Bank of Japan has radically shifted how it will purchase exchange-traded funds (ETFs) in Japan's stock market.
the BOJ said after its policy-setting meeting on Wednesday that now 3 trillion yen of its purchases would still be divided among ETFs based on the three indexes, roughly proportionate to the ETF's total market value.
But the central bank added that the remaining 2.7 trillion yen would be aimed only at funds tracking the Topix index. It said the 300 billion yen allocated to ETFs tied to "supporting firms proactively investing in physical and human capital" would be unchanged.
In a note on Wednesday, analysts at Nomura estimated the change meant around 70 percent of funds would be allocated to the Topix index, 28 percent to the Nikkei and 2 percent to the JPX Nikkei 400, compared with an estimated 42 percent, 53 percent and 4 percent respectively, previously.
That was a likely driver of the Topix index's outperformance on Wednesday, when it closed up around 2.7 percent, compared with the Nikkei's 1.9 percent gain. Japan's markets were closed Thursday for the autumnal equinox holiday.
Nomura expected the biggest gainers from the change would likely be among the low-liquidity small-capitalization stocks included in the Topix.
Showing posts with label stocks. Show all posts
Showing posts with label stocks. Show all posts
Friday, September 23, 2016
adjustments to BOJ ETF buying
Monday, September 12, 2016
Sunday, August 21, 2016
Bonds carry the same absolute risk as equities, just different volatility
both can go to zero.
equities, when no one wants to buy yours.
bonds, when the company cannot return you your capital anymore.
just the speed and paths are different.
now, what about treasuries? ;)
equities, when no one wants to buy yours.
bonds, when the company cannot return you your capital anymore.
just the speed and paths are different.
now, what about treasuries? ;)
Singapore stocks prices are cheap, but
cheap can get cheaper, so we need convincing of us.
The Thai economy was certainly a bit more Boleh in Q2. 2Q16 GDP expanded 3.5% yoy, the strongest since 1Q13 led by increased public sector spending as well as steady contribution frm the hospitality sector to offset the drag from exports and sluggish private consumption. Fingers crossed the Land of Smiles can continue to recover.
Despite sluggish global growth, the region’s macro picture is looking “less bad” according to 2 other countries who reported Q2 GDP growth during the week. Taiwan’s 2Q16 GDP rose 0.7% yoy vs. 1Q16’s -0.3% yoy. It was the first growth since the Q2 2015, and the fastest expansion since Q1 2015 on “less bad” exports.
Over in the Philippines, the economy is on fire. 2Q16 GDP expanded 7.0% yoy, the fastest expansion since the Q3 2013, as a stronger domestic demand (consumption and investment) offset a slowdown in exports.
What about the poor July trade performances of Indonesia, Singapore & China or the stagnant Japanese economy? Total trade fell 15% yoy in Indonesia while Spore’s total trade shrank 11% yoy in July, the worst in 6 mhs for both countries. While this is a reflection of the still sluggish global demand, the shorter working month due to the Hari Raya festivities could be the main reason for the sharp plunge in July trade while China’s data was partly affected by supply disruptions (the severe flooding in July).
What about Japan? On an annualized basis, the economy grew just 0.2% in Q2 as companies cut back on capital spending and exports fell. Spending by businesses was weak & household spending was also lacklustre. But we must also remember that earthquakes in April caused extensive damage and disruptions to production in western Japan, while exporters kena by stronger yen with more expensive Made-In-Japan goods. More pressure on PM Abe & the BoJ to spend and spend to lift domestic demand.
The disappointing Q2 GDP growth in Japan, so-so July US and Asian macro data fuel expectations that there will be more global fiscal stimulus from governments & monetary easing by central banks. Expectations of cheaper liquidity “add oil” to global equities (except in Spore where sadly there’s still minimal interest in our local stocks). In Asia, the interest this week is very much focus on the upcoming trading link between HK & Shenzhen that will give outsiders the chance to trade shares, not of stodgy SOEs (listed in Shanghai), but the smaller start-ups & leading Chinese tech companies.
The only thing we can say for SGX-listed stocks is that many are cheap cheap, and despite the rally, valuations for Spore REITs are not over-stretched. According to a recent report from CIMB Research. S-REITs are trading at mean of 6.3% dividend yield and 1x P/BV. Furthermore, S-REITs are still trading at a 450bp spread vs. the 10-year bond yield, 75bp higher than the average 370bp. Compared to the other key REIT markets, S-REITs is also one of the cheapest. And, Industrials replace the office as their most preferred sub-sector. So Spore REITs still Boleh.
Not so boleh was the US$ during the week. Expectations that the US central bank may hold off raising interest rate in September pushed the US dollar lower this week although it managed to recover some ground on Friday. The dollar index (DXY) ended the week 1.3% weaker (-0.5% last week) and the US 10Y Treasury note ended the week at 1.58% (1.51% the previous Friday). Gold, which usually benefits from a soft dollar and falling bond yields, ended Friday at US$1,341 an ounce, highest in 3 weeks.
Weaker US$ and (misplaced?) hopes that major oil producers can agree to an output freeze next month continued to underpin oil prices for the third consecutive week. Brent crude crossed US$50 for the first time in 5 weeks, to end Friday at US$50.88/bbl.
And speaking of oil, the Norwegian govt reported this week that it had to tap into its massive oil fund (US$890bn, the largest sovereign wealth fund) for spending for the first time in two decades. Given the current trends of low oil prices and low (& lower?) expected rates of returns, there is a big debate in Norway about how much risks this mega fund should take to grow or protect the fund if the govt were to continue dipping into reserves to fund spending. Here in Spore the same question is being asked at GIC/Temasek. It’s a indeed a very stressful time for SWFs, pension funds & long-term investors.
This question & more will certainly be asked at the key event for Week 34 of 2016, a gathering of central bankers, finance ministers, etc. at Jackson Hole, Wyoming, USA for the Kansas City Fed’s annual symposium (Thur/Fri). The theme this yr is ‘Designing Resilient Monetary Policy Frameworks for the Future’, or in simple Singlish, “What can central banks do ah if global growth and inflation stay low low for long long?” Fed Chair Yellen will cakap on Friday & we’ll wait to see if she will “show hands” (unlikely) on what the Fed may or may not do in its next policy meeting.
There is no major central bank monetary policy decision this week but there is plenty of Developed Mkt data to test investor confidence. Among the key macro releases: Prelim Aug PMI readings from US, Eurozone & Japan, US Durable Gds Orders, revised Q2 GDP readings from UK & US.
Here in Asia, Taiwan will report July export orders (Mon) and industrial output (Tue). Spore will report July factory output data on Friday & PM Lee is off to Semarang, Indonesia for a 3-day meeting and makan with Pak Jokowi on Wednesday.
Friday, August 19, 2016
Rotation into cyclical shifts market into high gear, but first?
Rotation into cyclical?
not without a fat dip first, I reckon.
tonight?
sauce
not without a fat dip first, I reckon.
tonight?
sauce
This may be about to change. Below is the price ratio of the PowerShares S&P 500 High Beta Portfolio (SPHB) relative to the Powershares S&P 500 Low Volatility Portfolio (SPLV). A rising ratio means high beta (riskier) stocks are on average outperforming low volatility (less risky) stocks. The top shows the relative strength of that ratio, and beneath the middle pane is the performance of the two Exchange Traded Funds since a significant “bull” market began in October 2011. High beta, which should have led the last few years, ended up underperforming low volatility by a whopping 3,380 basis points.
Chinese retail investors buying up US stocks, really?
One year ago, U.S. markets tanked because China surprised everyone with amini-devaluation of their currency and a clear indication it will further liberalize foreign exchange markets.This lead to massive private sector capital outflows and the People’s Bank of China (PBOC) had to sell foreign exchange reserves to keep the exchange rate stable.
Much later we learned that China’s central bank had not only sold U.S. government bonds but also $126 billion in U.S. stocks over the period from July 2015 to the end of March 2016, contributing to short-term corrections in the fall of 2015 and the spring of 2016.
So why is the S&P 500 trading at an all-time high around 2200, despite the Chinese official selling, Brexit, and a possible meltdown in the Chinese economy?For two main reasons. First, while the Chinese central bank is selling U.S. stocks, Chinese people are buying them.
If a Chinese citizen wants to buy U.S. stocks, they have to first exchange yuan for U.S. dollars in the marketplace, either illegally or legally. If enough people sell yuan and buy dollars, this puts downward pressure on the yuan and the price falls.
Enter the PBOC: To keep the price stable, it steps in on the other side of the market and sells dollars into the market, buying yuan and therefore stabilizing the price. Of course, the two parties seldom interact directly, but rather through Chinese and international banks.
Real estate is by and far the biggest investment vehicle for Chinese, but they also like U.S. stocks, especially after their stock market crashed in 2015.
According to a Financial Times survey, Mr. Guo, who works as a manager in manufacturing in Nanjing, has invested two-thirds of his assets in U.S. equities. The percentage of respondents holding foreign securities increased from 27.3 percent to 35.1 percent over the course of one year.
“U.S. stocks are easier to understand when you spend enough time studying them. In China, the longer you are in the market the less certain you feel,” Mr. Zeng, a Chongqing-based factory owner who owns $600,000 worth of U.S. stocks told the FT.
The demand for overseas assets including stocks is so great, the first Chinese wealth manager has set up a trust firm on the British channel island of Jersey.
Other, less wealthy individuals, who can stay under the $50,000 cap on foreign exchange transfers use apps offered by companies like Jimubox to invest in stocks abroad without even visiting the bank.
“Chinese investors are actively seeking alternatives from the volatility of the local equity markets and have significant concerns about the valuation of the renminbi,” Jimubox Chief Executive Dong Jun told the Wall Street Journal. The IIF estimates citizens and companies will invest up to $237 billion in different kind of equity investments abroad for the whole of 2016.
Speaking of Chinese companies, they spent $134 billion on outbound mergers and acquisitions deals, some of them on listed companies like China’s Anbang Insurance Group buying Strategic Hotels and Resorts Inc. for $6.5 billion.
Even the 134-year-old Chicago Stock Exchange was recently sold to a group of Chinese investors.
Central Banks
But there is yet another buyer of U.S. equities, helping them to reach record highs while many other institutional investors and domestic individual investors are selling: the central banks of the world.
For example, the Swiss National Bank (SNB) held $119.7 billion in listed U.S. equities at the end of the first quarter of 2016. It is allocating 20 percent of its foreign exchange reserves to stocks and it’s a fan of tech companies like Apple ($1.2 billion) and Google ($1.2 billion).
According to an analysis by investment bank Barclay’s, central banks may have been a big factor behind a $60 billion net investment in long future contracts in U.S. equities.
“You are essentially in the world where public sector signals dominate,” says Viktor Shvets, global strategist at Macquarie Securities. He thinks the aggressive involvement of central banks and the government in investment decisions could end investment theory as we know it.
“The public sector doesn’t have cycles like the private sectors. Investment theory evolved around cycles. If you are dominated by the public sector, then investment is no longer possible,” he says.
Thursday, August 18, 2016
Shenzhen-Hong Kong announced, to be launched 4 or more months later
Chinese equities already reacted ahead of time.
sauce
sauce
Stock investors in China and around the world will have easier access to hundreds of companies via the Shenzhen-Hong Kong link.
Institutional investors will be able to trade all dual-listed shares and most of the Shenzhen Component Index’s 500 members, as well as small- and mid-cap shares with a market value of more than 6 billion yuan ($904 million). Retail investors won’t have access to the ChiNext board of small firms at the beginning, according to the Securities and Futures Commission. The large number of small-caps in Shenzhen provides an additional opportunity for investors over the Shanghai-Hong Kong connect.
Global investors will gain access to some 870 Shenzhen-listed companies with a combined market value of about 7 trillion yuan via the northbound link, says Ting Gao, the Shanghai-based head of China strategy at UBS Group AG. Those firms include several high-growth technology and pharmaceutical companies in Shenzhen, which typically trade at higher valuations than Shanghai-listed firms. The ChiNext index trades at about 32 times its projected 12-month earnings, compared with a multiple of 13.4 for the Shanghai Composite and 11.9 for the Hang Seng Index.
Here’s what they get to trade:
- Members of Hang Seng Composite Large Cap Index, such as China Mobile Ltd., the world’s largest mobile-services company by subscribers, and energy major Cnooc Ltd., which aren’t listed on the mainland
- Members of the Hang Seng Composite Mid Cap Index, including logistics firm Orient Overseas International Ltd. and developer K Wah International Holdings Ltd.
- Dual-listed firms in Hong Kong, many of which trade at a substantially cheaper price. The Hong Kong-listed shares of ZTE, for instance, trade at 10.6 times their 12-month forward earnings, a 29 percent discount to Shenzhen valuations
- Hang Seng Composite Small Cap Index members with at least HK$5 billion in market capitalization, such as women’s apparel maker Koradior Holdings Ltd., or Bank of Chongqing Co.
Tuesday, August 16, 2016
NEEQ the hidden Chinese exchange
a lot of short term explosive growth companies in NEEQ actually.
sauce
sauce
A boom on China’s over-the-counter stock market has seen its ranks of listed companies swell 9 percent in the past two weeks, amid a backlog of initial public offering applications at the country’s exchanges.
The National Equities Exchange and Quotations hosts 8,622 corporations, according to its website, up 68 percent from the end of last year. That compares with 2,914 listed on the bourses in Shanghai and Shenzhen. Companies have this year raised 78.2 billion yuan ($11.8 billion) from share sales on Beijing-based NEEQ, known as the third board.
NEEQ’s rapid growth is helping to ease the thirst of small firms for capital and is also allowing regulators to develop a system in which companies get more flexibility on the timing and valuation of their share sales, which has been difficult to implement on the main venues. More than 800 companies are waiting for IPO approval on exchanges, according to the China Securities Regulatory Commission.
“The third board helps solve a big problem in China’s economy, allowing small and medium enterprises to raise funds despite a long queue for listings,” said Hao Hong, chief strategist at Bocom International Holdings Co. in Hong Kong.
Companies listed at NEEQ raise money by issuing new stock in placements after listing at the venue. Guangzhou Evergrande Taobao Football Club Co., China’s first soccer stock and backed by Alibaba Group Holding Ltd., listed its shares without raising money in November and sold 869 million yuan of new stock in December, according to a January filing. The sale price of 40 yuan a share valued the company at 15.9 billion yuan.
China rally due to Shenzhen-Hongkong stock connect?
wanna bet A shares still soar faster than H?
China’s rally was partly fueled by a surge in brokerage stocks, in turn propelled by renewed hopes for the launch of Shenzhen-Hong Kong Stock Connect within 2016.
Hong Kong Economic Journal reported Monday that the trading link could be announced as soon as this week and that it would be officially launched in December. The China Securities Regulatory Commission said last Friday that it had formed a special work team with its Hong Kong counterparts to prepare to launch the link.
Saturday, August 13, 2016
Risk on into EM etfs and high yields, less into money market and treasuries
http://www.reuters.com/article/us-funds-baml-flows-idUSKCN10N0ZC
Equity funds attracted $6.5 billion of inflows this week, the first inflows into global stocks in a month, as investors returned to U.S. markets and continued to pile into emerging assets, Bank of America Merrill Lynch (BAML) said on Friday.
Emerging debt funds extended their bull run, pulling in $1.6 billion in the week to Wednesday, as investors frustrated with the zero or negative interest rates on offer in developed government bond markets hunted for returns.
The swing into global equities was driven by investors moving into exchange-traded funds (ETFs), where inflows of $10 billion more than offset the $3.5 billion that fled mutual funds.
Emerging bond funds have now taken $18 billion over six weeks - the largest on record, and equivalent to 6 percent of assets under management - in what BAML described as an "EM melt up".
Even markets such as Malaysia, tainted by the 1MDB scandal, are pulling in cash as interest rates fall in Britain, Japan, New Zealand and Australia.
High yield bond funds attracted $1.7 billion and investment grade bond funds pulled in $5.3 billion. Government and Treasury bond funds suffered $800 million in outflows, racking up five straight weeks of redemptions.
Investors also dumped money market funds, withdrawing $3.6 billion, the largest outflows in seven weeks.
Friday, August 12, 2016
roller coaster for chinese property company investors
link
Another surprise investor burst onto the scene this month. Evergrande, a rival developer run by billionaire Hui Ka Yan, said in regulatory filings that it had amassed a 5 percent stake as of Aug. 8. It cited Vanke’s “strong” financial performance for the purchases, without providing further detail on its motives.
Sell-side stock analysts have mostly stuck with their positive recommendations on Vanke as the drama played out. For both the mainland and Hong Kong shares, a majority of analysts tracked by Bloomberg have a rating equivalent to buy or hold.
It’s been a roller-coaster ride for investors. Vanke’s shares in Shenzhen plunged almost 30 percent in the four weeks through Aug. 1, playing catch up to Hong Kong as the six-month trading halt was lifted. The stock reversed its slump this month, surging 24 percent on news of Evergrande’s purchases.
Stock Exchanges Propose Fix to Prevent Another Wild Session
http://www.bloomberg.com/news/articles/2016-08-11/stock-exchanges-propose-a-fix-to-prevent-another-wild-session
The changes come after months of industry discussion on the appropriate way to stave off a similarly wobbly trading session. Last year’s Aug. 24 rout included brief plunges of 21 percent in JPMorgan Chase & Co. and General Electric Co.’s share prices. The swoon illustrated the need to adjust safeguards, put in place after a market crash in May 2010, that are meant prevent sudden erratic lurches.
The changes come after months of industry discussion on the appropriate way to stave off a similarly wobbly trading session. Last year’s Aug. 24 rout included brief plunges of 21 percent in JPMorgan Chase & Co. and General Electric Co.’s share prices. The swoon illustrated the need to adjust safeguards, put in place after a market crash in May 2010, that are meant prevent sudden erratic lurches.
“We look forward to the accelerated implementation of the new reopening procedures, and the continued progress by the exchanges and the industry to address the other key areas outlined in our letter,” the money managers said in the statement.
The system the exchanges are addressing is called limit-up/limit down. Their proposed changes include measures to smooth the market’s process of determining the right price for securities after they come out of a trading pause. The exchanges have already reduced unnecessary trading halts by 75 percent by using different a reference price to calculate the halt-trigger threshold in some cases, according to the exchanges’ release.
Sunday, August 7, 2016
comments on Rolf’s View of the World and Singapore’s Economy – The whole world has been leveraging up! (Part 3)
comments on: http://www.rolfsuey.com/2016/08/rolfs-view-of-world-and-singapores.html?showComment=1470506201574#c4614877967689040021
not an inapt comparison.
"Imagine you held currencies worth US$35 since 1970. Fast forward more than 40 years today, while the paper US$35 currencies are still the same dollar notes, the purchasing power of the currencies have fallen dramatically. In retrospect, if you bought 1 ounce of gold in 1970 which cost US$35, the dollar value of that ounce of gold is worth US$1,350 at present time. This is a whopping increase of >38 times."
and you see the effect on longer dated bond prices.
During the GFC, QEs were used to acquire assets of longer maturity as well as the distressed mortgage backed securities from US government sponsored Fannie Mae and Freddie Mac, thereby lowering longer-term interest rates. Thanks to QE1 implemented in Nov 2008, just one year after the worst crisis since Depression, business remarkably went back to usual. Subsequently, QE2 took place in Nov 2010, followed by QE3 in Sep 2012.
it will require coordinated central banks together with coordinated fiscal policies.
Janet Yellen, the current Fed chairwoman was left behind an enormous public debt problem in US today (~19 trillions) that I reckon there is no way she can turn back, but to continue the artificial support of the world’s economy. It is possible that any major tightening of money supply will possibly lead to collapse of the entire market.
for the personal, just simply reduce your debts.
but the interesting immediate consequences of a gradual rate hike is the effect of this on currencies and trade balances.
as of now, it seems while EU and BOJ haven't abandoned their monetary stimuli, the Fed will continue to hold off any rate hike.
BOJ's recent action has caused a noticeable reaction on long dated treasuries.
When debt becomes so huge, even a less than substantial increase in borrowing rate can bring about significant interest repayments.
productivity growth can no longer lead to jobs and higher income due to technology.
it may become more relevant again with higher acceleration of consumption demand.
consumption demand by itself will not help much, only acceleration of its growth will.
productivity growth is an old metric. and i suspect increasingly irrelevant.
Recently he also discussed the biggest worries in US now is the low productivity growth that will eventually lead to economic stagnation particularly in most developed OECD countries.
i believe this stimulus disappointment was the best move by BOJ at this current juncture due to previous stimulus moves resulting in higher yen.
http://shiohmekiah.blogspot.com/2016/08/boj-buying-up-japanese-etfs-and.html
the problem with Japan is a mentality problem that won't go away easily.
but demographics are changing and the younger guard are bringing back some energy and new ideas and new changes.
it will take time though.
Just recently, PM Abe had announce another round, >28 trillions yen ($265b) of stimulus. However its effectiveness remains to be seen. Many suspect if this strategy is to fail, Japan may need more dramatic strategy ahead, such as "helicopter money"!
surprisingly, I think the cheap devaluation of GBP and EUR (without spending upfront money, they may pay for it with legislation and restructuring of economic policies later on) has given them some help. we may see this positive aid in figures later this year granted confidence hasn't totally abandoned EU with the recent bank stocks collapses and being kicked out of STOXX and the recent terror attacks and the recent migration of more elites from Europe to US and other countries.
the problem with europe is long term and cannot be solved easily.
They will still do better as a trading bloc but it is not so simple; binding one size fits all legislation, binding currencies out of sync with the economies, tyranny of the majority votes in EU, conflicting interests.
they can do better with a looser structure but the EUR is important for them.
The recent Brexit does not bode well for the EU. About half of UK imports come from EU. In particular France and Germany are UK largest trading partners after the U.S. Brexit also further dampened the solidarity in EU. Already cohesiveness is low because the core economies do not like the idea that they need to support the countries that cannot pay their bills, which includes Greece, Portugal, Spain, Ireland and Cyprus who defaulted resulted in the Euro Debt crisis after the GFC.
China has devalued this year too.
but comparatively, they are quite nice already. they didn't devalued too much.
even given their long transition pains from export to self sustainable economy.
they are already being nice to global community so far.
not an inapt comparison.
"Imagine you held currencies worth US$35 since 1970. Fast forward more than 40 years today, while the paper US$35 currencies are still the same dollar notes, the purchasing power of the currencies have fallen dramatically. In retrospect, if you bought 1 ounce of gold in 1970 which cost US$35, the dollar value of that ounce of gold is worth US$1,350 at present time. This is a whopping increase of >38 times."
and you see the effect on longer dated bond prices.
During the GFC, QEs were used to acquire assets of longer maturity as well as the distressed mortgage backed securities from US government sponsored Fannie Mae and Freddie Mac, thereby lowering longer-term interest rates. Thanks to QE1 implemented in Nov 2008, just one year after the worst crisis since Depression, business remarkably went back to usual. Subsequently, QE2 took place in Nov 2010, followed by QE3 in Sep 2012.
it will require coordinated central banks together with coordinated fiscal policies.
Janet Yellen, the current Fed chairwoman was left behind an enormous public debt problem in US today (~19 trillions) that I reckon there is no way she can turn back, but to continue the artificial support of the world’s economy. It is possible that any major tightening of money supply will possibly lead to collapse of the entire market.
for the personal, just simply reduce your debts.
but the interesting immediate consequences of a gradual rate hike is the effect of this on currencies and trade balances.
as of now, it seems while EU and BOJ haven't abandoned their monetary stimuli, the Fed will continue to hold off any rate hike.
BOJ's recent action has caused a noticeable reaction on long dated treasuries.
When debt becomes so huge, even a less than substantial increase in borrowing rate can bring about significant interest repayments.
productivity growth can no longer lead to jobs and higher income due to technology.
it may become more relevant again with higher acceleration of consumption demand.
consumption demand by itself will not help much, only acceleration of its growth will.
productivity growth is an old metric. and i suspect increasingly irrelevant.
Recently he also discussed the biggest worries in US now is the low productivity growth that will eventually lead to economic stagnation particularly in most developed OECD countries.
i believe this stimulus disappointment was the best move by BOJ at this current juncture due to previous stimulus moves resulting in higher yen.
http://shiohmekiah.blogspot.com/2016/08/boj-buying-up-japanese-etfs-and.html
the problem with Japan is a mentality problem that won't go away easily.
but demographics are changing and the younger guard are bringing back some energy and new ideas and new changes.
it will take time though.
Just recently, PM Abe had announce another round, >28 trillions yen ($265b) of stimulus. However its effectiveness remains to be seen. Many suspect if this strategy is to fail, Japan may need more dramatic strategy ahead, such as "helicopter money"!
surprisingly, I think the cheap devaluation of GBP and EUR (without spending upfront money, they may pay for it with legislation and restructuring of economic policies later on) has given them some help. we may see this positive aid in figures later this year granted confidence hasn't totally abandoned EU with the recent bank stocks collapses and being kicked out of STOXX and the recent terror attacks and the recent migration of more elites from Europe to US and other countries.
the problem with europe is long term and cannot be solved easily.
They will still do better as a trading bloc but it is not so simple; binding one size fits all legislation, binding currencies out of sync with the economies, tyranny of the majority votes in EU, conflicting interests.
they can do better with a looser structure but the EUR is important for them.
The recent Brexit does not bode well for the EU. About half of UK imports come from EU. In particular France and Germany are UK largest trading partners after the U.S. Brexit also further dampened the solidarity in EU. Already cohesiveness is low because the core economies do not like the idea that they need to support the countries that cannot pay their bills, which includes Greece, Portugal, Spain, Ireland and Cyprus who defaulted resulted in the Euro Debt crisis after the GFC.
China has devalued this year too.
but comparatively, they are quite nice already. they didn't devalued too much.
even given their long transition pains from export to self sustainable economy.
they are already being nice to global community so far.
Sunday, July 31, 2016
comments on smol Equities and Bonds can't be both right. Right?
long duration fixed income investors moving to short term to lower their risk in recent times. you can't change the spots on leopards, fixed income investors will always prefer fixed income. and then there's the positioning by funds too. when even the old and new bond kings go bearish on longer duration bonds, you know there is just one last attempt to hit the highs.
if you are confused by the above paragraph, I have posted some hastily written articles. or you can just google for the info.
some nice stuff there smol.
"With 30 year bonds yielding so low, in the days of old, short term treasuries will be yielding much higher to give an inverted yield curve."
abe and kuroda playing pingpong. neither wants to be responsible.
seriously, time is running out for these deflationary markets.
time to bring on the fiscal spending bazooka.
else it's not just changes in the monetary policy environments,
it's the change in public political sentiments!
"Let's see whether Japan got the guts to be the first country to experiment with "helicopter money" this week."
half the bonds out there in the DM world are negative yielding.
"11 trillions of sovereign bonds globally are now in negative yield. Who owns these bonds? "
nice. correlations work.... until they don't. a nice example is the recent decoupling between oil and us equities.
"Corelation between asset classes change all the time. During GFC, asset classes that have low co-relation become highly co-related. I think not all bonds are created equal."
devaluation of renminbi. right now, it's businesses and asset plays, not just properties.
"You think why rich mainland Chinese are bidding up properties in Canada, Australia, HK, and Singapore?"
how soon? no idea. is there coordination between CBs? no idea.
"Now, when the music stop and central bank start to drain the water back, which glasses will be emptied first and which glass will not be completely emptied?"
haha. a standard idea sold to people who don't know what to do.
"All these years, I've been told to hold both bonds and equities to take advantage when either asset class drops."
nope. SGD is extremely teng (tough to chew) at the moment still. but other currencies are dropping.
"But what am I suppose to do now when both are rising? Both are rising due to increase liquidity cause by QE right? Does this mean that the value of my cash holdings will fall due to inflation?"
is that a leading question? lol
" In that case, am I suppose to buy some precious metal to protect the value?"
what do you think of that, TI?
" Or will it be better to get some ETF to ride on the liquidity wave? Wouldn't this QE bubble burst anytime? It's doesn't make sense to keep printing when it's not back by any assets except our confidence in the paper right?"
that's your reaction? so funny lol and no, i am not making fun of you.
"Why are there so much considerations? Not passive at all leh! 我被骗了"
i imagine it is tough. the risk is so high.
"I tell you, it cannot be fun to be money managers working for pension funds or insurance companies right now.How to secure the "promised" income for your pensioners and policy holders when 10 year US treasury is yielding below 2%???"
somemore still got people recommending crowd funding leh. I see the 13.5% yield on Epicentre for $1m and I go huh? why the management of Epicentre do this? do they need it? what's their vested stake? somemore got so many promoters woh. what are they earning?
"3) Small time newbie "ah longs" losing their money in peer-to-peer lending..."
they go by tranches. the ones where yields are guaranteed means they already bought them. and if the prices go up, they sell to lock in the promised yields and get some float. It's really the mark to market ones that are scary.
by my reckoning, some 'accredited investors' are going to get some real accreditations.
"If it's institutions then quite cham, can't worm their way out of the "promised guaranteed plus chop capital protected with variable bonus interest else my banking hall let you burn" investment that they have sold to their clients, without fearing that these investments will go up in smoke IF the party ends (honestly I think few really knows which direction the market will trend now right?)."
so long ago. such a dangerous time then.
"In the past, where need to invest. Just save put in the bank double digit interest compound. Where got all the rubbish of 5-6% return portfolio per year that we are all shouting now from our portfolio. "
they charge, bank run, lower reserve, unlawful. so they also forced to find yield. else unprofitable, bank selloff. see european banks. it's fun so far.
"Then now negative interest which is the central bank preventing commercial bank to hold money but instead lend it all out. Bank will never charge consumer negative interest. "
I always maintained bonds have the same risk as stocks.
risk is defined as permanent loss of capital.
the volatility is different, that's all.
"" Don’t forget that bond prices crashed in late 2008, and many stopped paying dividends."
lol are you positioned?
"In investing, its all about positioning - before the event happens."
don't like that. lol
they doing their best already.
I don't know about their market knowledge of all these current batch.
(LHL and tharman are really smart people though.)
but they did put in their heart. even upped the CPF RA rates via a tiered system.
I just hope they are not eating into reserves again. (I am a miser.)
and not squeezing juice out of the GIC rock.
forcing people an impossible target sometimes result in disasterous consequences.
"Those of us who worked in corporate and experienced a top management change would appreciate.Promises made by the previous management to you become words written on water :("
nice.
"Just look at ASEAN - how many are run by the military in the background? So far so good? That's because we have a BIG STICK!"
gan en
"If I look at Taiwan and HK for the past 10 years; and Japan for the past 30 years... I am just grateful how life has turned out for me and my family."
Tuesday, July 26, 2016
Monday, July 25, 2016
The Bond King Gundlach on Brexit and since then
http://www.barrons.com/articles/jeffrey-gundlach-on-stocks-trump-and-gold-1468036872
dated 11th July 2016
since then
since then
since then
since then
dated 11th July 2016
Despite your risk aversion, you like emerging market bonds. What is the story there?
It is a dollar play. The weaker dollar has been very good for emerging market debt, which is up 12% year to date. We expect the dollar will continue to be weak. For the past year or so, maybe even longer, there has been an incredible correlation between the probability that the Fed is going to hike interest rates and the value of the dollar. The probability of a rate hike is pinned to the ground right now. The market says there is almost zero chance the Fed will raise interest rates through November of this year. The dollar is going to have a hard time, despite the fact that it has been strong recently on the Brexit upset.
since then
How much lower could yields on Treasury bonds go? Could we see a 1% yield?
We just passed the all-time low on the 10-year yield of 1.39%, which we saw in July 2012. It is no surprise the 10-year has been strong after Brexit. I’m not at all convinced that we are going to see much lower yields in the U.S. But even if we do, you’re talking about a de minimis profit. Even if the 10-year yield drops another percentage point, how much will you make? Less than 10%. There are better ways to speculate.
since then
Such as?
Gold miners have a very high probability—if you bought them today and were disciplined—of making 10%. One of the things driving markets lower is a declining belief in—and enthusiasm for—central-planning authorities and the political establishment. In this environment, gold is a safe asset. There’s an 80% chance of making 10% in gold; the probability of a 10% gain on Treasuries is 20% at best. I’ve never seen a worse risk-reward setup.
since then
That doesn’t make for a very exciting portfolio.
Our portfolios are high-quality bonds, gold, and some cash. People say, “What kind of portfolio is that?” I say it’s one that is outperforming everybody else’s. I mean, bonds are up more than 5%, gold is up substantially this year [28%], and gold miners have had over a 100% gain. This is a year when it hasn’t been that tough to earn 10% with a portfolio. Most people think this is a dead-money portfolio. They’ve got it wrong. The dead-money portfolio is the S&P 500.
since then
Sunday, July 24, 2016
Leverage for the Long Run
wow. just wow.
Table 6: Unleveraged Buy and Hold versus Unleveraged Moving Average Timing(October 1928 – October 2015)
When the stock market is in an uptrend (above its Moving Average), conditions favor leverage as volatility declines and there are more positive streaks in performance. When the stock market is in a downtrend (below its Moving Average), the opposite is true as volatility tends to rise.
We found that being exposed to equities with leverage in an uptrend and rotating into risk-free Treasury bills in a downtrend can lead to significant outperformance over time. For investors and traders seeking a destination with higher returns who are willing to take more risk at the right time, systematic leverage for the long run is one way of moving there, on average.
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