The month of May reminds me of the Thai Protest in March when Blood was spilled on the government gates because it was all red. All the indices I’m monitoring are in negative territory in 2010 after a bloody month in May. I had added 3 new indices namely Korea Kopsi, Russia TRS as well as the US Consumer’s Sentiment index.
1st Minute – Let us go through the indices
a) It was all red for the month of May with the Emerging Markets dropping as much as 12-14% and developed markets by 9-11%.
b) Generally, if you started investing in global or asia equities from October last year, you are most likely losing money today.
c) Blend Crude prices shoot down 15% to $73.1/barrel. The lowest point was on 25th May at $63.18/Barrel. It shows how oil prices are determined by sentiments and not so much by supply and demand.
d) Vix Index shot up 45% to 32.07. On 20th May, it was crazy at 45.79. It shows how irrational and uncertain investors are at the moment. A high number reflects volatility and lack of confidence in the stock market.
e) One area that goes up is Gold which rose 11.1% since 31st December 2009. The debt crisis in Europe shows that people are losing confidence in paper money either in USD or Euros.
f) US Consumer index remained relatively unchanged since April.
g) Baltic Dry index rose despite a global equities decline and falling oil prices. It seems that demand for trade rises despite the uncertainties.
2nd Minute – New indices in my analysis
a) I’d added 3 new indices into my analysis namely the Korea and Russia Index as well as the US Consumer Sentiment Index. Why do I add them?
b) Valuation in Korea and Russia is fairly attractive considering the issue about North Korea and the indices are rather correlated with Technology Stocks in Asia. As for Russia, its a good correlation for Eastern Europe and Commoditities Prices.
c) The current PE ratio in Korea is only 9.6 compared to the Asia Ex-Japan index at 12.2. As for Russia, it is only 6.3.
d) I had also added the Consumer Sentiment Survey analysis as I believe that it is a good leading indicator of the general economy in USA. I like to share what this survey is about:
* The University of Michigan’s Consumer Survey Center questions 500 households each month on their financial conditions and attitudes about the economy. Consumer sentiment is directly related to the strength of consumer spending and is mainly affected by inflation and employment conditions.
* The University of Michigan’s Consumer Survey Center questions 500 households each month on their financial conditions and attitudes about the economy. Consumer sentiment is directly related to the strength of consumer spending and is mainly affected by inflation and employment conditions.
Consumer spending accounts for more than two-thirds of the US economy, so the markets are always dying to know what consumers are up to and how they might behave in the near future. The more confident consumers are about the economy and their own personal finances, the more likely they are to spend. With this in mind, it’s easy to see how this index of consumer attitudes gives insight to the direction of the economy.
3rd Minute – My views and days ahead
a) The May drop is a very decent correction where it wiped off all 2010 gains and back to October 2009 numbers.
b) Investors are adopting the wait and see approach considering the recent volatility. I believe a lot of cash are at the sideline, invested in bonds and money markets. A likely inflow back into risky assets may result in rise of equities when it happens.
c) I’m particularly interested in Russia Equities of late considering the low valuation of only 6.3 P.E Ratio. Oil prices had dropped quite a bit and I’m positive with Russia long term growth prospect considering proximity with China and their low corporate tax structure.
d) For those who had invested with me, you have been underweight equities since early May and we shall relook again in July and hopefully able to rebalance your equity position back to normal.
e) Volatility is expected over the next few months and direction will be largely determined by the US labour market. We are seeing a temporary slowdown in growth but fundamentals will gradually bring optimism back into the market.
[...] 3 minutes investment updates – 06/2010 Investing The month of May reminds me of the Thai Protest in March when Blood was spilled on the government gates because it was all red. All the indices I’m monitoring are in negative territory in 2010 after a bloody month in May. I had added 3 new indices namely Korea Kopsi, Russia TRS as well as the US Consumer’s Sentiment index. 1st Minute – Let us go through the indices a) It was all red for the month of May with the Emerging Markets dropping as much as 12-14% and developed markets by 9-11%. b) Generally, if you started investing in global or asia equities from October last year, you are most likely losing money today. c) Blend Crude prices shoot down 15% to $73.1/barrel. The lowest point was on 25th May at $63.18/Barrel. It shows how oil prices are determined by sentiments and not so much by supply and demand. Read more… [...]
By: 3 minutes investment updates – 06/2010 | TheFinance.sg on June 12, 2010
at 12:02 pm