21 Sept 2019
Dear Fellow Investor,
Today, I had the rare opportunity to hear Mr Phua Lee Kerk, Strategist of Phillip Capital Management in a talk he gave to a group of professional investors.
He answered some of the pressing investment questions that many of you have been asking.
Questions included: Value versus growth stocks? Why is the KLSE stuck in a trading range near 1600 ? What catalyst to move the index ? What are the foreign funds waiting for ? Why Donald Trump will continue to make sure the Dow Jones goes up and why this correlates positively with world markets.
Value Stages a Comeback
PE Levels current vs historical as of 3 Sept 2019 for S &P
|
Historical Medium
|
Current
|
Implied Price Change
|
Value Advantage
| |
|
Growth PE
|
19.7
|
32.5
|
-39 %
| |
|
Value PE
|
11
|
10.3
|
7 %
| |
|
Value Advantage
|
46 %
|
From an odds point of view value investing has a 46 % advantage over growth investing at the present time.
Growth stocks such as Facebook/ Netflix are faltering while value stocks such as consumer issues are outperforming as fund managers shift from growth to value. This is a world wide phenomena.
The KLSE remains stuck at 1600 because investors are waiting for the budget to be announced and waiting for ratings agencies to decide if to remove Malaysian bonds from the world bond index. Foreign funds are out of the market and will return when these uncertainties are resolved. Foreign funds hold less than 31 % of the market which is close to a historical low which means not much downside from current levels.
Donald Trump is only interested in getting re elected so he will send out a positive twitter when the market corrects and a negative twitter when the market goes up too fast. Every one of his actions is designed to get the most votes as possible. Morgan Stanley has created the Trump Twitter Index to measure Trump’s twitters. The whole world of traders are exploiting this index for quick gains. This index is available on the Bloomberg work station.
The Hong Kong disruptions are lessening and are limited to a few violent hard core criminal protesters. The general public are getting tired of it and want to get back to business as usual. Phua feels by 1 October the 70th anniversary of the Communist party Hong Kong will stabilize. There is value in Hong Kong shares as fear and uncertainty dominate but this is opportunity for brave investors.
Invest well and grow your wealth
Bill
Bill
Critter of the week is the white tiger.
White tiger at Zoo Negara. Once the haze lifts we will definitely visit the tigers. And pray to God these wonderful animals are not suffering. Hopefully by the end of October we will have relief.
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