Amareos

Ryan Shea

Thematic (Sector/Industry)

2016's "Political Kill" season continues, making this year one of the most toxic for incumbent politicians we can ever recall.Monday saw Italian PM Renzi announce his resignation following the crushing defeat of his constitutional-reform-turned-personal-confidence-vote referendum; an outcome clearly flagged by our crowd-sourced sentiment indicators as outlined in an earlier Market Sentimentalist Insight.However, Renzi is not the only political leader whose time in office appears to be drawing to a close. South Korea’s President Park Geun-hye is facing an impeachment vote in parliament this Friday, having failed to pacify her critics with her pledge to step-down in April. The scandal has led to a surge in social unrest and contributed to South Korea being the crowd’s “most-hated” country.Such strong emotions are reminiscent of what we observed last December in Brazil, when President Rousseff also faced impeachment proceedings. Back then this extreme crowd negativity proved to be a very prescient contrarian buy-signal for Brazilian equities. Is the same now true of South Korean equities? Is Mr. Market again offering investors an early Christmas present?

2016's "Political Kill" season continues, making this year one of the most toxic for incumbent politicians we can ever recall.Monday saw Italian PM Renzi announce his resignation following the crushing defeat of his constitutional-reform-turned-personal-confidence-vote referendum; an outcome clearly flagged by our crowd-sourced sentiment indicators as outlined in an earlier Market Sentimentalist Insight.However, Renzi is not the only political leader whose time in office appears to be drawing to a close. South Korea’s President Park Geun-hye is facing an impeachment vote in parliament this Friday, having failed to pacify her critics with her pledge to step-down in April. The scandal has led to a surge in social unrest and contributed to South Korea being the crowd’s “most-hated” country.Such strong emotions are reminiscent of what we observed last December in Brazil, when President Rousseff also faced impeachment proceedings. Back then this extreme crowd negativity proved to be a very prescient contrarian buy-signal for Brazilian equities. Is the same now true of South Korean equities? Is Mr. Market again offering investors an early Christmas present?

The Market Sentimentalist: Political Kill

Following Brexit and Trump the collective sigh of relief that “thank goodness 2016 is nearly over” is palpable. Unfortunately, political uncertainty and its associated risks are not going to disappear any time soon. Indeed, there are major European political events looming on the near horizon.Most immediately, there is the Italian constitutional reform referendum slated for December 4th. With PM Renzi having promised to resign in the event that he fails to secure victory this has, in effect, become a confidence vote in his government.According to opinion polls published just prior to the mandated black out period, the No campaign had a commanding lead – ranging between 5-10 percentage points depending upon the poll. Even though this lead is below the number of undecideds the indication from the polls is fairly clear cut; Renzi will lose.That said, given how abysmal opinion polls have been at predicting the outcomes of political votes this year (and earlier – notably the polls were also wide of the mark in predicting the last UK general election) it is awfully tempting to go with a Yes victory purely on contrarian grounds.Our preference, of course, is to rely on the signals from crowd-sourced sentiment indicators given they accurately flagged both the UK referendum and US presidential outcomes.

Following Brexit and Trump the collective sigh of relief that “thank goodness 2016 is nearly over” is palpable. Unfortunately, political uncertainty and its associated risks are not going to disappear any time soon. Indeed, there are major European political events looming on the near horizon.Most immediately, there is the Italian constitutional reform referendum slated for December 4th. With PM Renzi having promised to resign in the event that he fails to secure victory this has, in effect, become a confidence vote in his government.According to opinion polls published just prior to the mandated black out period, the No campaign had a commanding lead – ranging between 5-10 percentage points depending upon the poll. Even though this lead is below the number of undecideds the indication from the polls is fairly clear cut; Renzi will lose.That said, given how abysmal opinion polls have been at predicting the outcomes of political votes this year (and earlier – notably the polls were also wide of the mark in predicting the last UK general election) it is awfully tempting to go with a Yes victory purely on contrarian grounds.Our preference, of course, is to rely on the signals from crowd-sourced sentiment indicators given they accurately flagged both the UK referendum and US presidential outcomes. 

Market Sentimentalist: Political Economy Redux

Special Situations, Content Strategist, Smartkarma

Crispin Francis

Special Situations, Content Strategist

Smartkarma

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<h2>The Roller-Coaster Ride</h2>My initial note on Qihoo was back in June 2015, titled "QIHU MBO - Fair Offer &amp; Attractive spreads" (<a href="https://www.smartkarma.com/insights/qihu-mbo-fair-offer-attractive-spreads" target="_blank">link</a>).That was before the 24 August 2015 crash. Following the crash, spreads on almost all ADRs going private widened substantially.It has indeed been a roller-coaster ride for arbitrageurs that got into Qihoo:<figure class="editor-figure"><figure class="editor-figure"><figure class="editor-figure"><img src="https://static-prod.smartkarma.com/images/media/000/004/369/original/Spread.png?1449040401" class="editor-image img-responsive" data-smartkarma-image-id="4369"></figure></figure>Qihoo traded as low as 42.21 (82.4% gross spread) before slowly climbing back up to the current spread of 10.1% as of 1 December 2015.
Qihoo closed 3% up last night…
</figure>

The Roller-Coaster RideMy initial note on Qihoo was back in June 2015, titled "QIHU MBO - Fair Offer &amp; Attractive spreads" (link).That was before the 24 August 2015 crash. Following the crash, spreads on almost all ADRs going private widened substantially.It has indeed been a roller-coaster ride for arbitrageurs that got into Qihoo:Qihoo traded as low as 42.21 (82.4% gross spread) before slowly climbing back up to the current spread of 10.1% as of 1 December 2015.
Qihoo closed 3% up last night…


Italy

iShares MSCI Italy ETF is an exchange-traded fund incorporated in the USA. The ETF's  objective seeks to provide investment results that correspond to the performanceof the MSCI Italy 25/50 Index.

ishares msci italy index (etf) (EWI US)

The Market Sentimentalist: Political Kill

2016's "Political Kill" season continues, making this year one of the most toxic for incumbent politicians we can ever recall.Monday saw Italian PM...

Amareos

Market Sentimentalist: Political Economy Redux

Following Brexit and Trump the collective sigh of relief that “thank goodness 2016 is nearly over” is palpable. Unfortunately, political...

Amareos

Qihoo, Back from the Dead

The Roller-Coaster RideMy initial note on Qihoo was back in June 2015, titled "QIHU MBO - Fair Offer & Attractive spreads" (link).That was...

Crispin Francis