Posts Tagged market
The Trends And Shape Of The World’s Economic And Financial Markets in 2013…Part 3 –10 biggest events and industry trends
Posted by jeffreyyap in China, Economics, Equity Market, Fixed Income Market, Global, Hong Kong, Money, Strategy, United States, Words of Wisdom, World on January 8, 2013
This is the 3rd and final part of my overview of the trends and shape of this year’s global economy and financial markets. The 10 biggest investment trends that are likely to be feature and standout in 2013 are as follows:
1. China will become more global and powerful than before
2. The world would start to re-focus on emerging markets but frontier markets will be the most talk about
3. In 2012 it all about global government debt and currency but in 2013 country, sector and company picks would be back in vogue
4. Equities will see more inflows than bonds in the 2nd half of 2013
5. Commodities prices will rise, talk of global inflation will be back and so will the speculation of end of quantitative easing
6. Geo-political risk will pick up led by domestic dissatisfaction with income gap and low growth
7. The talk of hard landing in China and fallout of Europe fails to happen
8. Investors and corporates start to gear-up again
9. Technological advancement will be key driver of productivity instead of cost management
10. The new era of tech bubble will start to build as cheap money chase innovations/dreams and hopes
Before i moved into the long waited sectoral views for those that miss the Part 1 and 2 earlier on you can review it with the links below
Given what has been said thus far, we are in a new era of which Mohamed El-Erian says a new normal. In his context he refers to the global economy from financial and political perspective. I look at it more from a microscopic level, what would it mean to our day-to-day life and it is the day-to-day activities of the seven billion people in the world which will shape the world’s economy.
Some of you have probably read this week, many countries in the world faced one of the worst winter in many decades and as i said in part 1 of this analysis extreme weather is something we should all start to get use to. As a result of extreme weathers, urbanisation will speed up even more and as a result create more demand for urban homes. What would be implications? This would leave fewer people farming for crops for example.In a similar deduction, cities with moderate weather such as Hong Kong, Sydney, and Singapore will attract more affluent professionals and businessmen to house their families.
The industrial sectors which will see most technological advancement this year would be robotics, green energy and online commercialisation. There are many successful stories in 2012 on retail automations. This was helped partly by the growth in smart phone usage and mobile technology. I am sure many of us have noticed the use of Iphone in order taking in restaurants, Ipad usage for browsing of products in shops etc. The year of 2013 is the year of robotics with rising cost of labour and shrinking pool of cheap labour. Robotics is the way forward to maintain or increase productivity globally. On green energy, given the extreme weather and governments pressure to contain inflation and pollution with rising population green energy has to be the sector of focus for most large nations. Cost of production came down substantilly in recent years and the commercial viability is slowly becoming reality. Online commercialisation is another key theme this year. In 2013 we will see more people purchasing songs (not CDs) tv series (not DVDs) clothing (not shops), services (not in person). Have you used online personal trainers and dieticians? Is it coming our way big time. Consider this; will you learn to play golf from Tiger Woods and soccer from Lionel Messi online if they were available? Answer would be yes no matter how impersonal it may be. This wall of awkwardness is coming down EVERYWHERE.
Sectors which i like in terms of investment this year are as follows:
1. Retail Sector – Companies with mega brands with huge brand value as Porter’s five forces are less prominent these days. Companies using technology to reach global consumers with rising income in an aging population. Look at most of the countries where there is aging population which sector continue to flourish? Retail!
2. Green energy - solar, wind and water will prove to be winning sectors with potential rising crude oil price and technological advancement and governments backing globally to support this sector in 2013
3. Property - I am not a big fan of developers. Nevertheless, given the whole world is getting more centralized than before – seen the rise in density in global cities lately?? I like companies with good portfolio of investment properties as consumption growth and rising replacement cost would make these companies attractive. Look for those with huge landbank and solid properties in prime location
4. Healthcare – In here i am talking about pharmaceutical industry which produces drugs, vaccines, supplements for this growing aging global population. I am talking about companies that make technological breakthrough in terms of medical machinery Have you seen doctors and nurses in hospitals holding the latest IPhone and Samsung Galaxy but hospitals still running on old medical equipments?
5. Banks – As the number of players shrunk the survivors post Lehman with global franchise will do good in this less borderless world. I am talking about those facilitating cross border financing and investment business not propriety trading here..
6. Services - Education, Social Network, Nursing and Retirement homes are some of the services which will see an increase in importance. Everyone would want their child to go Harvard, MT, Oxford or Cambridge. Everyone would want feel connected through Facebook, Twitter or LinkedIn. Everyone would hope their retirement home is like staying in Fourseasons or Mandarin. If anyone can achieve that kind of stigma or following the world its their oyster.
China PMI rose above 50 – signs of sustained recovery to come?
Posted by jeffreyyap in China, Equity Market, Fixed Income Market, Strategy on November 1, 2012
China PMI rose as expected. This did not come as a surprise as indicators such as retail spending, freight volume, overtime etc has been on the rise recently. What is extremely encouraging was the reading was strong despite the general slowness in October with long holidays and leadership transition in the horizon. I am certain further picked up in economic activities and growth in months and quarters are very likely and the recovery seems broad-based too. Some critics who are unfamiliar with the developments in China might point to the lacklustre lending numbers but if one was to add the growth in debt issuance (which are typically long-term financing) the total pick up in financing activities have actually picked up in pace and in strength. I would suggest readers to position for beaten down sectors (credit and equity included) to have a good rally in the next 3 months. In debt, Chinese Property, Auto Sector, Cement, Retail while in equity, Property, Auto, Retail, Construction, Healthcare, Logistics, Brokerage would be my obvious sectors picks.
Risk Asset Cooled ahead of Hurricane Sandy? Opportunity to buy for 2013!
Posted by jeffreyyap in China, Equity Market, Fixed Income Market, Strategy on October 29, 2012
Running up to the US election and Chinese leadership change and now Hurricane Sandy, risk assets have pulled back last few days. I believe this week would be the best time to add risk assets to your portolio if you have miss the boat earlier. Global inflation have started to pick up and fund flows have move out of money market funds in search of yields and returns as US and China economic data points to further recovery. Right now many global investors has parked cash in low yielding fixed income instruments such as government bonds. Once global economy picks up slighlty and QE being withdrew from the system money will chase for higher return assets and given low valuation in the equity and credit space, we will see a long and sustain run up in the Risk assets in 2013.
World’s first RMB-traded equity security outside Mainland China
Posted by jeffreyyap in Equity Market, Offshore RMB on October 29, 2012
Hong Kong Exchanges and Clearing Limited (HKEx) has welcomed the debut on October 29 of the first RMB-traded equity security on Hong Kong’s Stock Exchange – the world’s first RMB-traded equity security outside Mainland China, and the Exchange’s first dual counter equity security. The RMB-traded shares of Highway Infrastructure Limited are in addition to its previously-existing HKD-traded shares, and all of the shares are under the dual counter model (under the dual counter model, there are RMB and HKD counters of the same class of shares that trade in RMB and HKD respectively, have different stock codes and short names, and are fully transferable).
I believe this is a new beginning and provides investors alternativea new asset class to deploy their offshore RMB to just fixed income and deposits at the moment
