And you expect markets to fly?

In Uncategorized on 26/11/2010 at 6:12 am

There’s very slow growth and the fear of deflation  in the US, inflation in China, a financial crisis in the Eurozone, tension in Korea and Christmas hols around the corner, so you think that markets will take a pause at the very least.

But local broker Kim Eng thinks not. It sent out a note on Wednesday morning saying: Feeling hot, hot hot! – There have been concerns that the recent rise in Asian bourses has been fuelled by “hot money” coming out of the US on the back of higher liquidity from the Federal Reserve’s quantitative easing measures. With more money flowing into the system, fund managers are looking to piggyback on Asia’s fundamental growth story and local currency appreciation against the greenback as a hedge against the weaker US dollar and inflation. The obvious investment candidates for this “blind money” are Singapore’s blue chips, which offer sound fundamentals and rock-solid balance sheets. A further subplot within this context is the likelihood of funds moving out of Hong Kong and China to be invested into the Singapore property market after recent moves by the Hong Kong government to cool its property market and the possibility of China doing the same for its own. Transaction statistics also are pointing to a larger proportion of China buyers for Singapore properties. The government said it is continuing to monitor the property market and further measures will be taken where necessary if it deems a bubble is forming. For now, we believe that the recent pullback is an excellent entry opportunity to ride this wave of cash. City Developments, in particular, stands out, as it is often identified as the bellwether of the Singapore property market and is looking attractive following its recent pullback.

It’s other stock picks are Keppel Corp, Neptune Orient Lines, Sembcorp Marine, SingTel and UOB. Well you can’t go very wrong with these which include four TLCS even if market collapses. They all got cash and strong balance sheets. And other than the City Dev and UOB, very little borrowings. And UOB and City Dev are conservatively run by the standards of their peers in banking and property dev respectively.

  1. Hi

    I like reading your article and follow them almost everyday.

    So your today article ‘and you expect market to fly’ is can buy stock now or not? I have missed the whole bull cycle, now waiting to get in? HOw about property, is this the right time to buy for own stay, i sold mine last year (sad lah) in March and now prices sky high, now renting…prices are still high, may go higher?? what do you think

    Thanks for all your rational thoughts.


    • Whatever happens longer term, the flood of money that comes into the market will drive asset prices.

      The issue each of us has to decide is whether we want to take part in the ride. Part of the decision depends on whether we think the uptick will be short or long (remember we know know with hindsight that the bear market rise in equities lasted from 2002 to 2007 or 2008). Taz a long time!

      And if QE II works, then the ride can go on longer.

      Moral of the story

      ‘Tis labor lost thus to all doors to crawl,
      Take thy good fortune, and thy bad withal;
      Know for a surety each must play his game,
      As from heaven’s dice-box fate’s dice chance to fall.

      Grieve not at coming ill, you can’t defeat it,
      And what far-sighted person goes to meet it?
      Cheer up! bear not about a world of grief,
      Your fate is fixed, and grieving will not cheat it.

      Lament not fortune’s want of constancy,
      But up! and seize her favors ere they fee;
      If fortune always cleaved to other men,
      How could a turn of luck have come to thee?

      • ol
        Thanks for your quick response.

        But i remember the property drought last from 2001 to 2006 before they fly and down 2008. Property cycle is getting shorter this days.

        What do you think?

      • Uptrend has ended? Taz news.

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