Factors sustain the equity rally

7 January 2018

Dear Fellow Investors,

Malaysia has joined the world emerging markets equity rally.
There are 4 factors which should sustain the equity rally.in Malaysia, Singapore and the rest of Asia.  

1. Weak US Dollar. The weak US dollar means lower import prices and   can help balance the Malaysian budget as revenue from oil exports increases.

Those companies with loan exposures to US Dollars benefit with a lower dollar. Already foreign funds are joining the weak US Dollar trend  to take advantage of under priced Malaysian/ Asian   equities and bonds.

2.  Rising commodity prices especially industrial commodities.

Rising commodity prices reflect demand. They reflect building of infrastructure,  rail projects, factories, and airports. 

This is real and the CRB index below is too big to be manipulated.  

The CRB is a basket of 21 major commodities including crude oil, metals and grains. The index presently is showing  robust commodity demand having risen more than 30 % from the low.

3. Rising Emerging market Index
Ending December 2016 for 5 years the emerging market index  (EEM) had a 25 %  loss . In the last year there has been a massive    inflow of investments into emerging markets. 

The losses have been reversed and the EEM has now gone in the money with a 25 % profit.

4. China equities still under represented by portfolio managers

From Gary Dorsch of Global Money Trends

“China makes up more than one-seventh of the global economy, yet its footprint in foreign portfolios is ludicrously small, with overseas investors owning less than 2% of its domestic stocks and bonds. However, as a share of the global economy, China’s clout has only expanded, making the managed yuan an anchor for currencies throughout Asia. 

The nation’s status as both the world’s biggest exporter and the largest market of consumers means policy tweaks in Beijing” can boost growth.” 

This will benefit all Asian stock markets.

Our EWM- the Hong Kong blue chip fund has  risen strongly in the last few months and should continue to progress. Our recently acquired holding, Nidec, the Japanese world leading micro motor maker  is  moving ahead steadily as it taps into the Asia growth trend.

Next week should be positive as the pre election rally continues. There are trading opportunities for nimble, alert traders.

Invest well and grow your wealth
Bill  

I wonder if there is such an indicator for stocks ?

I and Mrs Lee thank  you for your interest in the beautiful, healthy pups. Most have been adopted. There may be 1 or 2 left. Do call Mrs Lee if interested 017 371 2696. Do not hesitate if interested or otherwise the opportunity is gone.