Risk Assessment:Gauging the Potential Overseas Pitfalls

Japanese companies are strong,said Geoff Lewis,senior strategist at Manulife Asset Management.We are seeing stocks that we like in Japan.We can still see reason to invest in the Japanese market.They have managed to stabilise.*
The cyclical indicator is showing improvement in the emerging markets,including Brazil.*
The polls on the UK Brexit issue are very,very close.I think for the UK the question is,will the City of London financial centre suffer,lose its allure if the UK leaves the European Union?I think the City will continue to function even if there is a Brexit,Mr.Lewis reassured.*
Manulife is a Canadian full line financial services company.Besides Canada and the world's biggest economies of China,Japan and the US,where it owns the John Hancock brand,it operates in promising Asian economies such as Hong Kong,Taiwan and Singapore.*
iShares Japan ETF (EWJ),iShares Emerging Markets ETF (EEM),Manulife Financial Corp(MFC)

Monday Newsline:Good Data Encourages Asia;Matsuyama Wins

Several Asian markets were closed Monday for the Dragon Boat Festival,including China,Hong Kong and Taiwan.Of those that did open,the Nikkei rose strongly,up 2.07% on good reports.Japanese capex rose 7.4% in Q1,and the Nikkei saw its first monthly gain in five months in May.*
The China PMI indicated that factory activity increased by the most in five months,although home prices were down slightly on the month.Asian markets were also impressed by the record high achieved by the S&P 500 Index last week.The ASX 200 rose 0.47% and the KOSPI was up 0.35%.Indian stocks also gained,rising 1.0%.
Gross operating profits rose 3.0% on the quarter in Australia,helping the stock market there.
Overall,a positive economic climate is encouraging equity investors worldwide.*
In sport,the young Japanese golfer Hideki Matsuyama,22,sent cheer to his nation as he defeated American Kevin Na in a playoff at The Memorial Tournament in Dublin,Ohio.It was his first victory on US soil,and the first ever win by a Japanese golfer at the prestigious PGA event.
Australian Will Power won the first of two Indycar races comprising the Chevrolet Belle Isle Detroit Grand Prix on Saturday,and came in second in the Sunday race,maintaining his lead in the overall Indycar Series standings.Helio Castroneves of Brazil won Sunday's race.Both drivers are members of Team Penske.

Singapore Group Buys Rio Airport;Webber Closes Out F1 Career

Changi Airport Group Singapore Pte Ltd and Odebrecht SA have bid 8.3 billion reals for Rio's Galeao Airport.The airport will host the 2014 World Cup and 2016 Summer Olympics.About 600,000 visitors are expected for the World Cup alone,and auctioning the airport was a part of President Dilma Rouseff's plan for infrastructure improvement for Rio de Janeiro prior to the huge upcoming events.
If they can follow this up with three successful highway auctions,it could be really helpful in turning the boat of sentiment away from negative to more positive,said analyst Jefferson Finch of the Eurasia Group.
The Brazilian state management company Infraero will retain a 49% satke in the airport.The Latin American aviation market presents many growth opportunities,said the Singaporean acquirer Changi.We must focus immediatley on the expansion of the Galeao Airport.*
Australian Prime Minister Tony Abbott's Liberal/National Party coalition has fallen out of favour already,a new poll suggests.Only 11 weeks old,the coalition trails the Labour opposition 48%-52%.People are critical of the government's immigration and environmental policies,as well as Australian intelligence's alleged phone tapping of Indonesian leaders.*
In motor sport,Germany's Sebastian Vettel won the Brazilian Grand Prix at Sao Paolo Sunday,with his Red Bull Racing teammate Australian Mark Webber finishing his career with a second place showing,and Spaniard Fernando Alonso taking third for Ferrari.Webber,37,has retired from Formula One after compiling a record of 9 wins out of 215 races.Vettel,26,won his fourth straight World Driving Championship,while Alonso was second,and Webber third in the overall standings.
It was a very good finish,Webber said,a good fight with those I've fought with the last few years.It's been a great journey,one that I'm proud of.On to Porsche-I'm looking forward to it.*
Webber will race Le Mans sports cars for Porsche next season.He has already been fitted for his new seat and been released from his contract with Red Bull Racing.

Hasbro Gets Consumer Wants

At toymaker Hasbro,immersion is the central feature of today's marketplace.Immersive motion pictures and television immerse people in brands,says CEO Brian Goldner.Hasbro employs enhanced licensing for its toys and video games.It can go all around the world.
The world is rectangulars;it's all about screens.People want to experience a brand immersively,and the consumer is willing to pay for that experience.
We develop scripts,but don't invest in our films.A film based on the Battleship game is upcoming.
Our business internationally is accelerating,especially in the emerging markets.We're moving toward being a 50-50 developed/emerging markets business from a 60-40 business.We're in China and Brazil,but Russia is our fastest growing market year over year,Mr.Goldner indicated.
Founded as a school supply manufacturer in 1923,Hasbro today is a branded play company providing children and families worldwide with a broad range of immersive entertainment.Its brands include Transformers,Playskool,Monopoly,Nerf,Littlest Pet Shop and G.I. Joe.
Hasbro has also entered into a multi-platform joint venture with Discovery Communications,The Hub.It is basically a cable channel featuring Hasbro brands and old TV series,along with an interactive website from which you may purchase and gift Hasbro products.
Hasbro(HAS),Discovery Communications(DISCA)

Commercial Real Estate Today

Commercial real estate magnate Sam Zell observes that there's a lot of activity going on.Eventually all that space will get filled.In apartments,they're getting very successful numbers,very rapidly getting back to the figures of 2007.There's a lot of demand for office space,but at 20-30% less than peak rates.It has to fill first.A lot of tenants want to lower square footage per employee.There's opportunity there to get much more efficient.Each segment of the commercial real estate market has to be viewed separately.
Equity International,part of Equity Group Investments,Mr.Zell's holding company,is investing in Brazil.Brazil is self-sufficient,growing,and has solved inflation.It's likely to be one of the fastest growing countries in the world over the next 5-10 years.The country as a whole has about 8% debt compared to 70% in the U.S.EGI's investment philosophy in the emerging markets is about that whole aspirational population and how they're gonna get serviced.
China's a more difficult environment to work in than Brazil.There can be very strict government control there,conforming to a goal they're trying to achieve.
In the U.S.,we're still soft on the demand side.There's a lot of obsolescent real estate,such as anchorless centers-most of them are dying-or office centers in ex-urbia.The issue in the U.S. today continues to be confidence and the unpredictability of the administration.The health care bill is a huge economic time bomb for this country,and it's gonna have to be modified,in Sam Zell's opinion.
Mr.Zell is Chairman of Equity Group Investments,the multi-billion dollar,diversified holding company which he co-founded in 1968.It is based in Chicago.

Hyundai Heavy's China Plans

Hyundai Heavy Industries is building a plant in China for heavy duty bulldozers.The factory will initially produce 8,000 of the three and five ton machines a year,ramping up to 10,000 within five years.They are also planning to produce heavy equipment in Brazil,Africa and the Middle East,inspired by their success in China.They entered the Chinese market in 1995,and their Chinese operations account for 50% of their global sales.
Besides manufacturing construction equipment,Hyundai Heavy has a shipbuilding division that is number one globally,with 15% of the world market.The company also produces electrical systems,industrial plants and offshore structures.Hyundai Heavy is a component of South Korea's KOSPI composite stock price index.In the U.S.,the company trades on the OTC pink sheets.

Starwood Likes TALF Prospects

Barry Sternlicht,Chairman and CEO of Starwood Capital,says he thinks everyone's pretty optimistic about Commercial Mortgage-Backed Securities,or CMBS,in the TALF program.I think we're closer to the bottom of the residential side,Mr.Sternlicht observed,so now we can focus on the commercial side.The commercial real estate market is gonna lag the economy.Companies are gonna have to be confident before they get back in.This recovery is gonna be longer,deeper and broader than the Resolution Trust Corporation cycle of the 1980s.There still isn't any debt,Mr.Sternlicht noted,though TALF will encourage some lending.
When we buy land,we're doing it unleveraged,Mr.Sternlicht revealed.We're buying debt in property.There's one in Las Vegas we're looking at,and something in Brazil right now.You've got to be patient.The bid-ask spreads are huge,Mr.Sternlicht feels.

Federal Reserve United

By a rare unanimous vote,the Federal Reserve has cut its key interest rate by o.5, to 1.0%.It can cut the rate all the way to zero if it chooses to.In its statement,the central bank noted that industrial output has weakened,but inflation is expected to moderate to levels of price stability.While recent actions have helped,downside risks to growth remain.Slow foreign economies will hurt U.S. export prospects.Recently,the Fed has expanded its balance sheet-unlike in the Great Depression,when the Fed contracted it.Today,the Fed has over 700 billion dollars in its account.And it has extended swap lines to 14 countries.A swap line provides U.S. dollars in exchange for foreign currencies,in order to increase confidence.Swap lines of 30 billion dollars each have been granted to Brazil,Mexico,South Korea and Singapore.

Petrobras Explores

Petrobras,the state oil company of Brazil,has 5-8 billion barrels of estimated reserves.It has several exploratory wells in the Jupiter,Tupi and other fields.Many fields are in the final phase of appraisal.They are finding very good results,working with the four largest drillers,with whom Petrobras has years of experience.Petrobras is now producing 2.3 million bbl a day,but will increase that to 4.5 million over the next five years.They have made a very large investment in refining,and have enough resources to finance the projects,with a strong cash flow and a very high exploratory success rate,CEO Gabrielli asserted.

Stanford's Investing Perspective

Sir Allen Stanford,CEO of privately held Stanford Financial Group,which manages 50 billion dollars U.S.,thinks Brazil is an incredible place.It is self-reliant in energy.There is a housing boom.Its bank stocks look good.Brazil will be an incredible place well into the future.As for the U.S.,he says it is a 10-12 year proposition for an investor.In the U.S.,the dollar is low and there's a credit crisis,while a billion dollars a day is being spent on the Iraq war.It's pretty spooky,he said.The Stanford Financial Group stayed out of subprime securities because they couldn't understand what the risks really were.You really wonder what was going on in people's minds,the forthright executive observed.Mr.Stanford likes Russia,India and China-in that order.Russia is flush with money,he noted.

Exxon Expands Search

Exxon Mobil(XOM) has ramped up its quest for new hydrocarbon fields.In 2007,Exxon replaced 76% of its production-the least in 14 years.A map of the Irving,Texas firm's drilling plans to meet this challenge is literally a map of the world.From Alaska to Indonesia,Exxon will be returning to its wildcat roots,drilling wells in areas not known for their oil and gas reserves,such as inland Germany,Ireland,Greenland,New Zealand and Madagascar.Using advanced technology that allows drilling from huge floating rigs up to two miles into the ocean floor,Exxon will explore off the coasts of Qatar,Angola,Nigeria and Libiya.By 2012,it expects 50% of its production to come from West Africa,Central Asia,Russia and the Middle East-up from today's 36%.Other exploration sites include Colombia and Brazil.The Brazil project is near Brazil's recent large discovery in the Tupi field.The largest Western oil company,Exxon will increase its capital spending by 25% to 125 billion U.S. over the next five years.

Precious Metals Prospects

Kinross Gold Corporation(KGC)is on course to increase its production of gold and silver.The Canadian mining firm has exploration,construction and production projects from Brazil to Russia.The Brazilian Paracatu project will increase gold production from 174,254 ounces in 2006 to 557,000 ounces in 2008.The Buckhorn project in Washington state will yield 160,000 ounces of gold annualy beginning in 2008.In the Russian Far East,the Kupol project will yield 418,000 ounces of gold per year beginning in 2008.It also contains more than 40 million ounces of silver.Kinross acquired Bema Gold in early 2007.It is headed by CEO Tye W. Burt in Toronto.As of this morning,the price of gold was up,as were shares of KGC.