2013: Stock markets at highs but can they do it again next year?

I m maintaining my view that global mkts are in the mid term a 10 year cycle (3 sharp bears and 7 grinding bulls) that started during the depth of gfc in 2008.

On a macro basis, only US stand ready to tighten. Even so it is tapering, ie winding back in terms of $ pumping and remains edgy in terms of premature tightening.

Europe and Japan remain on the printing phases each adopting their unique methods to pump prime their economies.

Even China is selectively targeting weakness in the economy to prevent further deceleration in its economy.

Locally, STI is benefiting from its own unique QE. So far the delisting of Olam and CMA are examples of liquidity injection into the stock market that is counter balancing the broad based reduction of $ velocity from the cooling residential property markets.

So far stock market participation remains confined to selected participants - I think value buddies have benefited greatly via their disciplined stock picks while the rest of retail are still licking their wounds and wondering where is the easy $.

Take heart as value buddies fruits will eventually spill over to the rest of the markets. However, markets are no longer cheap and hence in the final stages of the crazy bull, irrational valuation yardstick will start to appear and that will take bigger courage and possibly rambos to take on that wild bull. Like in all previous wild phases of the penultimate bull, valuations will require imaginations and easy money alongside with retail participation will resurfaces. Perhaps, remiser phones may start ringing but on a reduced scale compared with previous runs due to the popularity of online trading.

Just be wary when the clock start to run down to 2016/17.

GG

brattzz Wrote:1Q2014 - STI - 3244!! Holding STRONG! trading sideways still!!

Money is back in Asia.

Mainly Jardines pushing and pulling the index.
Seems like most property counters are enjoying attention from the acquisitions.

It looks like the index can go higher still.
There are some lagging indexes.

2Q2014 - STI - 3262! Still Holding Strong and trading sideways!

What's the next trigger?!!

SINO/VIET/PHILI spat? :O

(15-04-2014, 07:28 PM)greengiraffe Wrote: Just be wary when the clock start to run down to 2016/17.

My feeling is the same as GG.
There are too many bad news in the headline, ranging from Sino/Viet/Phi/Jpn conflict and Russia/US/Ukraine, MERS, etc.
Similarly, lot's of noise in the stock market, fund withdraw, fund pouring in.
Equally noisy in property market, China, SGP, Australia/Sydney, NZ etc

This is what I think:
1. no volume aka retail investor had not come in yet
2. blue chip up and small cap down aka long way to go
3. big company privatize GEM, and buy-back company share aka undervalue/dont know how to spend their money

Questions:
1. Is our stock market going to crash?
2. Is our economy turning bad?
3. Are we seeing a lot of people losing job?

May be, but like what WB says, he can not predict what will happen to the economy and in fact, as contradictory to many people belief, both Charlie and himself seldom pay attentions to economy.

Love Compassion
P.S. I'm heavily vested and no intention to sell.

Equities best bet as rates rise: Banker

Private wealth manager suggests shares comprise bulk of investors' portfolios
Published on May 18, 2014 1:16 AM


Focus on shares: "It won't be an easy road to get the returns you want, but equities are the focus - other plays are for diversification or for risk management." - MR BHASKAR LAXMINARAYAN, Asia chief investment officer at Pictet Wealth Management

By Tee Zhuo

Shares should be firmly in the sights of investors as the era of low interest rates draws to a close, according to Pictet Wealth Management.

The subsidiary of Swiss private bank Pictet told a briefing in Singapore that it has advised clients to weight their portfolios towards equities this year.

It suggests that shares comprise about 54 per cent of investments, up significantly from 35 per cent in 2011, with bonds accounting for 30 per cent this year, compared with 33 per cent allocated three years ago.

Alternative assets occupy the bulk of the remainder of 14 per cent, with cash - at 2 per cent - the lowest amount suggested in five years.

Mr Bhaskar Laxminarayan, Asia chief investment officer at Pictet Wealth Management, said the composition anticipates the end of quantitative easing, or the low interest rate policy in the United States.

"There is a revival in US growth, but that naturally means there has to be an exit to the zero interest rate policy... we need to start thinking about how to position our portfolio to take advantage of this," he said on May 8.

US Federal Reserve chief Janet Yellen said last Wednesday that "there is no specific timeline" for raising rates from the current zero to 0.25 per cent range.

In general, the interest rate typically shares an inverse relationship with the value of bonds as an investment. Bonds become less popular when interest rates go up as better pickings in other asset classes emerge.

While Mr Laxminarayan noted that there is "some merit" in having bonds, there is still "real risk" in the short term due to the eventual rise in US interest rates, which he predicted could go up to 3 per cent or so over the next few quarters.

"The only reason to have bonds in the portfolio is for two things: for diversification and protection," he added.

Pictet Wealth Management believes the global economic recovery is largely US-led, despite the slow growth there in first-quarter gross domestic product at 0.1 per cent, far below economists' expectations of 1.1 per cent.

"The US GDP numbers were lower than expected, but this is not surprising given the severe winter conditions. If you consider the government closure for two weeks of the last quarter of 2013, the sustained recovery in the US economy is very creditable," said Mr Laxminarayan.

To take advantage of this, Pictet recommends stocks that are "high quality cyclicals" in developed markets, such as the US, as opposed to emerging markets. Cyclical equities are stocks that follow the economy's ups and downs closely.

The bank also stuck to its earlier call for investors to get out of gold. In 2011, the yellow metal made up 7 per cent of the suggested portfolio, but this year's recommendation saw no trace of it.

Mr Laxminarayan said "there is no logic" in owning gold at this time as part of a portfolio.

"Gold is a hedge in high inflation conditions, but not in normal inflation conditions where other assets are working and have greater earnings potential," he added.

Consultancy Metals Focus reported last Wednesday that gold prices could sink to a four-year low at US$1,100 an ounce this year amid the recovering US economy.

Mr Anuj Khanna, South Asia chief executive officer at Pictet Wealth Management, also pointed out the allocation given to alternative assets, which has remained largely unchanged at 14 per cent, from 15 per cent in 2011.

"This is an asset class that is giving better and better returns as time goes by and more investors are coming back to it."

He noted that real estate like commercial buildings as a private equity investment is getting popular.

But Mr Laxminarayan emphasised that "we are in an equity world".

"It won't be an easy road to get the returns you want, but equities are the focus - other plays are for diversification or for risk management."

teezhuo@sph.com.sg

"Now you have a scenario where every politician has a get out of jail free card. You don't have to make anyone withstand any financial hardship because you have -central banks printing money to get demand stimulation," he said. "That is creating this monumental asset bubble. The bizarre thing about it is that it is nowhere near the end. While you don't have inflation and so much excess liquidity in the system, there is no limit to how high markets can go.

Australia's most optimistic bear
Michael Smith
843 words
19 May 2014
The Australian Financial Review
AFNR
English
Copyright 2014. Fairfax Media Management Pty Limited.
Ashok Jacob, one of Australia's top investment advisers, is caught in a conundrum.
Describing himself as a "fully invested bear", he believes global financial markets are caught in a huge asset bubble. But he acknowledges professional investors such as he can't afford to sit on the sidelines while prices soar.
"It is one of the oddest periods in financial history," he told The ¬Australian Financial Review in an interview. "You have to be invested but you have to be bearish with a longer-term approach."
The director of Ellerston Capital is concerned the global economy is heading for "back-breaking hardship" if inflation rises sharply. It could also trigger a sharp upturn in interest rates, which would likely hit the price of shares, bonds and property. He thinks the price falls could be 20 to 30 per cent.
But he added there was no sign of that happening in the near term and is confident about the broader market.
Australia is also relatively insulated from global instability and would be seen as a haven as long as China's economy remains stable, he said.
Ellerston, which focuses on shares, was established as a subsidiary of the Packer family's holding company in 2004. Today it invests $3 billion on behalf of clients around the world.
"You may get a little bit of a recession and I can't see how you can get much earnings growth, but Australia doesn't have the big bogeyman or the big bear around the next corner that Western countries do. It is not as exposed to this run-up in equities around the world," he said.Printing money has led to 'bizarre' scenario
Mr Jacob is a long-time adviser to the Packer family, sits on the Pratt family advisory board and last week agreed to sell part of Ellerston's stake in takeover target Goodman Fielder.
He said the current conditions have their roots in the abandonment of the gold standard in the 1960s, which allowed countries to print their own money. The world's top five Western central banks have multiplied their monetary base by nine times since the financial crisis in 2007-08. There is little incentive for politicians to take liquidity out and trigger a recession as their goal is to ¬survive the next election, he said.
"Now you have a scenario where every politician has a get out of jail free card. You don't have to make anyone withstand any financial hardship because you have -central banks printing money to get demand stimulation," he said. "That is creating this monumental asset bubble. The bizarre thing about it is that it is nowhere near the end. While you don't have inflation and so much excess liquidity in the system, there is no limit to how high markets can go.
"Every respected economic commentator says there is too much debt and no one is taking the pain. But the reality is that while you have excess liquidity and there is no ¬inflation, asset prices have to keep going up.
"Is there a point where it comes crashing down? That point can only be the arrival of inflation and you can't see that anywhere."
Mr Jacob's comments highlight the catch-22 for many investors seeking to capitalise on the growth in prices without being caught in a crash if inflation rises. The impact on global markets as the US Federal Reserve looks at winding back its quantitative easing program is driving uncertainty.
But the groundwork is now being laid by central bankers for quantitative easing in Europe, while Japan is ¬taking similar measures to prop up its economy despite criticism from the United States.Abbott 'doing the right thing'
Mr Jacob said governments should prepare for a downturn by repairing their balance sheets, noting the Abbott government was moving in the right direction by seeking to return the budget to surplus.
"There is no question he is doing the right thing. When the time comes and interest rates go up, the hardship caused by it will be diabolical," Mr Jacob said.
"The way you deal with it is by getting your debt down before the hardship comes and the hardship will be reduced. What he is doing is very atypical for a politician. You can argue about his motives and say all kinds of things but he is undergoing balance sheet repair."
Mr Jacob is well known for his former role as a long-time adviser to James and Kerry Packer. He still sits on the board of Packer's Crown Resorts and works closely with the Pratt family, who own private paper and packaging interests. The Packer-controlled Consolidated Press Holdings (CPH) sold down its 100 per cent stake in Ellerston in 2011 and retains a passive shareholding. It was in the news twice last week after raising its stake in GrainCorp and agreeing to sell part of its stake in Goodman Fielder to woo Wilmar International.Hard assets key

Fairfax Media Management Pty Limited

Document AFNR000020140518ea5j0001p

GG,
exactly my sentiment too.
also, retailer had not come in yet, who are they going to sell to?

plus, the facts that there are so many bad news in the market everyday (and we know who is the one who read and follow headline news. definitely not value buddies, right?

most importantly, everybody is having high spirit waiting for bigger pay increment this year.



Live with Passion, Lead with Compassion

End July 2014 - STI @ 3350!

Still trading sideways!!

I chose to post the article here...

Asia stocks reach three-year peak, China on the rise

SYDNEY - Asian shares touched fresh three-year highs on Tuesday as investors in the region drew encouragement from a rally in Chinese markets, though caution was warranted given the torrent of U.S. economic news still to come this week.

Hong Kong's key stock index rose 0.5 percent to its loftiest level in over 3-1/2 years on optimism that the economy has turned a corner and as investors wagered on more growth-friendly policies from Beijing.

The charge had been led by Chinese banks after a Reuters report said the country's fifth-biggest bank by assets planned to seek more private investors.

The CSI300 of the leading Shanghai and Shenzhen A-shares added 0.5 percent, bringing its gains to almost 8 percent in seven sessions.

"The recent rally of Hong Kong and China stock markets is pretty much liquidity-driven due to favourable fund flow. And fund flow is maybe because the two markets remain relatively lagging behind in terms of the valuation and performance," said Ben Kwong, director at KGI Asia in Hong Kong.

MSCI's broadest index of Asia-Pacific shares outside Japan added 0.33 percent to be just a whisker from a peak last touched in April 2011. Likewise, South Korea's index gained 0.7 percent to its highest since mid-2011.

Japan's Nikkei rose 0.4 percent to a six-month high as investors focused on the positive in mixed economic news.
...
http://www.todayonline.com/business/asia...lar-buoyed

Funds will eventually flow back to Asian markets after US markets reach lofty levels.
With money coming out of bond investment (in a rising interest rate environment), more funds are likely to go into equity in general.