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| Thai protestors fighting against the "corrupt" Shinawatra controlled government (AFP/Nicolas Asfouri) |
The US market started the month of November with a bang, with all the past year troubles on tapering and debt ceiling crisis forgotten for the time being. The technology heavy NASDAQ, reached their pre Dot-Com bubble high in 2003, after a decade of recovery and consolidation. Emerging Markets continued to underperform for the month, with SEA performing the worst among the Emerging Nations. Gold prices fell sharply this month, falling over 6%, after staging a brief rally a few months ago.
The Troubled SEA Markets
During the month of Nov, 3 sectors that performed the worst were Thailand, Indonesia and Gold. The underperformance for Thailand didn't come as a surprise, due to the severity of the street protests, in relation to the Amnesty Bill tabled by Prime Minister Yinluck Shinawatra in an attempt to pardon the crimes pressed on Thaksin Shinawatra, ending his self imposed exile. Judging from the demands of the protestors, nothing will probably come out of this protest. The protestors are demanding that the government dissolve itself and the government with an unelected "People's Council". This demand is like coming from a sore loser, who knows that they cannot win an election from the democracy process, but wants to control the country anyway. The protestors are probably hoping that the military will intervene and put them into power again, just like the 2006 coup. As the end of the day, as long as the democracy process is in place, they will not be able to win enough votes to govern the nation, unless they can win the hearts of the poor and the middle income class. This unrest will die down in a matter of time, as the protestors exhausted their time, money and passion, and the stock market will come roaring back again, just like what had happened for the last few mass protests that Thailand had gone through.
Indonesia on the hand, has a fiscal and debt issue, whereby foreign investors are worried that a repeat of the Asian currency crisis will hit Indonesia as the flow of cheap money in US starts to slow down. The Indonesia stock market and Rupiah has fallen sharply since the middle of the year, recovered a bit during the last 2 months, and continued its fall in November. The Indonesian central bank reacted by offering a higher interest rates to attract investors to keep their money within the country but the measures have not been working well so far. The Singapore and Malaysian markets are affected by the sentiments of the SEA two biggest economies and their stock market performances have been dismal too.
The Renewed Technology Rush
13 years after the crash of the Dot-Com bubble in 2000, the technology bell weather index, NASDAQ, is back to its pre-2000 highs again. The technology sector has changed greatly since than, but still eerily familiar to the days of the dot-com frenzy, materializing in another form. The previous industry leaders have either gone down hill or their market dominance threatened by fresh or reinvented companies. The consumer technology has undergone a big change as Apple and Samsung took the fight to the PC and mobile market, and accelerated the demise of global technology leaders such as Nokia, Motorola, Blackberry, Kodak and Dell. Other industry leaders such as Intel, Microsoft, HP, Toshiba, Canon and Sony, saw their positions being threatened as consumers moved from desktops, televisions and cameras to mobile integrated platforms such as smart phones and tablets. The rise of interactive mobile platforms also lead to the rise of Google, Facebook and Twitter which became the new poster boys of the mobile technology rush. The current technology industry is more stable as compared during the dot-com bubble days when dot-com companies had no clear profit making strategies, and are still being sold and bought for billion of dollars. However, it seems like the trend of unprofitable companies listing for billion of dollars are back again. Twitter, the most recent high profile listing, haven't seen profit yet but is already worth $30 billion, making it worth more than profitable companies such as Times Warner, Yahoo and Kraft. Some analysts argued that Twitter will behave like Yahoo, Amazon and Facebook, which took a long time after their listing before they started to make a profit. As more and more social media companies rush to sell their companies for billions of dollars, history will soon judge whether this mad rush will be a sustainable development, or another tech bubble in the making.
Portfolio Strategy
The portfolio returned 1.03% for the month of November, thanks to our US heavy portfolio but underperformed the MSCI World Index again, as the lackluster emerging market performance dragged down the overall returns. Our positions in Thailand & Turkey also pulled the performance down as political and economic uncertainty in both countries lead to a negative returns for the month. I am observing closely the performance of these 2 countries and is waiting to see if time will calm down the situation and will cut these two positions if the uncertainty still persist into the end of the year.
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