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Sunday, January 31, 2016

"Experts" on where the Market is heading



2016 didn't start off brightly, especially in the global stock market, with China's slowdown seems to be worse than expected and the oil supply glut has yet to improve. The China's circuit mechanism in trying to control the volatility of the market has failed and make things worse....so, the big question now: just where the market is heading?

It is common for us to have different views on the market outlook but here are the summaries that we collect from some of the "experts" in the industry.

MAYBANK IB

Maybank Investment Bank (IB) expects the current volatility in the stock market to continue, especially in the first quarter of 2016. Maybank IB Regional Chartist & Economics Lee Cheng Hooi was reported by Bernama as saying the factors impacting the stock market would be largely externally induced by headwinds revolving around US monetary policy normalisation, China's structural slowdown and emerging market impact.

Meanwhile, for the first half 2016, he said the key themes to influence the local bourse includes construction, which will be boosted by the execution of the 11 Malaysia Plan (11MP) projects, the state of the ringgit, weather phenomena such as El Nino and Shariah investment.

He said investors should remain defensive in the near term and invest based on selected themes in the face of the current market condition.

The investment bank has picked some of top stocks for this year, naming Gamuda, Sunway Construction, Cahya Mata Sarawak, Harbour Link, Genting and Hong Leong Financial Group, as among them.

-reported by Bernama on January 30, 2016

Affin Hwang Investment Bank Bhd

Affin Hwang Investment Bank Head of Retail Research Datuk Mohd Nazri Khan expects it would be “just a matter of time” for the FTSE Bursa Malaysia (FBM KLCI) to pull below the critical 1,600 points support level. 

The FBM KLCI hit a record high of 1,892 points in August 2014. At current level, the index was down 15% from where it was at its highest peak.

The market is considered to be in bear territory after falling more than 20% from recent peak.

Stocks in India last week joined benchmark equity gauges of Japan, China, Singapore, the UK, Germany, France and Spain in bear territority.

As it is, a slowdown in China, weaker commodity prices and the unpredictable currency movement represent the biggest threat to the Malaysian economy, Nazri said.


-reported by The Star Business News on January 27, 2016


GEORGE SOROS



Soros is someone that Malaysian will be very familiar with as former Prime Minister Tun Mahathir claimed George Soros to be partially responsible for the economic crash in 1997 of East Asian markets, and here's what he got to say.

“China has a major adjustment problem. I would say it amounts to a crisis. When I look at the financial markets there is a serious challenge which reminds of the crisis we had in 2008”
Soros believes that China’s currency devaluation is transferring problems to the rest of the world, and that higher interest rates in the United States will add pressure domestically. If you’re not sure if you should heed Soros’ warning, he averaged approximately 20% year for his hedge fund from 1969-2011.


ALLIANZ CHIEF ECONOMIC ADVISER

Mohamed El-Erian, the chief economic adviser of Allianz believes that markets are in full-scale contagion, and that central banks have run out of ammunition in a slow-growth economic environment.

The era for borrowing growth and profits from our future have reached an end for the US market. On the Fed rate hike, he thinks that two rate hikes should be the maximum expectation and not four.

On his recommendation to investors, he said 20% - 25% to be allocated to cash. He's most cautious about junk bonds, emerging markets and energy. There is very little optimism from him on the current and future economic conditions.

Jim Cramer
Cramer is most concerned about a strong U.S. dollar, oil and earnings. He believes that the U.S. dollar can no longer be used as an excuse for poor performance, and that it has become more of a cost. In regards to oil, he cites too much supply and net enough demand to achieve balance. Furthermore, he feels that housing and auto sales have peaked.
CONCLUSION??

The one thing interesting about the market is that whatever the "experts" say, it's not necessarily true. Any investment should be done based on your own research and analysis. It should be interesting to take note of the opinions of these names though given the track record that is rather convincing. These "bearish" opinions might not be true but it's good to take note and stay cautious in your investment endeavor. 

"Price is what you pay. Value is what you get." - Warren Buffett

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