The Association of Gaming Equipment Manufacturers (AGEM), in its October 2011 Index report, states that volatility continues to drive the broader equities market. Although the United States markets ended the month of October with significant gains, the journey was a roller coaster. Of the 21 trading days, the Dow Jones Industrial Average posted only six with a gain or loss of less than 100 points. The remaining 15 days witnessed larger swings in activity, recording a one-day increase as high as 336.48 points and a one-day loss as low as -274.21 points.
The overall improvement in equities likely pushed many of the AGEM Index members upwards as well, erasing the substantial loss from the prior month. The AGEM Index increased by 18.00 points during the month of October, up 17% from the prior month, to end with a composite score of 123.79. Based on points, the latest period represents the largest single-month gain since the index began in 2005 and on a level not seen since June 2008, or six months into the Great Recession.
Positive moves from foreign exchanges against the dollar assisted in the index's expansion. Additionally, the index of global gaming suppliers is also down to 16 members, as GameTech International is no longer trading on the NASDAQ. Broader economic and financial conditions are expected to continue to play a role in overall market volatility, including debt issues in the Eurozone. The Euro's stability notwithstanding, the regulatory
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environment, consumer confidence, and ultimately end-user spending will press the market forward.
International Game Technology (IGT) contributed 6.19 points to the index from a 21.06% gain in its stock valuation. Lottomatica (LTO) posted a 17.67% increase in its stock price, contributing 4.22 points to the overall index. On the down side, Konami (KNM) reported a month-to-month decline of 1.96% in its stock price, removing 0.50 points from the index, although the stock remains nearly double where it stood one year ago.
Assuming initial third quarter earnings reports foreshadow an overall positive trend for global gaming manufacturers, the future may give way to additional demand for sector stocks and improving confidence. While the AGEM Index is closer to reaching its prerecession peak, it will be some time before global gaming suppliers report commensurate earnings levels achieved prior to the economic downturn. (E-11.15.11)
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