Forget Password?
  1. Indices
  2. Commodities
  3. Currencies
Straits Times 3,183.00 -20.93 -0.65%
Hang Seng 26,790.24 -334.31 -1.23%
Dow Jones 27,076.82 -142.70 -0.52%
Shanghai Composite 2,978.12 -52.64 -1.74%
Daniel Loh: Skip Value Investing; Focus on Growth Stocks
Aspire, Thought Leaders | 11 November 2015
By: Chen Xushuang
Articles (26) Profile

After going through a correction phase (around July to October), the Straits Times Index seems to be on a road towards gradual recovery. But local investment educator Daniel Loh actually expects the global economy to “hit the bottom” in the next few months and into 2016. According to him, Singapore is likely to follow suit.

Hitting the Bottom Also Means Chance for Turnaround

The world market is in the second phase of the bull run, but it is not doing well, said Daniel. He cited the reason that the top world economies, with the exception of the US, have all been reporting weak GDP growth. For instance, the Chinese economy only grew by 6.9 percent year on year in Q3 2015, which was the slowest growth since Q1 2009.

As there are many Chinese-listed companies on the Singapore stock market, Daniel sees China’s economic slowdown as one major factor that explains why the Singapore market has not been doing well since 2011.

However, he assures that we are not in a technical recession. He also thinks that a turnaround is bound to happen after the market has reached its lowest point, and he expects the turnaround to take place around mid-2016. He explained that the Chinese government has only started injecting economic stimulus in 2014, and based on his observation, it would take at least two years for the stimulus to take effect. S-Chip Stocks might show stronger earnings then, he said.

Fed Rate Hike Already “Factored In”

Chair of the US Federal Reserve Janet Yellen has been suggesting the possibility of a September rate hike since the turn of the year, and in recent news she signalled that interest rates may increase this December.

But she might also just be “crying wolf” again.

“Now that I look at it, it’s not about whether the US economy is good or bad now. I think Janet Yellen will most likely look at the world economy, and turn her attention to China. But with China’s current GDP figures, I don’t think a December hike is likely. It might be next year,” said Daniel.

“But then again, even if interest rates were to rise in December, I think it has already been factored in, and I don’t think it would create a ‘panic’ in the stock market. ‘Panics’ are usually caused by sudden and unexpected situations, whereas the rate hike has been anticipated for quite some time, so I don’t think it will affect the Singapore market,” he added.

China’s “13.5” Still a Plan for Now

Despite the large amount of anticipation regarding  China’s 13th Five-Year Plan (13.5), Daniel thinks that the “13.5” schemes have not yet been factored into the earnings results of companies belonging under the sectors that stand to benefit. Thus, even though the Chinese government has a long term plan and would pump money into sectors such as environment and healthcare, etc., it does not mean that the stocks would rise right now, says Daniel.

 “At this stage it’s just a plan, so I’ll definitely look at the numbers first,” he said.

 Investment Philosophy and Advice

Daniel’s investment philosophy changes with time. At this point of time, in view of seven years of bull run, he prefers to focus on growth investment instead of looking at valuations. In fact, he feels that if a stock is still cheap now, there is probably something wrong with it. Regarding growth strategies, he advises investors to not just look at historical growth, but future growth potential as well. When it comes to sectors, he thinks that commodities and shipping-related stocks have more turnaround potential in 2016.

Daniel Loh is conducting a FREE three-hour seminar on 17 November (Tue), in which he will be sharing the key steps of spotting a good fundamental stock. Click on the button below to find out more.

As a Communications Studies graduate specialising in journalism, Xushuang is keen to observe and explore issues that readers want to know more about, and to deliver quality content through engaging writing.

Please click here for more information about this author.

Join The Conversation
The Shares Investment editorial team welcomes constructive feedback on our coverage and content. We would also be delighted to answer any questions on the above article. Leave us a comment below, and we'll get back to you shortly!

All Rights Reserved. Pioneers & Leaders (Publishers) Pte Ltd. Best viewed with Mozilla Firefox 3.5 and above.