June 3rd, 2010 |
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Asia, China, Economy, Europe, Financial Knowledge, Investment Advice, Singapore, U.S.A. | Add a comment
May has been a volatile month. Europe’s sovereign debt risks and tensions in Korean Peninsular weighs down heavily on the financial markets while economic data has shown that the recovery is underway.
Europe
Speculation and intense debate on 2 issues, whether Greece will be forced to default and whether Euro will lose some of its weaker member countries has died down a little. However, things are still not certain a month after attacks lead to a trillion dollar bailout package. Euro skeptics say the forced spending cuts and tax increases will scuttle a recovery before it takes hold. The fiscal austerity measures will be a big drag on growth. Spain lost its AAA credit grade at Fitch Ratings, dropping one step to AA+ to a “stable” outlook.
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December 30th, 2009 |
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Asia, Economy, Investment Advice, U.S.A. | Add a comment
2009 end of the year update
2009 has been a year of recovery, first in share markets & then in global economic activity. Patient investors have seen some recovery in their wealth after the losses of 2008.
The perception of risk is still out of balance. While government bonds are expensive and there is still a lot of money in cash, equities and corporate bonds are no longer cheap.
Outlook for 2010
2010 is likely to see the economic recovery continue and become self-sustaining. Interest rates likely to be kept low by the US and the Europe.
A ‘U’-shaped recovery is most likely, which in some ways is the best outcome for investors. A ‘U’-shaped recovery presents investors a chance to enter the market when asset prices remain low. Global GDP growth in 2010 is at 3.6%-3.8% according to consensus.
Share markets are likely to rise further thanks to the combination of improving economic and profit growth, low inflation and still low interest rates at time when there is still plenty of cash on the sideline.
However, with uncertainties about the strength of the recovery and key central banks moving towards rising interest rates in the year ahead, share markets will be more volatile and gains more constrained than has been the case since March. A well-diversified portfolio should help to smooth performance.
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November 5th, 2009 |
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Oct 27 (Reuters) – South Korea’s economy grew at its fastest rate in 7-½ years in the third quarter, joining China and Singapore that have also reported faster growth in Asia in the September quarter.
In the Asia-Pacific region, Japan, Singapore, Hong Kong, Thailand, Taiwan and New Zealand all pulled out of recession in the second quarter, although the recovery is expected to be gradual.
In Europe, Germany, France and Sweden have also announced a return to growth, however Britain’s economy, by contrast, contracted in the third quarter.
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August 14th, 2009 |
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Asia, China, Economy, U.S.A. | Add a comment
Yesterday, the Australian and New Zealand dollars traded near the highest level in 10 months after Reserve Bank of Australia Governor Glenn Stevens said he will have to raise interest rates at some stage as the economy recovers. This is to guard against inflation.
Elsewhere, global fund managers are betting China will let the yuan strengthen for the first time in more than a year to keep inflation at bay following a flood of foreign capital and record lending. New loans in China almost tripled to $1.1 trillion this year, contributing to a 60% surge in property sales. A US$585 billion stimulus plan helped July’s retail sales rise 15.2% from 2008. Reserves swelled to US$2.1 trillion on June 30 after a record quarterly jump as overseas investments led China to sell yuan to hold it down. The Shanghai Composite Index, Asia’s second-best performer this year with a gain of 72%, is in “bubble territory”.
The predicted appreciation in Yuan pale alongside six-month rallies of 18% and 14% for the Indonesian rupiah and the Korean won.
All these bodes well for Asian currencies and fund inflows. Asian stocks rose after the U.S. Federal Reserve said the recession is easing and pledged to keep interest rates low.
U.S. Federal Reserve statement on Wednesday provided 3 points which boosts the market. Firstly, Fed pledged to keep interest rates low, boosting share prices on a short-term basis. Secondly, Fed said the U.S. economy is “leveling out”, meaning it is time now to wait for positive signs. Thirdly, the Fed will stop buying U.S. treasuries directly from the U.S. government by October. This is seen as a huge sense of confidence by the Fed and also made countries holding huge U.S. dollar reserve happy.
Short-term volatility will still be present. This week, Shanghai Composite Index fell, completing the worst week since February, on concern this year’s rally has overvalued the prospects for earnings growth.
As medium to long term investors, you should concentrate on the second and third point stated above. These 2 points points to a positive outlook over 3 years period, especially in Asia.