19 June 2021
Dear Fellow Investor,
National Recovery Plan
Last week the national recovery plan was announced. It appears to be a clear plan that will restore our economy. The goal is for full recovery by the end of the year. The market as a leading indicator is showing the recovery in recovery opening stocks such as Genting Bhd which is up 13 % this year. Last week the technology index rose to 82.20 up over 10 % since 15 May. This shows that export related technology shares are attracting buyers. Despite the price volatility in technology shares, technology businesses are here to stay. The successful technology companies which we hold all have strong balance sheets, innovative management and positive cash flows.
Weekly US 10 year treasury bond
Despite the US and European stock market panic on Friday based on inflation fears and threats to raise interest rates by the US Federal Reserve, the 10 year bond yield went down. If professionals really believed rates would go up, yields would also rise dramatically. It means the drops in markets Friday were a panic driven event.
Most commodities were also hit as the Chinese are cooling the markets by releasing physical commodities such as copper and iron ore. This is a long term positive for infrastructure plans and may reduce inflationary pressures. For those who trade commodity relate stocks this could be a buying opportunity once the dust settles. Crude oil diverged from the sell down and was marginally up supporting the world recovery theme.
Despite the market volatility the Nasdaq only traded down
0.28 % for the week. Should the authorities really have decided to raise interest rates the Nasdaq would have collapsed. The Nasdaq has many growth related shares with stretched balance sheets and loaded with debt so they get killed with higher rates.
Despite the negativity, uncertainty and fear stay the course with your quality shares as odds favor recovery and better times ahead.
Bill
Genting re opening with new theme park by end of year + Borders open and tourists return = Share recovery
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