Advertisement
Singapore markets closed
  • Straits Times Index

    3,224.01
    -27.70 (-0.85%)
     
  • Nikkei

    40,369.44
    +201.37 (+0.50%)
     
  • Hang Seng

    16,541.42
    +148.58 (+0.91%)
     
  • FTSE 100

    7,952.62
    +20.64 (+0.26%)
     
  • Bitcoin USD

    69,676.62
    -955.00 (-1.35%)
     
  • CMC Crypto 200

    885.54
    0.00 (0.00%)
     
  • S&P 500

    5,254.35
    +5.86 (+0.11%)
     
  • Dow

    39,807.37
    +47.29 (+0.12%)
     
  • Nasdaq

    16,379.46
    -20.06 (-0.12%)
     
  • Gold

    2,254.80
    +16.40 (+0.73%)
     
  • Crude Oil

    83.11
    -0.06 (-0.07%)
     
  • 10-Yr Bond

    4.2060
    +0.0100 (+0.24%)
     
  • FTSE Bursa Malaysia

    1,536.07
    +5.47 (+0.36%)
     
  • Jakarta Composite Index

    7,288.81
    -21.28 (-0.29%)
     
  • PSE Index

    6,903.53
    +5.36 (+0.08%)
     

4 Takeaways from Shares Investment Conference 1H 2016

The gloomy market outlook in 2016 has dampened investors’ spirits. In view of the many uncertainties ahead, investors may feel reluctant to get their feet wet.

But investing is not about jumping into the market hoping to get rich overnight. In the words of renowned investment expert and columnist Dr Chan Yan Chong, it is about spotting the right opportunities, accumulating wealth, and paving one’s road towards comfortable retirement. This is precisely what our Aspire and Shares Investment Research team aim to help you achieve.

After the first Shares Investment Conference of the year (SIC 1H 2016) on 14 May, attendees walked away with invaluable analyses and advice from our five speakers. But if you were unable to attend the event, fret not because we have summarised the key takeaways for you and highlighted the experts’ opinions and picks, like we always do.

1. The Bear Market Is Here

All our speakers acknowledged the market downturn and weakening global economy in 2016. CMC Markets financial analyst Margaret Yang pointed out that the Morgan Stanley Capital International (MSCI) Emerging Market Index has fallen 22 percent from its 2015 high, which means that it has technically entered bear market territory. Similarly, Singapore’s stock market, which is usually high in correlation with global stock indices – especially the Dow Jones Industrial Average – has also registered a decline for the past year. The Straits Times Index (STI) has lost around 21 percent from May 2015.

MSCI Emerging Market Index, Bloomberg
MSCI Emerging Market Index, Bloomberg

MSCI Emerging Market Index, Bloomberg

STI 12 May 2015-11 May 2016, Bloomberg
STI 12 May 2015-11 May 2016, Bloomberg

STI 12 May 2015-11 May 2016, Bloomberg

ADVERTISEMENT

Investment coach Daniel Loh stated that in the near future, it is unlikely for exchange traded funds (ETFs) to see a drastic rise. Stock market guru DAR Wong went one step further by foreseeing a stock market crash in the second half of 2016.

What this means for investors

This is perhaps a time to change long positions to short. According to DAR Wong, one can consider short-selling major world indices, such as the S&P 500 or the Dow Jones Industrial Average.

2. Commodity Stocks Are Comparatively More Lucrative

soybean-corn-wheat
soybean-corn-wheat

Despite the bearish market outlook on the whole, Daniel Loh sees an impending bull run for commodity stocks.

In particular, there are four types of commodity products that he thinks will witness price appreciation: corn, silver, soya bean and wheat.

CMC’s Margaret Yang also agrees that this year is not a good year for stocks, but a year for commodities, as the market is flooded with money but low on confidence. In this instance, we will see money flowing back to tangible assets, and in her words: physical assets that “we can see and touch”.

What this means for investors

Investors can consider buying silver futures, or iShares Silver Trust (SLV). For agricultural commodity stocks, investors can look into Halcyon Agri Corporation, Golden Agri-Resources, Indofood Agri Resources, and Wilmar International.

3. Keep An Eye On The Coming US Election

trump vs clinton
trump vs clinton

Here is a question that may seem irrelevant to investing: Who would be the next US president – Hillary Clinton or Donald Trump?

However, in the opinion of Daniel Loh and DAR Wong, whether the Federal Reserve decides to continue or halt interest rate hikes, is highly dependent on the result of the election.

What this means for investors

Though Janet Yellen is holding interest rates for now, both Daniel and DAR anticipated that the Federal Reserve interest rate would be lifted if Trump wins, and remain largely unchanged if Clinton wins. In the case of a Trump victory, which Roger Tan, CEO of Voyage Research thinks is also highly possible, both DAR and Daniel opined that the US market would likely take a downward move, and drag other markets along. That is perhaps something that investors can be mentally prepared for.

4. Be Daring To Invest When Others Are Not

In view of the economic downturn, it is common for investors to be reluctant to enter the market.

Dr Chan even quipped that he lost 7 out of 8 of his readers when the market was down.

“I notice that many people only rush in to invest when the stock market is crazy and soaring, and back out when it’s going down. These people will always be the ones losing money, because they always enter when prices are highest,” he said.

His advice for investors: Be the “1 out of 8” who dare to invest during market downturn, and buy stocks that bring in stable income.

What this means for investors

Note that the phrase “cash is king” does not mean that one should hold only cash when the market is not performing well, said Dr Chan.

Instead, it means that cash becomes more powerful when stocks have fallen to cheap pricings, and investors should utilise this power well, Dr Chan explained.