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4 Investment Takeaways From SIC 2014
In the Spotlight | 23 October 2014
By: Louis Kent Lee
Articles (199) Profile

The market has been punished relentlessly in the month of October.

As retail investors, it is hard not to be rattled by the market forces and other negative catalysts in play.

From events like the protests in Hong Kong, the Ebola spread in Europe and the United States, to the unavoidable rise in interest rates in time to come, the market tanked, making October the month of epic redness.

In our bid to bring you the best possible view, and strategies on how to navigate the market, we held our Shares Investment Conference 2014 over the weekend, to tackle all these.

The heavy weight speakers invited to the conference all have a belt full of experience and knowledge about the market. They devised and shared specific investment nuggets for the conference attendees.

Here are the key takeaways from the conference.

The Next Two Years Are Still Extremely Difficult To Navigate

Mr Hu Li Yang mentioned that the current market right now is in a state whereby there’s nothing cheap left.

Money inflow created by rash quantitative easing (QE) in the past few years have resulted in these monies attacking everything that can be bought at a cheap price.

As such, nothing that can be reasonably picked up today that has not been already done so in the first place with such QE monies.

Hu however felt an imminent market meltdown in 2014, is quite unlikely. Although a lot of scares and emphasis have been placed on the upcoming interest rates rise in the US, the key thing to note, is that it hasn’t happened yet.

That said, when the rate rise officially kicks in come 2015; the speed of the increasing of such rates (by how much as well) and the market’s reaction to it needs to be measured. The worry comes when the rates increase in a way that is not that fast, and harsh, and market players become complacent about it and ignore the consolidated effect of the overall rate increase.

That’s what is going to make the judgement of the markets for 2015 and forward tricky.

The Current Plight Of The US Market

The US is still the world’s market leader in terms of economic size. Therefore, when markets there don’t do well, naturally other markets will feel the brunt of the heat as well. Whether or not US is in bear market territory is still a big question mark.

However, in March last year, the US market made a historic high. From Dr Chan’s statistical research, the US market, after making its historic high, will not have a bull market that lasts for more than two years.

Measuring the time frame from March last year to now, it has been around one and a half years. That said, we are only a few months away from the two-year mark, and this adds pressure on a possible bear turn if you think about it.

Shifting Of Hot Money From US To China

Once the Shanghai Hong Kong stock connect (SHK) happens, there is a potential that the hot money from the US will flow to this new big market, filled with opportunities that haven’t been seen before, specifically money entering into a market that would be beneficial to the businesses in China.

The SHK’s potential is not just limited to the opening up of the stock market on both Hong Kong and China’s side, rather, one of the biggest potential, and a possible objective of the HKSE, would be the internationalisation of the Chinese yuan.

This will result in the gradual adoption and usage of the Chinese yuan. Though it’s too early to put a finger on whether or not this could mean the Chinese yuan could be one of the contenders for a “reserve currency” in the future, this potential cannot be ignored.

Hong Kong Market Opportunities

The SHK is of course, one of the key things mentioned in the conference. Interest pertaining opportunities this link up can bring remains piqued, and Louis Wong, who is based in Hong Kong, explained and pointed out sector of interests he is currently zoning in at.

Specifically, companies that operate in China, but not listed there, and are only listed on the Hong Kong stock exchange warrants attention.

This is because many mainlanders who are very familiar with such companies were not able to directly invest in them as they’re not listed in China. However, with this link up, they are now able to invest in such companies via Hong Kong’s stock exchange.

Apart from that, some of the sectors that Louis pointed out are healthcare, defence related, and waste management.

Louis is a qualified accountant with the ACCA, and is the Research Editor at Shares Investment magazine.

Please click here for more information about this author.

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