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Kevin Gin: Looming Crisis Bigger Than Lehman; Diversify & Buy Defensive Sectors
Aspire, Thought Leaders | 07 October 2015
By: Vance Wong
Articles (74) Profile

During our previous interview, Kevin Gin gave us his insights on why investors should be interested in putting money in China. As the founder and principal of Alpha Capital, Kevin has also given his opinion on the US Fed rate hike as well as what investors can do this time round.

Kevin: Rates Might Be Raised This December, Then Plateau

Kevin feels that interest rates should not be a huge worry since the market has already more or less priced in the rise of interest rates. Nevertheless, he thinks that interest rates would be raised by December this year, but would probably remain stagnant for some time while the economy adjusts accordingly.

However, he suggests that the issue does not lie so much in whether rates would go up, but how risk is priced right now, and how it would be priced post rate hike.

With interest rates close to zero right now, we must ask ourselves, is risk priced adequately? In other words, are valuations, be it real estate, bonds or equities, priced adequately for the risks?

Next Crisis Will Be ‘Much Bigger’ Than Lehman

The 2008 Lehman Crisis, in the view of Kevin Gin, has not been resolved, but merely deferred.

Just last week, billionaire activist investor Carl Icahn commented that there would be a crisis so huge that it would make all past crises look “pretty good”.

Kevin agrees with Icahn and thinks that the next financial crisis will be much bigger than the Lehman Crisis back in 2007-2008. To Kevin, the Lehman Crisis was never resolved; it was merely deferred.

Kevin looks at the Lehman Crisis as the result of risk mispricing. Essentially, the ones that should not be given loans were given loans. Those loans were then repackaged and distributed through retail chains, masking the high risks.

“What we are having right now in the market during recent market routs and panic is the impact of such mispricings”, said Kevin. Thus it is important that investors, be it vested in the US or other countries, understand that valuations and returns must justify the risk involved.

Investors’ Takeaway

When the US Federal Reserve finally decides to raise rates, funds will start to flow into US companies. Therefore, Kevin thinks that there will be a major impact on the businesses that rely heavily on local revenue,  like retail, automobile and real estate to name a few.

For Singaporean investors, one of the safer options is to have a diversified portfolio. That means owning stocks in both emerging and developed markets, or even frontier markets. It is important to look at more defensive and secure sectors as well, like healthcare and consumer non-durables.

Still worried about when and how much would the US Federal Reserve hike interest rates? Do you have burning questions that you want to ask regarding the China economic slowdown and SHCOMP nosedive in June? Are you confused if any of the external factors from other countries in Asia will affect your Singapore stocks portfolio?

Catch renowned investors and speakers with rich experience in the stock markets, who have had witnessed multiple stock market crashes and global recessions over the years at Shares Investment Conference 2015!

Speaker profiles

1. Dr Chan Yan Chong, a renowned investor with more than 25 years of experience and the MBA programme director & associate professor of business school at the City University of Hong Kong.

2. Kevin Gin (CFA), the Founder and Principal of Alpha Capital. He was the former COO for CITIC Securities, Head of Singapore and Regional Real Estate Research for Kleinwort Benson Securities Asia (now part of Credit Suisse) and Head of Greater China Property Research with Yuanta Securities (Hong Kong)

3. Louis Wong, one of the most experienced fund managers in Hong Kong. He has over 25-years of solid experience and track record in the financial market. He was awarded Best Financial Analyst for 3 years by the Putonghua Channel of Radio Television Hong Kong and is also a part-time instructor of several investment courses in various Hong Kong universities.

4. Daniel Loh, an investment coach that specialises in equities and derivatives trading, he appears regularly on local TV financial programmes like “Good morning Singapore” and “Hello Singapore”.

With a Communications background, Vance has the passion to write with a purpose - to provide content supported with substantial evidence to vested readers.

Please click here for more information about this author.

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