Market Review 2017

Personal Review 2017

As the year is coming to an end and traders/portfolio managers are going for their Long holidays, market is likely to go quiet. 2017 has been a good learning ground for myself. 2.5 years in the market as a novice trader has indeed grind me to be more aware over various market condition. It hadn’t been a smooth ride of which May to August were the toughest months.
Nonetheless focusing on process and journey allow me to be as determined as before. 2018 shall be more challenging as market moves into uncharted territories

 

Market Review 2017

 

Cryptocurrencies

For people who knows me, directly or indirectly, will know how much distrust I’ve on crypto-currencies. It all voices down to lack of control and regulation. Despite my displeasure, Bitcoin (BTCUSD) still crosses 7000usd. Chart has been very positive on BTC although there are a lot of traps set to distort traders/investors.
Going forward, as much as I hate to say, Crypto is here to stay but the amount of studies behind it has been lacking. Money laundering can be carried out anonymously. Pure supply and demand driving the price is not sustainable, and I stand by it. Chasing over such “assets” is therefore not advisable. At the time of writing, it has just dropped to US$6100.
The use of block chain to enhance efficiency is perfectly acceptable but as for crypto, I’ve my reservation.
However with Market Makers planning to include BTC futures in their range of products, drives me wondering if investors or traders are aware of their risk.
So much so for crypto-currencies, I’ll not put my money in them until I can see the rationale and way to value them. Basically, when we value a company/sector or fx pair, we can use valuation methods ranging from comparable(s) to charts or even macroeconomics. But Crypto-currencies? Beats me wondering the intrinsic value of them…

Global Market (excluding FX and Cryptocurrencies)

Woah did you buy and keep those stocks which are related to financials and infrastructure? If you have done the buy and hold approach, you will have made at least 80% profit from most stocks.


Nonetheless past glory doesn’t resemble future victory. Going forward, what’s next? With market getting hotter day by day, it’s without doubt that greed shall get the better of human, and it’s our duty to stay vigilant over macro events.
If you do remember, I had mentioned during 2016 that Trump’s appointment and administration would likely assist America to concentrate more on tax reforms, infrastructure spending, reform of health care acts, more military spending and etc. Recent events have seen Trump visiting Asia. SIA signed an agreement of US$14 billion (20 Boeing 777 and 19 787-10Dreamliners) with Boeing, this is likely to create 70,000 America jobs. A further 37 major business deals were signed with China (worth more than US$250billion). Trump will next visit the Philippines to further improve on the ties with the rest of the South-East-Asia countries. Putting aside the crazy North Korea provocation for a war, it is very apparent that Trump is a great businessman which has so far kept to his promise of creating more jobs for fellow Americans and incentivising companies to move money back to the States. All in all, unless Trump’s reform face with hiccup, market is likely to go up further

However here comes the truth. How long will these easy monies last? Will we see a further 3-4 rounds of interest rate hike by the FED in 2018? Personally, I envision at most 2 rate hikes in 2018, to allow market to grow comfortably and inflation to pick up.  Despite this positivity, divergence in monetary policies is a major concern. This shall be touched on later at the FX section. Nonetheless, for the coming year, we are looking at defensive sectors and consumer/retailers market to expand our portfolio.

With continual optimism in the market, we believe that consumer/retailers market shall take lead from the manufacturing and construction sector. As for defensive sectors, we are looking to even out our risk.

 

Foreign Currencies (FX)

As per earlier mentioned, divergence in monetary policies is a great concern especially when FED is tightening its balance sheet while ECB and BOJ are still in a dilemma to do so. Continual pumping of money into the market to get out of deflation is after all a fallacy, especially when you are not even a reserve currency. BOJ’s stance to inject money into the market is likely to face further set back if the consumer market doesn’t catch up with its spending and the companies not expanding fast enough (worst off, there are accounting frauds in some of the largest Japanese corporations of late). ECB is also facing the same issue of liquidity trap. As much as it needs to raise rates, fiscal austerity is likely to hold the idea back. In Singapore, we are well taken care of. MAS has been actively monitoring the FX market and allow Singapore Dollar to stand strong despite the challenging market ahead. However, having a strong currency is not advisable for an export orientated country. Thus, adjustment along the way is pretty much what MAS is working on. We still have some ammo left amidst the uncertain market ahead and I am certain that SGD will not be hit as bad as any of our neighboring countries.

As much as I will like to go into details on most of the charts, I simply don’t have the luxury of time to do so. Besides FX market is far more volatile and trend changes very fast even within a month, therefore it’s not worth the effort to do any chart analysing at this point of writing. But one thing for sure, I am very certain that British Pound is a buy on dip currency. It is to be held for 1-2 years to see past glory again. Any price from 1.24 to 1.28 for GBPUSD, 1.7 to 1.751 for GBPSGD is a keeper. GBP is poised for a run up and a multi-bagger for long run.

 

Conclusion

One of my longest post just yet, 2018 shall be as challenging and we shall see higher high forming for major indices. There is a slight chance that market is looking to be corrected in the next 1-2 months. The correction may be heavy due to the overstretched market. So, whatever you invest or trade in, do exercise due diligence and understand why you are buying in.

Last but not least, we hope that this review will help you have a holistic view on the market and let’s rock the market together.

 

Cheers,

JG