Kevin Scully, executive chairman, NRA Capital. NextInsight file photoI WAS A panel member in the panel piscussion organised by ShareInvestor at InvestFair 2013 over the weekend. The moderator of the session was NMP Nicholas Fang with other panel members being Gabriel Yap, Kathy Lien, and Dr Alexander Elder.Kathy Lien is an economist/currency strategist - she kicked off discussions with a good macro view which included the all important Fed tapering.
My summary of her views is that the Fed will commence tapering this September 2013 and not December 2013. She sees 10-year US Treasuries which now have yields of 2.5% rising to at least 3% by mid 2014 when QE3 is supposed to end. Because of this, she remains bullish on the US$.
Dr Elder and myself were of the view that this bull market had another six months to go before a meaningful correction would occur.
The crowd at the panel discussion. Photo by Kevin ScullyMy macro market view remains unchanged - we are in the tail end of a bull market which started in November 2009 - with at best another six months to go.
The main reason comes from the expected rise in global risk free rates (Kathy's view that 10 year US Treasury Yields) would rise to 3%.
The rise in risk-free rates with subsequent rise in equity risk-free rates means that stock markets are now looking fairly valued because I did not see the stock market delivering strong earnings growth to make the markets attractive again.
I cited the three local banks recent results and highlighted that all the three banks had loan/deposit ratios ranging from 89-90% for DBS and OCBC to 97% for UOB. This signalled to me that deposit rates and lending rates in Singapore are on the rise.
A sustained rise in domestic Singapore deposit and lending rates could lead to the much awaited property price easing and its consequent effect on non performing loans for Singapore banks which have about 60% of their loans in the property sector.
I told the investors that they should look at sectors which are still on attractive PE valuations and which are reporting better than expected results such as the off shore oil and gas sector - I highlighted two stocks Jaya Holdings and Atlantic Navigation (I am putting Atlantic as one of my Stock Picks today) watch out for my article.
There were questions on the gold price and interest rate investments such as REITs.
My view on gold is that if we expect further US$ strength because of the strength of the US economy and the ending of QE3 - gold, which was a hedge on an expected weak US$ should remain weak and revert to fundamental demand supply levels as will other commodities.
On interest rate investments - I said the key question remains inflation - I mentioned that OUE Hospitality Trust which was recently listed with a yield of 7.3% looked attractive as its higher yield provided some buffer against a rise in domestic deposit rates.
This article was first published on www.nracapital.com and is reproduced with permission.
My view on gold is that if we expect further US$ strength because of the strength of the US economy and the ending of QE3 - gold, which was a hedge on an expected weak US$ should remain weak and revert to fundamental demand supply levels as will other commodities.
On interest rate investments - I said the key question remains inflation - I mentioned that OUE Hospitality Trust which was recently listed with a yield of 7.3% looked attractive as its higher yield provided some buffer against a rise in domestic deposit rates.
This article was first published on www.nracapital.com and is reproduced with permission.
Comments
If they are really that good and accurate, they will be top 100 in the forbe list of rich ppl already
We can use their recommendation as "reference" but dun over rely on them ...
i'm also of the view the real bull has not come yet
If anyone remember the momentarily 20% drop in 2012 June due to euro flare up, nothing is spared at all. They should be saying get ready to accumulate at bottom or weakness and not OUE still look attractive. I am a nobody compare to Kevin Scully, please ignore my talking to myself