Last week Czech antivirus software group Avast came to market and had a rough time, in part because its own site was hacked last week, which rather hurts its credibility. Avast says that the attempt to blackmail those who downloaded the popular free version into paying for its services to get rid of blockages installed to “protect” users' computers was not its own doing.

Its IPO in London came out below the bottom price in the offering roadshow and then fell some more. It is a rival of unlisted McAfee and listed Symantec which has c-suite problems that delayed its annual report. I planned to write Avast up for my subscribers but just to be sure downloaded the software and found my laptop being held for ransom. I dropped the Avast stock pick after license 5JQJQN-RNEYSJ-42Y7CT turned out to be a trick to make me pay. I also removed it from the laptop.

In theory, we like exotic stocks like Czech ones, because they have growth levels unreachable in most developed stock markets where hundreds of analysts are looking for performance. You can achieve smashing growth and high returns if you get the right ones.

There are political risks, notably in China and Russia, but also in other countries that have over-borrowed like Argentina, or ones where investor protection is lacking and auditors just rubber stamp what companies want to tell their shareholders. The latest case is that of RenRen which we used to own, plotting to sell its assets to its CEO and Softbank of Japan

We ran into Russki political risks when Oleg the Oligarch (Deripaska) was barred from US companies and we had to sell our MMC Norilsk Nickel in a hurry, losing only a tiny part of our basis. Last week we had a very belated disclosure to the US SEC of the hidden Allende-Pinochet-era owners of another NYSE-listed stock we own. We are not exiting that one because Chile has been operating in global financial markets in the interval since then. And Chile has first world-class autiditors and disclosure most of the time. But it was a close call. Even Big Board foreign listers may fail to protect investors from secret owners whose holdings have not been revealed.

The risk with emerging markets stocks, apart from dictators' sons-in-law, includes families in control of listed companies via special stock classes or offshore entities.

So add that to the potential damage from excess debt, especially in dollars where interest rates are rising. Interest rates at 40% hit Argentina hard but we got out of the exchange-traded country fund in good time. We exited early as I visited Argentina during its last financial crisis after its last IMF bailout.

While Argentina has oil, the spiraling fuel price of the for countries which must import it is another warning indicator. This applies to another market darling, India, which depends on imports of many raw materials. And unlike China, its chief doesn't have good relations with Pres. Trump like China does. I cannot imagine PR Narendra Modi phoning the White House with a request that Trump calls off enforcement of a serious violation of US export regulations and getting his way, as Xi Jinping did for ZTE, the Chinese phone company, which by the way reported yesterday. ZTE faced closure after being barred from buying US components it needs for its cell phones for 7 years over sanction-busting sales to Iran and North Korea which the company says were made “in error.”Mr. Trump whose bark is worse than his bite gave way.

With the re-election of nearly 93-year-old Mahathir Mohammed in Malaysia, despite his believing that Jews control the world, I am tempted to find a Malay stock to buy.

Health

*As it reported yesterday, Mazor Robotics, an Israeli maker of surgical assistance systems. MZOR fell 3% pre-market on Monday despite its healthy results because of investor worries about Israeli bombing of Iranian installations in Syria and the battle with Hamas at the Gaza Strip border. It reported its first ever quarter with a non-GAAP profit to shareholders, of 1 whole penny, vs a loss of 8 cents last year and a consensus forecast (by Capital IQ) of 0.04 cents. It reported a GAAP loss of $1.3 mn but funding from its partner turned this into a net gain of $300,000 vs prior year non-GAAP loss of $3.9 bn.

Revenues also beat, at $15.5 mn up 32% from prior Q1 of $11.7 mn and a consensus forecast of $15.1 mn. Gross margins fell from 64.65 last Q1 to a still impressive 58.3%. Operating expenses fell because of lower sales costs, to $10.5 mn from $13.3 mn.

CEO Ori Hadomi went beyond the numbers to claim that the quarter also saw “clinical adoption” of the back surgery systems which were used in a new record of 33,000 operations in the quarter. Moreover, the new MazorX surgery platform, developed to work with Medtronic's stealth navigator, will come to market before the end of this year. Its other system for ambulatory surgery centers launched in the US also with MDT is now being adopted internationally, according to Mr. Hadomi. While I would have loved to buy more MZOR it has now recovered its mojo and will probably open up on Wall St.

*Patti the Biotech Maven reports that Tencent of Hong Kong (which is up because of a better outlook for US-China relations) is taking a lead in a major funding program for new ways to predict the way drugs work. TCEHY joined the $15 mn second funding round for Xtalpi founded by some MIT physicists four years ago, which now operations in Cambridge Mass, and Shenzhen and Beijing, China. It uses algorithms supported by cloud computing, artificial intelligence, and quantum physics to predict a potential drug's crystal structure rapidly. This can speed up the determination of its safety, stability, and efficacy and make the discovery process faster and cheaper.

Note that Xtal stands for crystal and pi for the Greek letter. This is not Chinese. While drug majors are also investing in this area, the only one we know is working with Xtalpi is Pfizer. Patti thinks that the new business may wind up lucrative for TCEHY but for sure it will help support innovation in the short term. There is no way to buy except through the funders of Xtalpio which also include Google and Sequoia Fund. This is another reason to hold on to high-flying Tencent despite it gaining 3.6% yesterday in Hong Kong trading, reaching HK$420.8. It closed out last week at H$408 and change. More technology below.

*Jefferies has raised its target prices for many pharma firms after the inconclusive Trump statement on cutting drug pricesFriday. Or to quote Credit Suisse, “Potus lacks Punch.” In particular, the call for quicker approvals of biosimilars will help generics makers like Teva and Novartis. As frequently happens with this president, his call for higher prices to be charged in foreign drug markets is a non-starter because he has no way to achieve this.

*Teva was also boosted because rival Perrigo got a dreaded US FDA complete response letter delaying its generic for ProAir albuterol sulfate inhalation aerosol. Credit Suisse analyst Dr. Vivek Divan says there are no other potential generics coming in 2018 so he is adding $20-40 mn per quarter to his estimates for Teva for the rest of this year. Every little bit helps. Teva gained 1% premarket.

*Roche has a blood test which spots Ebola, which I failed to mention last week in my note about the return of the dread disease in former Congo-Brazzaville which will help Ebola jab maker GlaxoSmithKline. Its blood donor system cobas 6800-8800 also spots Zika virus.

Roche sub-Genentech will present at the Glasgow leukemia conference May 20-24 results of its phase III trials of emiluzumab to treat patients with and without factor VIII inhibition in the disease. RHHBY also provided more data on the failure of its trial of Tecentrique with Cotellic in a phase III trial in colorectal cancer. While disappointed in the failure of the combo to work, it also noted that 95% of the patients treated has microsatellite talbe tumors which do not react to checkpoint targeting therapy.

*Columbine Capital slashed its rating of Shire to equal-weight from overweight yesterday. It's Irish.

*It also upgraded Novo Nordisk to strong buy from buy. It's Danish.

Tech Focus

*Hollysystems Automation reported after the close yesterday. HOLI makes installation robots for railways and subway systems, as well as nuclear power plants (the latter only in China).

*Harry Geisel points out that Naspers may have been run by white people who spoke Afrikaans but that it did not take the easy way out when South Africa adopted Black empowerment policies. It didn't pay off politically connected Africans but only gave money and positions to its own employees based on merit. The process also helps NPSNY in finding worthy investments in other countries. It owns 31% of Tencent, discussed above as an early supporter of Pony Ma who would not have been a suitable partner under Apartheid. NPSNY's most recent coup was over the Walmart buy of Flipkart in India, in which it also was an earlier investor. Being ethical at home gives you an edge worldwide.

*Renishaw, after rising all last week fell back Friday by 4.44% on heavy trading. RNSHF however still gained 12.7% in the week.

Industrials

*BAE Systems was assured of funding for a 7^th Astute nuclear submarine by Britain on Monday, by the Ministry of Defence (sic. That's how it is spelled in British) despite the £20 bn shortfall in its budget for the next decade. Already there are 3 of these subs sailing and 3 others being built. The Astute class sub carries the Trident nuclear deterrent for Britain's second strike capability, along with smaller subs as well. The contract is worth £1.5 bn and had been uncertain after the budget gap was revealed. However, Theresa May added as well another £900 mn for smaller Dreadnaught nuclear subs as well. The future 7^th Astute sub, to be called the HMS Agincourt, was also supported by the Labor MP for Barrow, where it will be built, despite Jeremy Corbyn's negativism on nuclear deterrents.

*Israeli Delek Group was upped to outperform from neutral by Columbine Capital on Monday. DGRLY is in the oil business.

*It also dropped Cameco, the Canadian uranium miner to hold from buy. CCJ.

Bankers

*Spanish Banco Santander will launch a digital service for British small and medium companies to get a slice of the £775 mn which Royal Bank of Scotland will have to provide to competitors after it was fined under the state-aid rules of the European Union after it was taken over by the government in 2008. SAN is small enough to get funding, open to banks with assets under £350 bn. In Q1 SAN UK had £310.5 bn in assets. This may nip some of the funding that makes our Virgin Money and its planned acquirer, Yorkshire and Clydesdale Banking Group, so appealing to investors. We own RBS preferreds because they pay out nicely as long as the government doesn't decide to reprivatize the Scottish bank.

*Last week our Virgin Money gained 10.6%. VM here and VRGDF in the US.

*Standard Life-Aberdeen managed closed-end Aberdeen Emerging Markets Equity Income Fund, AEF, was the subject of a cash tender offer at 99% of its net asset value on 32% of the shares outstanding. The SLFPY stable is aiming to create a powerhouse in emerging market stock funds to back up the two venerable bonds funds, Aberdeen Asia Pacific Income Fund (FAX) and Aberdeen Global Income Fund (FCO).

*Allianz SE now yields 4%. AZSEY stock lost traction in German trading last week after it went ex-dividend.

Reports

*I will be returning to the US Wednesday by way of Reykjavik and will, therefore, write up the results of Toray (TRYIY) of Japan andSoquiMich (SQM) of Chile on Thursday.