Tuesday, January 1, 2008

Wither 2007, Welcome 2008

April 2007 saw the massacre in Virginia tech campus by a gunman on the rampage killing 32 people before shooting himself to death. The year ended with the assassination of former Prime minister of Pakistan, Benazir Bhutto. However, in between these two tragic events, the world saw China continuing to grow at 11% with India following with 9% GDP. Most world index ended in a positive note except Japan's Nikkei. Apple brought out its IPhone amidst much fanfare & Nintendo launching its virtual reality game of Wii which was a run-away success.The year also saw a global credit squeeze triggered by the U.S sub prime lending problem. Most Financial institutions in the western world were seriously hit as their mortgage securities became worthless papers triggering billions of dollars in write downs. The panic caused the dollar to plummet & lost its bearings against most world currencies. Crude oil jumped 58% during the year from $61 to $96. It's effect on world inflation would be felt in 2008.

In a nutshell, 2007 has been just another year for the developed countries but a strong performance by the emerging economies.

What do i see of 2008? U.S will be struggling most of the year to keep it's head above water.The Fed will be busy tinkering with the interest rates to stave off a recession. But the dollar would start strengthening from the second half when the economy slowly starts to unfold.My bet would be to buy the Financial stocks in Feb/March when they are likely to be at their lowest . Given a 2 year span, these should give good returns. On the political front, Democrats would win the Presidential race & one might well see a woman president for the first time.

China would showcase its economic power during the Beijing Olympics but may see a slowdown in the second half after the event. India would continue its upward march & sectors like, Power, Metals, Infrastructure,Banks & Capital goods would be the stocks to watch for.

Happy New year to all.