Kevin_Scully_300
Kevin Scully, chairman, NRA Capital. NextInsight file photo

SINGAPORE AND REGIONAL stocks enjoyed a strong recovery last week but ….. there is more bad news to come out of the eurozone debt crisis in the coming months, according to Kevin Scully, the executive chairman of NRA Capital.

As a result, the Singapore market will continue to be volatile and range bound with a downward bias until the end of 2011, said Kevin at the Invest Insight Seminar held at the Rock Auditorium on Saturday (Oct 15).

Kevin expects the STI Index, currently at 2,744, to find support at 2500 and, if that breaks, then 2200.

“If you cannot stomach the volatility, you should reduce your weightings in cyclicals into any rally and move into defensive yield plays.” (see table below)

Kevin added that investors who are prepared to wait one to two years can expect to make good gains in both blue chips and mid/small caps. His blue chip stock picks:

  • Singapore Telecom – accumulate at $3.00
  • SPH – accumulate at $3.60
  • OCBC – accumulate at $8.00
  • SGX – accumulate at $6.00
  • Keppel Corp – accumulate at $7.50
  • Olam – accumulate at $2.20
K_Scully_oct11
Source: Kevin Scully

On why, investors can expect more bad news from the eurozone, Kevin said the European Financial Stability Facility is too small - at euro 780bn, it can save Greece and maybe Portugal but not Italy, Spain, Ireland and even France.

In addition, eurozone governments would not be able to keep to their promised fiscal cuts in the face of strong social unrest.

It would be difficult to save European banks that hold euro sovereign debt. “I think we could see at least 10 European bank failures over the next one to two years,” reckoned Kevin.

Markets have been very volatile since August 2011. “Expect that to continue - it would take about 4 months for markets to stabilize,” said Kevin.

“I expect the volatility to continue into November/December 2011….or until we have a sovereign default or more bank defaults – we can then see the impact of the defaults instead of trying to guess their impact."


For the full set of powerpoint slides from Kevin's presentation, go to
www.nracapital.com

Recent story: Market Slide Continues, but Positives May Be on the Horizon


Comments  

0 #4 Robert 2011-10-17 10:58
When a ship turns, it may be difficult for the passengers on board to detect the turn initially.

My own gut feel is that the ship is turning. Consider that European Union Economic and Monetary Affairs Commissioner said clarity on a plan to contain the region’s debt crisis will emerge in the “coming days”. This is quite a big promise, isn't it? The big ship is turning.
G-20 countries have held out the prospect of giving more International Monetary Fund aid to Europe. Cheers guys!
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0 #3 7603 2011-10-17 09:12
agree with AG, nothing significant has been done so far except a common pledge for an improved EFSF - the Euro leaders have been pledging all these while.
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0 #2 AG 2011-10-17 06:50
if it was so easy to come up w a good soln, they would have done so much earlier... so in my opinion, if anythg, mkt will find the measures a bit of a shortfall.. how is it that the G20 can instil confidence in us, when all they did was to set a deadline for ECB instead.
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0 #1 7599 2011-10-17 05:20
The outlook has, I think, brightened considerably over the weekend. I am more optimistic now about stocks. G-20 finance ministers and central bankers concluded weekend talks in Paris, endorsing parts of an emerging plan to avoid a Greek default, bolster banks and curb contagion. They set an Oct. 23 summit of European leaders in Brussels as the deadline for it to be delivered.
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