3 Things Dr Chan Yan Chong is Looking at Now in Financial Markets
Even in a climate where volatility and instability are the norms, seeing a ten-percent increase in indices that declined over the past year, give-and-take, is something to note.
The Hong Kong Hang Seng Index (HSI) and Singapore Straits Times Index (STI) made such a recovery of about ten-percent in late February and early March in 2016.
This recovery – or rally – aside, there are more concerning issues that investors and economists are looking at.
Below are three main things that renowned investment expert Dr. Chan Yan Chong has been talking about in his recent writing (like here and here), along with some advice for investors.
1. Be Patient for Governments to Relax Property Cooling Measures
Hong Kong & Singapore Housing Index 5-Year Chart; Source: tradingeconomics.com
Apart from HSI and STI’s times of recovery, the property markets in Hong Kong and Singapore are very similar, as pointed out by Dr. Chan.
The property cooling measures that the Hong Kong and Singapore governments employ to curb housing and real estate prices are almost identical, too.
On that note, the property markets in both cities have been down till recently, albeit a strong resistance particularly due to both governments’ reluctance to relax the measures.
However, Dr. Chan points out that if the governments decide to loosen up, property prices will skyrocket back up.
His point is, there are a lot of rich people and there is money in the markets, but these people or investors are waiting for the right opportunities to go in.
When that happens, even small-time investors or punters can make profits. So, be patient and look out for the policy-makers’ decisions.
2. US Fed & USD poses opportunities for SG & HK markets
Hang Seng Index 1-Year Chart; Source: Bloomberg (as at 11 April 2016)
Straits Times Index 1-Year Chart; Source: Bloomberg (as at 11 April 2016)
Other than the property markets, Dr. Chan thinks that there is value in Hong Kong and Singapore markets, too.
One of his main reasons is the US Federal Reserve Chairwoman Janet Yellen’s recent comment about downgrading the rate-hike forecast for 2016.
As soon as Yellen’s words were made known to the markets, the US Dollar started weakening; the US Dollar was strong because of the rate-hike last year and her earlier four-rate-hike expectations for 2016.
Taking this into consideration, funds will start to flow out of the US market because of both the maintained and low interest rates, and the weakening US Dollar.
Furthermore, the Singapore Dollar and Hong Kong Dollar has been appreciating against the US Dollar over the past few months, which might cause US investors to consider our markets.
This is not forgetting that there are quite a number of US companies that have businesses in Hong Kong and Singapore. In short, expect more upside in our markets in the near-term as long as interest rates are maintained low.
3. Low-Price-High-Dividends Banking Stocks
HSBC Holdings 1-Year Chart; Source: Bloomberg (as at 11 April 2016)
The correction over the past year or so had brought stock prices down to cheap levels, Dr. Chan opined.
One example that he used in his recent writing is HSBC Holdings (listed on HSI, stock code: 0005).
At HSBC’s current valuation on the HSI, the over eight-percent dividend payout is high.
In the past, HSBC stocks were expensive, making the dividend payouts seem minute and of low investment value.
Now that HSBC stock price received a correction, it belongs to the category of stocks with low share prices and high dividend payouts.
Dr. Chan also mentioned that HSBC is not the only banking stock that offers high dividends for their current low share prices.
With this in mind, investors that are interested in dividends can look at China banks for good yield over the mid- and long-term considering Dr. Chan’s premonition of an impending surge of funds into our Asian markets.
Meanwhile, Dr Chan will be sharing more insights about his macro outlook of the economy and what you can do during this time of uncertainty at our upcoming Shares Investment Conference 1H2016. Click here to find out more.