US housing market pounds global stock

To go back to the beginning: this last month's problems all started with the infamous sub-prime lending market in the US.

So, logically one would expect the world's banks to be suffering as one imagines them holding on to loans of dubious quality, unable to sell them into a jittery credit market.

Certainly, Citigroup investors saw a net fall in their shares of 10.3% in July.

But HSBC, which really blew the whistle on the problems in the US housing market earlier in the year, saw its shares bounce back from the sharp falls last week and end up unchanged on the month.

Much of that was thanks to a 25% rise in first half profits and sanguine words from Chairman Stephen Green who told investors that the US housing market was "a long way from recession".

Mobile markets

Even Citigroup analysts are keen to point out that its last set of profits beat nearly all the forecasts.

Biggest winners in July

• China Mobile, up 7.09%
• Hutchison Whampoa, up 6.82%
• BHP Billiton Ltd, up 5.32%
• CNOOC, up 4.42%
• Nokia, up 1.80%

But only seven stocks in the Global 30 managed to escape last month relatively unscathed.

China Mobile and Hutchison Whampoa had sharp gains at the start of the month, and, even after they had been trimmed back by the general sell-off, both saw net gains of around 7% through July.

China Mobile is doing well simply by adding eye-watering numbers of subscribers - a record number in June, taking its total to 332 million.

China now has half a billion mobile phone users, double the number in the US.

As for Hutchison, the market is becoming more optimistic that it can make its massive investment in third generation mobiles pay off.

The latest suggestion came from Macquarie Securities' Gary Pinge who suggested that Hutchison's 3 UK and 3 Italia may now be prepared to share networks in Italy and the UK, dramatically cutting costs.

If it can cut a deal with its rivals, Pinge believes it may do a lot better than just break even this year.

Cool commodities

With oil prices heading towards new record highs, most of the oil companies held their own, with Exxon up 0.2% and CNOOC up 4.4%.

Biggest losers in July

• Tokyo Elec Power,18.02%
• Siemens, down 12.14%
• Canon, down 11.19%
• Vodafone Group, down 10.61%
• Citigroup, down 10.35%

But BP (down 4.2%) offered the most food for thought.

With first half underlying profits down 12%, the new chief executive, Tony Hayward, met investors and appeared to be keen to emphasise that he was a force for change from the days of his predecessor Lord Brown.

"We can be more efficient, leaner and fitter by ensuring we have a common and consistent way of doing things, by reducing our overheads and doing a better job at managing our third-party spend," he said.

If the falls in the stock markets reflect a sudden paralysis in the credit markets, and a slowing of global growth, one of the chief victims is expected to be commodities.

The miners have grown rich from the commodity boom in China and the 10.2% fall in Anglo American's shares last month reflect the worry that a credit crunch adds up to a Chinese slow-down.

New records

But not everyone is pessimistic.

Far from it.

Evy Hambro, who manages Blackrock's World Mining Fund and is considered to be Europe's top-ranked natural resources investor, believes that Brazil, Russia, India and China alone will use more aluminium, copper and oil by 2015 than the entire world consumed last year.

BHP Billiton itself has stated that the amount of copper that will be used in the next 23 years will exceed total global consumption since 1900.

And in contrast to Anglo's shares, BHP's stock gained 5.3% in July as is output of copper, iron ore and nickel, as well as natural gas and alumina, manganese and coking coal all hit new records.

Global suffering

The biggest fallers on the Global 30 are from all regions.

Tokyo Electric Power (down 18%) has its own problems away from credit crunches and the like.

The earthquake that hit its Kashiwazaki Kariwa nuclear plant means it will be out of action for eight months, and it has said profits will be some 79% below forecasts.

The German industrial group Siemens agreed to pay $7bn (£3.5bn) for the medical equipment maker Dade Behring - some 38% above its market price.

Investors fretted that this was far too much and, helped by the general market nervousness, the shares had a net fall of 12.1% over the month.

The electronics group Canon fell some 11.2%, and Toyota was down 5.5%, both of them victims of a strengthening yen which gained some 4% against the dollar last month.

Coupled with a consumer downturn in the US a strong yen could make life very tough for Japan's exporters.