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Commentary

ABXes Hitting New Lows

The Markit ABX indices, which are based on asset backed securities, are trading at new lows.

ABXes Hitting New Lows

This is the graph for the ABX based on loans (rated AAA!) made in the second half of 2007. This sorta means people are willing to pay 65 cents to the dollar for such loans. So much for AAA.

Note that without too much drama the indices of nearly all the tranches are at new lows. If this stays so, there are more writedowns coming.

India is going to see a lot of funds flowing out. Means dollar will rise. See it’s already above Rs. 40. What can you do? Maybe buy the small IT companies that haven’t hedged. Who? Patni? Mindtree? Someone at low valuations with hedge numbers low enough to warrant interest. Ideas?

  • Anonymous says:

    >Deepak i wonder if there are any IT companies at all that haven’t hedged. In the case of mindtree last i heard they were hedged to the tune of 69 million dollars and had a 17 million worth loan that also acted as some sort of hedge. Have really not paid attention to the IT space, but i suspect it may see some action – in fact it already is. One because of the rising dollar and two because of the possibilty of extending tax sops in this budget. Would be nice if you could do a piece on the best IT company to buy at the present moment. Actually would be great if you could give us an analysis of a couple of companies that you see as value buys now. I do miss you company analysis 🙂

    Rgds

    Mark

  • Anonymous says:

    >What I heard from a friend who attended the recent NASSCOM event, Govt might extend the tax benefits. But only for investments in tier 2/tier 3 cities. Atleast that is the expectation.

    Though the dollar might raise, the new business might sag for the initial part of the US slowdown. As the priority will be to cut the cost of new features etc. which are not mandatory (not the keep the business running kind of service). My hope is outsourcing might pickup later, as companies want to invest in IT, but want to keep the cost low. I think that happened after the Y2K bubble burst. But the concern is the salary for given productivity. They might find cheaper location near to their timezone which could be more productive or cheaper locations.

    “History may not repeat itself, but it does rhyme a lot” (Mark Twain, 1910).

    -Nagarajan