Citi Research thinks that markets have further to rise.
Since the bull market of 2002-2007 saw emerging markets rise
by 425%, Citi reasons that this bull market has much further to go.
“Talk of a bubble in emerging market valuations at this stage of the bull market is
premature although leaving extremely accommodative monetary policy conditions for
long enough would, of course, eventually increase the risk of a
bubble forming,” the report states.
“We are strongly of the belief that markets are
not in bubble territory. In coming months, given strong growth
prospects, there will be sufficient investor appetite and ‘room’ in valuations for
the emerging market benchmark to break out to new highs.”
Below is an extract from the article - “It’s Bonus Time & Time To Be Jolly” that appears in The Sunday Times of 28 November 2010: “Building your stocks war chest
The festive season is typically a lull period for the stock market. DBS Vickers strategistYeo Kee Yan looked at trading activity during the November to January period over the past decade and found that December was the quietest month 90 per cent of the time. The good news is that interest picks up markedly in January.
Mr Yeo said: 'We are expecting a seasonal decline in market activity after the results season ended from mid-November, before reviving just before the turn of the year.'
He advises investors to 'accumulate stocks over Christmas in anticipation of the pre-Lunar New Year rally' with the best time during or just before the Christmas holidays. Next year's Chinese New Year starts on Feb 2.
Mr Yeo recommends three things to focus on during the December lull.
Firstly, rig builders Keppel Corp and Sembcorp Marine stand to win new orders next year.
It could be a record year for SembMarine if it clinches Brazilian oil company Petrobras' contract for seven drill ships, with a projected total order win of $11.4 billion.
Likewise, Keppel Corp stands to win total new orders of $11 billion, including $6.5 billion from Petrobras, next year.
Secondly, crude palm oil stocks like Indofood Agri and First Resources should benefit from firm prices early next year, mostly due to higher soy oil prices.
Soy oil is a direct substitute for palm oil, so rising soy prices tend to lift palm oil values. Soy oil prices are expected to keep rising due to continued weakness in the US dollar and the expected La Nina weather phenomenon in South America. This may cause delays in soybean planting and reduce harvests in February to May next year.
Lastly, do not forget small caps. The post-Christmas to pre-Chinese New Year rally tends to stimulate retail participation in the market and investors often focus on small caps. DBS Vickers favours capital goods and basic materials plays like Ezion, PEC and Midas.
Mr Yeo also sees construction stocks Yongnam and OKP benefiting from the accelerated building of new HDB blocks, and major transport and other infrastructure projects. “
As a broad based New Year Rally did not materialize for the past three years, the odds for this happening in January 2011 should be exceedingly high.
observer2, looks like Dec 10 wasnt so quiet after all, with a strong rally.
January shld be a continuation of Dec..... sentiment is very positive and small and mid-caps should do well.
wat are your stock picks?
Dear Forummers,
2011 will be a year of inflation and rising interest rates. How will that affect the stock markets and the real economy is a big question mark?
One thing looks quite clear to me, the stock market looks pretty good in the 1st quarter of 2011. This is due to the increasing recovery of the European debt issue, the PRC strong economic growth and US continuing to print money. BUT the surge in stocks is likely to be selective. Small punting stocks have to seek good retail interests while the mid-big cap stocks have to adjust their valuations to bring in more investment interests.
Who will be the eventual winner, is everybody's guess.
Good luck to all in the year of the rabbit!
Sorry, Happin. I only do my stock picking during the corporate reporting months, the next one to be February. In anticipation of the January 2011 New Year Rally, I had earlier loaded up on some China Gaoxian (21.5 cts), Eratat (20.5 cts) and Genting HK (42.5 cts) for “quick profits” in January. Although there was many other promising ones, I had to pass them by so as not to get too involved because I am a poor trader – always giving back the bulk of the profits at the end of the day should I get carried away..
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