Bullish outlook: We remain relatively bullish on the outlook, expecting another couple of quarters of strong US and European growth to lead to much stronger growth in the first half of 2010 than consensus expectations.
LEAVE BEHIND your worst fears – and say goodbye to the unprecedented financial turmoil of 2009. It will not return in the new year. Instead stocks will rise.
”What’s over is over,” Charlie Lau, 66, a popular speaker on stocks, assured his 150 paying audience packed into a room in Tampines West Community Club over the weekend.
”By the first quarter of the new year, the stock markets of China, India and Singapore should perform well based on corporate earnings and activities,” he said.
This, despite the fact that the Singapore bourse’s benchmark index is at a 15-month high currently at around 2,800 points. The index has risen 49% since the start of 2009.
Bullish sentiment will be continue to be evident in other sectors, according to Charlie, who teaches technical analysis, emphasizing indicators including Relative Strength Index and Stochastic Momentum.
In the presentation at Tampines West, he walked the audience though his technical analysis of a number of stocks such as Olam, City Development and Midas.
The fundamental outlook is good for a range of investments.
“Properties, assets and commodities in 2010 would continue to rise due to low interest rates and high liquidity. But look out for asset bubbles to burst every now and then. Get ready to sell and buy back later.”
There is ample liquidity from funds and sovereign wealth funds – however, they may be looking at the short term and will take profit on good quick profits, said Charlie, who is a trading representative at UOB Kayhian.
He expects the US dollar will remain weak, which will be an aid to US exporters. But don’t expect it to crash – not when China has about US$1 trillion in US Treasury bonds and has an interest in ensuring that the dollar doesn’t collapse.
Charlie dealt with several questions that he had received earlier by email from investors. One of these had to do with “big boys” accumulating shares by queueing to buy - yet they also have put down large 'sell' orders.
Are these deceiving ploys to induce shareholders to sell to the big boys?
“Yes, in investments everything may be deceitful. You have to learn to look after yourself.”
Instead of reporting what he said, I will provide a link which I was glad to find on the Internet for my 2004 Straits Times interview with Charlie. Click here.
In January, Charlie will regularly appear on NextInsight with his technical analysis of stocks selected by NextInsight. Watch this space!
Deutsche Bank issued its Singapore Outlook 2010 report on Dec 18. Excerpts:
We expect YoY GDPgrowth could top 10% in Q1 due to a very favourable base for comparison but due also to a rebound in QoQ growth. For the year as a whole, our 6.5% forecast is well ahead of the 5.5% consensus forecast.
But importantly, we think growth will be “front-loaded” in the sense that we see much stronger-than-consensus growth in the first half of the year but potentially weaker-than-consensus growth in the second half as fiscal and monetary stimuli around the world are removed.
By yearend 2010, YoY growth in Singapore could be below 5%. But we expect a gradual recovery in 2011 to above 5%, yielding a still respectable 5.5% average for the year. Indeed, that would still be above our estimate of potential growth.
Tourism soft patch? One question mark hanging over the economic outlook, in our view, is whether the transition from building the integrated resorts to filling them with tourists will go smoothly. The IRs will have cost about SGD5bn to build, contributing about 0.6% to GDP growth in the last couple of years.
As these projects reach completion, this source of investment growth will disappear. It’s been more than 20 years since hotel capacity was increased as much as it is today (hotel rooms under construction amount to about 30% of existing rooms), so it’s difficult to judge how the opening of the IRs will affect overall tourism receipts in Singapore.
While the government aims to triple tourism receipts by 2015, it’s possible that a period of “soft opening” could mean that the support to growth from construction is not quickly replaced by tourism receipts – another kind of “soft patch” to growth perhaps in 2010.