, and sales in China fell by a whopping 45% as the number of active Avon reps in the country fell by 68%. Costs were also an issue for Avon in 2010. For the full year, they spent $96 million on an internal investigation surrounding allegations of bribery that began in China, and they plan to spend a similar amount in 2011. An additional $83 million went towards a review of their rewards program for sellers, up from $56 million in 2009. Operating margin fell 18 bps to 11.2% in the quarter, problematic as one analyst notes that the value of the company’s stock is dependant on its ability to improve margins. This is an issue Avon intends to address in the future as they announced executive compensation will be tied to operating margin targets going forward. Looking ahead to 2011, Jung is confident Avon has the right structure to be successful, expecting revenue to grow in the mid single digit range. No earnings guidance was offered as per company policy."
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Canaccord analyst says, "With protests seeking the removal of Egyptian President Hosni Mubrak and his cabinet continuing, the country’s financial markets have resumed operations. Egypt’s banks opened for the first time in more than a week, and despite initial media reports indicating there were hundreds of customers waiting to take their cash, the banks did not face the $8-billion run that was originally estimated. Central Bank Governor Farouk el-Okda had previously stated that the banks would have enough liquidity to satisfy a run of that size, noting that there were larger runs during the financial crisis in 2008 and that the country held approximately $36 billion in reserves as of the end of December. However, the run did not materialize and according to Hishan Ess al Arab, the head of Egypt’s largest bank, outflows were only about 20% of the original forecast. Additionally, the central bank was able to sell 13 billion Egyptian pounds ($2.5 billion) to local banks in a debt auction after protests had derailed an auction planned for January 30. The 91-day notes carry a yield of 10.97%, up 147 bps from the last auction held on January 27. Fixed income traders in Cairo generally viewed the auction as a positive for the country, noting that the central bank was able to keep yields below 12.0%. Some are speculating that the risin not deliver in Q4. Sales in Latin America, the company’s largest market, were up 8%, slower growth than the three previous quarters, and sales in China fell by a whopping 45% as the number of active Avon reps in the country fell by 68%. Costs were also an issue for Avon in 2010. For the full year, they spent $96 million on an internal investigation surrounding allegations of bribery that began in China, and they plan to spend a similar amount in 2011. An additional $83 million went towards a review of their rewards program for sellers, up from $56 million in 2009. Operating margin fell 18 bps to 11.2% in the quarter, problematic as one analyst notes that the value of the company’s stock is dependant on its ability to improve margins. This is an issue Avon intends to address in the future as they announced executive compensation will be tied to operating margin targets going forward. Looking ahead to 2011, Jung is confident Avon has the right structure to be successful, expecting revenue to grow in the mid single digit range. No earnings guidance was offered as per company policy."
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