Rainer's Investment Insights

Chinese stocks, both 'A' and 'H' shares, have seen meaningful corrections over the last few months. While 'A' shares responded promptly to government measures that were introduced of late by turning down accordingly, 'H' shares had other factors influencing its pricing, - mainly foreign investment flows. The question now is, when will we see a positive turn-up that can be sustained for some months?  Investing today and having to disinvest a few weeks later is a cumbersome and unreliable way to make money.  When will the turning point come? What are the accompanying signals? What are the downside risks? And - if China is really such a phenomenal driver of the global economy, why are we not making more money? 'A' - Shares   China 'A' Shares since June 2010  I wanted to show you this graph again, which is an updated version of one I published in August/September of last year.   At the time, I was looking at a much more detrimental o...

Today's a bank holiday in the US - and as so often when US stock markets rally into holidays, profit taking and some asset rotation is likely on a global scale in the aftermath. In practical terms, we could see further downside in stocks even in the US and Europe, - but pure technical analysis does not support this unequivocally.  So don't go short based on this statement! Asset Rotation into Gold There is little doubt in my mind that gold has become an integral tool in the tool kit of big investors.  As a result, fluctuations in gold prices are anything but tepid. A recent asset rotation exercise out of and  - back into - gold is a perfect example: Asset Rotation into Gold - after a 15% correction Prices fell as low as 1305 earlier this month but are now attacking the 1400 level again.  -15% down and +8% up in the space of 6 weeks are huge swings in prices by most standards, with little fundamental reasoning behind it, except - making a quick killing. The ...

Investors in the STI had a great start in the morning but after lunch a subsequent sell off started. Was it premonition? Did traders eat something wrong? The Singapore Budget 2011 was punctually delivered from 15:20 onward. As one commentator put it: "There are 7 pages of goodies for the households, and only 3 for businesses. " We are facing elections in a few months, after all. With a GDP growth of more than 14% in 2010, we probably are under no illusions: such years are more the exception than the norm. So, possibly a belated mental hangover ruled investors hearts this afternoon, losing earlier gains in the process. As for the medium term outlook on the STI, I want to show you the graph again from a previous blog, where I outlined the likely path the index will take. I created the arrows as far back as November 2010.  While that index follows the pattern roughly, the index failed to regain the same upward momentum after the peak at 3300 in November. The size of the en...

Well considering that our portfolios have a large exposure to Asian equity, a call for partial profit taking is well timed!  Many Asian indices have rallied for the last 2 weeks or so. For our portfolios, we have already taking steps on Monday and yesterday,selectively reducing our equity holdings between a third and half, according to the applicable risk profile. Indian BSX - All bets on a rally are off if below 17500 Brazil's BOVESPA also subject to strong FDI drain. It is rather daunting to see European and US stocks continuing their rally while Asian stocks linger at best or continue correcting since the highs last November. I have stated in the last update, that there is really no valid fundamental backdrop for this to happen. As yet no one has come forward to argue against my observation that it is all down to Foreign Direct Investment (FDI) outflows, in particular in India and Latin America. STI - following a sideways pattern from Dec 2010 USD buying less and le...

It's been two weeks+ since my last comments, - a therapeutic pause no less.  Since mid January all considerations of what fundamental reasons might be valid for investing here and there have been put aside and a simply opportunistic approach pervades global financial markets. Indian  BSE- down to major support, ready for a rise? We can observe this phenomenon in Indian stock markets, Indonesia and even the STI.  Foreign investors are taking profit, regardless of the underlying positive fundamental outlook. In considering the risk - reward environment of investing in their own stock markets with a reasonably stable US$, versus investing overseas, they choose the US markets. In the end, its ok as the ongoing QE should really benefit the US first and foremost, instead of creating a "hot money" ballooning effect and oversized share valuations in Asia. This I believe has created the last three weeks of incoherent market movements globally. Of course, there are already s...