Asian Stocks Plunge on U.S. Manufacturing, Extending Rout – Bloomberg 02-03-13

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Angus Gluskie at White Funds Mgmt said people are alert to some of the risks in China and some emerging economies, but very few people are concluding that it is going to run away too far.

51 percent of the 195 MSCI Asia Pacific Index companies reporting since the beginning of January and for which estimates are available beat analyst estimates. The Index is at  12.6 times estimated earnings versus 14.8 for the S&P 500 and 13.5 for the Stoxx Europe 600.

Matthew Sherwood at Perpetual said there are fresh concerns about the strength of the global economy, and the risk-off sentiment is now well entrenched across the globe. Sherwood said US manufacturing data disappointed even the most pessimistic economist and suggests we are not at the end of this recent bout of market volatility. 

Read the full article at http://www.bloomberg.com/news/2014-02-04/asian-stocks-fall-as-u-s-manufacturing-growth-slows.html

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Worst of Crisis Over for Asian Emerging Markets, Nomura Says – Bloomberg 09-02-13

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Steve Ashley at Nomura said:

  • The worst is over for Asian emerging markets but individual countries could continue to suffer significant challenges.
  • It is very positive for the next 5 to 10 years as the amount of investments by funds in these countries catch up with the growing size of their economies.
  • The markets have been addicted to QE so it is important that normalization takes place. The market should not be frightened of normalization because historically, the first half of the tightening cycle is normally accompanied with reasonable growth and reasonable performance by risk assets. Only toward the end of the tightening cycle do you see a tail-off in risk asset performance.

The market value of shares traded in China accounts for 37 percent of GDP versus 107 percent for stocks in the US,  45 percent for Indonesia, and 54 percent for India

The IMF predicts developing Asia will expand 6.9 percent in 2013 versus 1.7 percent for the US.

Stephen Jen at SLJ Macro Partners expects more losses for emerging markets because investors will withdraw funds as the Fed pares stimulus. EPFR Global said $44 billion has been pulled from emerging-market stock and bond funds globally since the end of May.

Rohit Arora at Barclays said investor sentiment is very fragile in emerging markets as investors are questioning how countries with higher current-account deficits will fund their deficits in an environment of tight liquidity when the Fed starts to tighten.

Investors see a 59 percent chance the Fed will raise the federal funds rate to 0.5 percent or more by January 2015.

Read the full article at  http://www.bloomberg.com/news/2013-09-02/worst-is-over-for-asia-s-emerging-markets-nomura-s-ashley-says.html

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Singapore Stocks Worst in Developed World: Southeast Asia – Bloomberg 09-01-13

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Investors pulled $2.2 billion from Thailand, Indonesia and the Philippines in August, versus inflows of $6.8 billion in 2012.

Wellian Wiranto at Barclays said Singapore is a barometer for Southeast Asia; choppiness elsewhere cause ripples in Singapore.

Khiem Do at Baring Asset Mgmt said Singapore’s stock market benefited from loose monetary policy in the past few years as shares offered investors attractive dividend yields.  Do said Singapore has been affected by redemptions from Asean since it’s the biggest market and is being lumped together with Indonesia, Thailand and the Philippines where capital outflows have accelerated.

Kelvin Tay at UBS said Singapore is likely to outperform, given its strong currency, resilient domestic economy, good earnings-growth potential and exposure to developed markets’ recovery. UBS said Singapore was its preferred market in Southeast Asia, upgrading its rating from neutral.

Singapore’s Straits Times Index is at 14 times estimated earnings  versus 16.1 for the FTSE Bursa Malaysia KLCI Index, 17.4 for the Philippine Stock Exchange Index, and 10.4 for Hong Kong’s Hang Seng Index.

The Straits Times Index offer an average dividend yield of 3.4 percent versus 2.7 percent for 10-year Singapore government bonds.

Daphne Roth at ABN Amro Private Banking sees little catalyst for the Singapore market to recover, and as investors begin to price in rising interest rates, Singapore’s high-yield REITs become less attractive.

Nader Naeimi at AMP Capital Investors said Singapore is getting hit from two sides: being lumped together with other Southeast Asian markets like Indonesia and the Philippines and investors selling high-yield Singapore REITs as bond yields are rising.

Read the full article at  http://www.bloomberg.com/news/2013-09-01/singapore-stocks-worst-in-developed-world-southeast-asia.html

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El-Erian Says Emerging Market Woes to Create U.S. Headwinds – Bloomberg 08-29-13

Salient to Investors:

Mohamed El-Erian at Pimco said:

  • Weakening emerging-market growth and spiraling currencies risk creating headwinds for a recovering US economy. Longer-term, we should care due to the feedback loop to the US.
  • We will see a tightening of financial conditions to markets, with growth more challenged and the ability of US companies to get top-line growth from emerging markets less going forward.
  • For many emerging nations, capital is flowing out and putting them under tremendous pressure. Some countries learned the lessons from the previous crisis and have self-insured tremendously, but others maintained twin deficits, whose growth dynamics are low and have limited reserves – e.g. Turkey.
  • The Fed will probably reduce its Treasury purchases rather than mortgage bonds.

65 percent of economists expects the Fed to taper at its September meeting.

Stocks in Southeast Asia are falling at the fastest pace in 12 years relative to global equities.

Read the full article at  http://www.bloomberg.com/news/2013-08-29/el-erian-says-emerging-market-woes-to-create-u-s-headwinds.html

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Bubble, Bubble, Money and Trouble – Barron’s 06-01-13

Salient to Investors:

Marc Faber at the Gloom Boom & Doom Report says:

  • High-end assets from stocks to art to real estate are in a bubble caused by central bank money-printing. This money doesn’t increase economic activity and asset prices in concert, instead creates dangerous excesses in countries and asset classes. Money-printing fueled the stock-market bubble of 1999-2000, the housing bubble in 2008, and the commodities bubble.
  • Owns equities because easing money is flowing into the high-end asset market, including stocks, bonds, art, wine, jewelry, and luxury real estate.
  • The government bailed out S&L depositors in the late 1980s. Treasury and the Fed bailed out Mexico in the mid-1990s. The Fed-supervised bailout of Long-Term Capital Management in 1998 gave a green light to Wall Street to keep leveraging up. Neither Keynes or Friedman would have approved current policies.
  • In the fourth year of an economic expansion, near-zero interest rates will lead to a further misallocation of capital. The S&P 500 is a near a long-term top and could rally to 2000 in the next month or two before collapsing.
  • Money-printing leads to a widening wealth gap. In the Western  democracies, large numbers of people will at some point target the rich through wealth taxes or significantly higher tax rates. The rich have seen huge wealth accumulation in Asia in recent years but the middle class has seen diminishing purchasing power. Growing wealth inequality has always been corrected either peacefully, through taxation and wealth redistribution, or by revolution, as in Russia. European voters will turn against the arrogance of the bureaucracy.
  • China will not tolerate US interference long-term in their region.
  • 25% in equities – no US, some Asian shares and Singapore REITs.
  • Except for some high dividend stocks, Philippines, Indonesia, and Thailand markets are unattractive having quadrupled from post-crisis lows. Dislike Chinese equities unless conditions worsen and China prints money like crazy, when the currency will weaken and stocks will rise.
  • Japanese stocks made a generational low in 2012 and won’t go below that. Like Japanese REITs.
  • Vietnam exports are strong, and the people are hard-working. The beach between Danang and Hoi An will be a huge resort area in the future and is only an hour and 10 minutes by plane from Hong Kong, and two hours from Singapore. Likes stocks with yields of 5% to 7%.
  • Many rich Asian companies have been buying other Asian companies. Asia long-term economic outlook is good. Laos, Cambodia, and Myanmar are opening up, and Vietnam is reopening. Myanmar market is hot but like Vietnam near its peak in 2006-07, looks dangerous for investors.
  • The huge credit bubble in China won’t end well. The economy officially grew 7.7% in Q1 but in truth is growing 4% a year, at best. China reports export figures to Taiwan, South Korea, Hong Kong, and Singapore that are much larger than those countries report as imports.
  • Markets in Europe have made major lows so own European shares – and plan to buy more – and corporate bonds, and real estate. Money in European banks is no longer 100%.
  • Like Singapore REITs whose yields of 5% and 5.5% compare favorably with US REITs. If inflation picks up, REITs can raise their rents.
  • 25% in gold and add to positions every month. When the asset bubble bursts, financial assets will be particularly vulnerable.

Read the full article at http://online.barrons.com/article/SB50001424052748704509304578511561194530732.html?mod=BOL_twm_fs#articleTabs_article%3D0

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Asia Stocks Fall After China Sparks Global Growth Concern – Bloomberg 04-15-13

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Nader Naeimi at AMP Capital Investors said China is heading toward slower growth than in the past decade, which means less demand for commodities, and has reduced equity exposure in the short-term. Naeimi says the market needs to correct at least 10 percent.

The MSCI Asia Pacific Index is at 13.9 times average estimated earnings versus 14 for the S&P 500 and 12.5 times for the Stoxx Europe 600.

Read the full article at http://www.bloomberg.com/news/2013-04-16/asia-stocks-fall-after-china-sparks-global-growth-concern.html

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Top Asia Fund Turning to Volatile Stocks: Riskless Return – Bloomberg 03-27-13

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Jesper Madsen at Matthews Intl Capital Mgmt said global investors have been seeking dividend-payers to the point where some areas of the market are overvalued, while more cyclical businesses are selling at significant discount. Madsen said Asia is a very fertile environment for yield, as well as being one of the fastest-growing regions in the world. The Matthews fund has more than tripled its stake in Chinese companies since the end of 2007 to 22 percent as of the end of 2012.

Madsen seeks companies that increase their dividends and says there is nothing safe about buying overvalued assets – stable or not, gravity applies.

Read the full article at http://www.bloomberg.com/news/2013-03-26/top-asia-fund-turning-to-volatile-stocks-riskless-return.html

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Asian Stocks Post Biggest Weekly Decline in Eight Months – Bloomberg 03-22-13

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Grace Tam at JPMorgan Asset Mgmt said nobody knows what will happen next, but Cyprus is something we have already seen happening in Europe, so are not concerned.

The MSCI Asia Pacific Index is at 14.9 times estimated earnings versus 14.1 for the S&P 500 and 12.7 for the Stoxx Europe 600.

Morgan Stanley cut the rating of Japanese real estate stocks.

Read the full article at http://www.bloomberg.com/news/2013-03-23/asian-stocks-post-biggest-weekly-decline-in-eight-months.html

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Asia Stocks Poise for Biggest Advance Since September – Bloomberg 02-27-13

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Tim Schroeders at Pengana Capital said US housing is pretty good and is providing a huge catalyst to consumers via the wealth effect, so the buy-on-dips strategy is in play and we’re definitely pricing in a lot more good news in equities.

The MSCI Asia Pacific Index is at 14.7 times estimated earnings versus 13.7 for the S&P 500 and 12.3 for the Stoxx Europe 600.

Glenn Morgan at Deutsche Bank said it is dawning on many people that they are not being aggressive enough with their exposure to equities, given the macro backdrop is looking better and companies are delivering – there’s a weight of cash on the sidelines.

50 percent of the 398 MSCI Asia Pacific Index companies so far reporting profits since January have exceeded expectations.

Read the full article at http://www.bloomberg.com/news/2013-02-28/asian-stock-head-for-fourth-monthly-advance-on-economy.html

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