Sorry to have sent the news letter so late! It is suppose to go out on 27 Oct but my strange illness stuck back and I am bedridden for a while. What happened is that I got a strange viral infection 2 months ago. The symptoms are high evening fevers and pain in the joints. It started with the swelling of ankles and fever. The GP I visited initially thought that I had gout, but with the high fever persisting, they sent me to the hospital for a battery of blood test. After 3 rounds of blood test and 12 vials of blood, the specialist concluded that I had viral fever, but they are not very sure which virus it is. Anyway, they could not find any life threatening virus and dismiss me with a bunch of panadols and antibodies and claimed that I will heal with time. I did get well for a week or so during last month, and when I overworked and overstressed, the fever came back again. I was hit with a bout of high fever on the day the I am suppose to send out the news letter. I apologize for any bad or slow services rendered during this period. It seems that I could only work until 4pm everyday so my efficiency will be slower and evening meetings may be shorter.
Market Updates:
- Yen hit 15 years high. Japanese companies registered good profits but warned that future profits will be affected if the trend in yen continues. Companies are seeing how they can reduce cost to outsource their production. Vietnam and Thailand seems to be benefiting from the distress in Yen and many major Japanese companies have already some production in those countries. This will lead to higher unemployment In Japan. In short, stay out of the Japan market.
- Global markets have a good rally as corporate results are positive and there are indicators that the Fed may do more quantitative easing (money printing) in the coming weeks. China market had a long awaited rally but it may lose steam as the government may tighten the market again as growth came out to be too hot again.
- Singapore SGX to proposing a merger with Australia main stock market ASX, leading to much political debate and upheaval in the stock market on both side of the country. This development will not affect our strategy and asset allocation.
- Gold prices hit a new high of $1360 due to the continuing weakness of the USD. Crude Oil is trading at a stable band between $70 - $85 with ample supply being the main deterrent of price appreciation
Early October was a good month and the portfolios were positioned to ride on this wave. The biggest winner this time round is China with an almost vertical climb in the stock market during this time. The steam seems to dropping off as investors are worried that the government may not be done with market cooling measures. I would recommend to lower the allocation of China or China heavy funds to below 30% as the Chinese market has a wall of worry to climb. But when it climb, it will climb fast as what we have seen during the last rally.
A disappointment has been the Australia stock market which I see potential many months back. My assessment for the stock market is the amount of hot money that will flow to Australia when the world markets rally. To my disappointment, the Australian market has underperformed all the other indices. It seems that there is minimal attention to that part of the world given the fact that we see more hot money flowing to SEA than to Australia. With little institutional interest in Australia, we have no choice but to put it at a lower priority and evaluate other more potential markets.
The Turkey Market did very well for October. Honestly speaking, I haven’t done much research into that country which saddles 2 continents. Turkish fund is a new thing in Singapore so I will keep a look out of that exotic country. The next interesting country than I am keeping an eye for is Malaysia. The Malaysian stock market has been the worst performing for the period of 2003-2007, a big part is attributed to the elections when the reigning coalition UMNO was dethrone from their absolute majority. With much infighting and a neglect of attracting FDI to the country, the Malaysian market was all but forgotten. This time round, the Malaysian market is getting more attention from investors and looks poised to deliver good returns. For investor who are interested in Malaysia, do drop me a call or email. I will explain in more details.
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| Malaysia Market recovered to its pre financial crisis high. Breaking this pt will have a huge rally |
My recommendations remains the same this month as I have made some adjustments to lower the exposure to BRIC given that their performance haven’t been fantastic this far. Indonesia continues to surprise and delight investors and I see no incentive to move out of the country yet. Gold is still continuing its bull run, but its return will not be spectacular. The reason why is because gold and gold companies are mainly traded in USD. So whatever gains, gold makes get offset by a fall of USD against SGD. Even though gold made new heights in Oct, the gold fund did not do well as MAS allowed SGD to appreciate greatly against USD to control inflation. Going forward, as long as inflation in Singapore is contained and MAS does not see the need to let SGD appreciate, the gold fund should perform again.
The market will take a breather for a few weeks given that the markets have run fast and hard for the month of Sep and Oct. I am expecting a pulling and consolidation in the coming weeks. In fact, the market is consolidating as I am writing this email. To give an indication of when to enter the market, take note of STI 3100. When it hits that mark, you can scope up some good investments. The momentum for a Christmas rally to Chinese New year rally is still strong, so just sit back, throw some money in and enjoy the ride.
Attached Below is the performance of the funds till date on 27th of Oct 2010.
Have a good ride!
Cheers Xeo
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