Julius Baer Says Thai Markets Retreat to Deepen: Southeast Asia – Bloomberg 12-02-13

Salient to Investors:

Mark Matthews at Julius Baer said the sell-off of Thai assets is not over and the protests will weaken Yingluck’s ability to increase investment in the economy – no one is itching to buy this market.

Joel Kim at BlackRock said the Thai baht is one of our bigger underweights.

Adithep Vanabriksha at Aberdeen Asset Mgmt said the weakening economy is more worrisome than the protests as it will affect earnings.

The SET Index is at 2.1 times net assets, a 39 percent premium versus the MSCI Emerging Markets Index, the smallest gap on a weekly basis since September 2012.

Petcharat Powattanasatien at Kasikorn Asset said the market should rebound strongly as soon as this political deadlock is resolved.

Thailand has had 9 military coups and more than 20 prime ministers since 1946.

Abdul Jalil Abdul Rasheed at Invesco Asset Mgmt said people still use mobile phones, buy the necessities, have banking products, and life goes on – this sort of democracy only happens in Thailand.

Kokusai Asset said the baht will remain weak as protests add to investor concerns about subdued exports and the current-account deficit. Takahide Irimura at Kokusai Asset said the longer this situation lasts, the more impact we will see on the economy – the outlook on the market and on the economy looks poor.

Read the full article at http://www.bloomberg.com/news/2013-12-02/julius-baer-says-thai-markets-retreat-to-deepen-southeast-asia.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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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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Emerging Stocks Face Significant Correction, JPMorgan Says – Bloomberg 02-21-13

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Adrian Mowat at JPMorgan said emerging-market stocks may enter a significant correction because fundamentals and technicals are weakening – investors should use options that protect against stock losses and sell equities that are most sensitive to market swings. Mowat sees no near-term changes to these conditions and expects emerging markets to continue to underperform and be a funding source for Japan. Mowat said emerging-market investors should favor quality companies with high return on equity, and is overweight shares in Turkey, India, Mexico, Indonesia, Thailand, the Philippines and Peru.

62 percent of MSCI Emerging Markets Index companies so far reporting missed analyst estimates versus 34 percent of MSCI World Index companies.

John-Paul Smith at Deutsche Bank said shrinking liquidity in China, heavier state intervention in key emerging-market economies, and a dearth of good stock ideas are the main reasons for being bearish. Smith expects a 10 to 15 percent decline for emerging markets in 2013 and more relative to the US. Smith says 2013 is the year people finally realize that the future sustainable rate of growth in China is much lower than they expect.

Bank of America says investors should buy emerging-market equities and bonds as economic growth improves in the BRICs. Analysts forecasts for 2013 suggest the MSCI emerging-market index will rise 13 percent in the next 12 months. The MSCI Index is at 10.5 times projected 12-month earnings, versus 13.7 for the MSCI World Index.

Lewis Kaufman at Thornburg Investment Mgmt said withdrawal of the global stimulus may lead to losses in emerging-market stocks as earnings growth has yet to show signs of recovery, and many companies are struggling to meet earnings expectation – there’s a bit of disconnection between the extent of the rally and underlying fundamentals. Kaufman favors stocks in Southeast Asia and the Philippines as economic growth surprises positively.

Read the full article at http://www.bloomberg.com/news/2013-02-21/emerging-stocks-may-enter-significant-correction-jpmorgan-says.html

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