Bear market is the number one concern on investors’ mind. This is especially true in the current investing climate where investors are constantly questioning whether the next drop would materialise into the next bear market.
Since June 2016, the UK citizens voted for an exit from European Union. At that time, the people were frustrated with involuntary migration of Eastern Europeans resulting in increased social insecurity within the country. In addition, terrorism has haunted London city with looming fear among citizens.
As soon as the management of Facebook Inc. finished with its earnings call for the second quarter, the share price plunged by as much as 24 percent in extended trading. In the process, the social media company lost US$130 billion of its total market capitalization – more than half of Singapore’s June 2018 foreign reserves of US$288 billion!
On the 24 April, US 10-year bond yield reached 3 percent for the first time since 2014. Market investors became worried and Dow Jones benchmark fell more than 400 points on that session. The following morning, all Asian stock indexes declined while the Dollar Index rose more than 1 point to almost 91.00 region.
In mid-December, Bitcoin Futures was launched in US market and a bearish trend ensued. The cryptocurrency unit price plummeted from over US$19,000 to US$6000 in early February, registering a loss of almost 70 percent in value.
2018 will be the year of major infrastructure projects, based on the pipeline of projects projected by Singapore’s Building and Construction Authority. The public-sector construction demand would be worth between $18-23 billion per annum for the next three years in five iconic projects. This could lead to increased construction activities for several main contractors, subcontractors and building material suppliers that will be involved in these infrastructure projects.
STI started the new year at 3,402, which is 13.9 times 12-month forward price-to-earnings. This valuation puts the STI at 0.25 standard deviation above its historical 12-month PE.
In the first two trading da...
Even though the current interest rate upcycle started in December 2015, the current interest rate environment remains benign. As of January 2018, there have been five increases, and the market expects another three increases this year. The long end of the curve, measured by the 10-year US government bond rate, likewise, is still benign and below the 2014 peak, even after the increase observed this month.
The Straits Times Index (STI) was one of the best performers among ASEAN markets in 2017. Moving forward, Maybank Kim Eng (MBKE) expects STI to continue to rally into 2018 with an end-2018 index target of 3,670, which reflects an about an eight percent upside for the year. For investors who are seeking alpha above the STI returns, there are three investment themes that MBKE recommends.