Readings: Country PEG comparison, Hedge podge, Credit Crunch v. 2008
. . . we created a PEG ratio for major countries using the P/E ratio of each country’s major equity index and its estimated GDP growth in 2008. Countries that are the most attractive are ones with low P/E ratios and high GDP growth, giving them a low PEG ratio.
Russia tops the list with a P/E of 11.17 and estimated GDP growth of 6.8%. This gives Russia a country PEG of 1.64. Other countries with strong PEG ratios include Singapore, Malaysia, Hong Kong, India and South Africa.
- Economist: Hedge podge
In 2006, says Hedge Fund Research (HFR), a consultancy, 717 funds ceased to trade—around two every day. Although 2007 was a far more difficult year, the pace of extinction slowed; in the first nine months just 409 funds gave up the ghost.
Returns are likely to be overstated given that poor performers will drop out of the index (so-called survivorship bias) and that only funds that are initially successful will agree to report their numbers.
In his book “The Big Investment Lie”, Michael Edesess argues that “the implication often made from hedge-fund statistics—that hedge funds perform better than other funds or than the market as a whole, with less risk—is completely wrong.”
- Satyajit Das @ Prudent Bear: The Credit Crunch – In 2008 The Worst May Keep Getting Worse
The financial elements of the credit crunch are becoming clearer - higher credit costs; lower availability of debt; forced de-leveraging of hedge funds and conduits/ SIVs; significant capital losses for financial institutions. The real economy effects will be slower to emerge.
Some US$ 150 billion of leveraged loans come due in 2008. Financial engineering techniques – toggles, pay-in-kind securities and covenant-lite (lack of maintenance covenants) structures – will delay the problem but probably cannot forestall the inevitable rise in defaults.
Unlike their equity and emerging market cousins, they are waiting anxiously for “the shoes to fall”, except it seems that the shoes are from Imelda Marcos’ collection.
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February 19th, 2008 at 8:40 am
Although there are many negatives on the Horizon, the fact that Republican Party will try their best and use all available tools to avoid a downturn till the Presidential Election, will make 2008 unlikely to face recession.