by Raymond Chatlani
On Monday, Asian stockmarkets rose as China did not raise interest rates as expected. Analysts believe that the next interest rate raise will commence in 2011. European stocks rose as upbeat U.S. and Chinese data boosted investors' risk appetite, and on hopes that Beijing may not raise interest rates anytime soon. Us stocks started off on a positive note after China refrained from raising its benchmark interest rate but gave up gains in the last hour with the indices ending mixed.
On Tuesday, Asian markets rose supported by optimism that China would shun aggressive measures to curb inflation that could inhibit its strong economic growth or blunt its voracious demand for raw materials. European indices rose on good US retail sales. US stocks rose after the Commerce Department reported that retail sales rose for the fifth straight month in November.
On Wednesday, Asian stocks fell on the Federal Reserve's decision not to increase its quantitive easing program on Tuesday which strengthened the US Dollar and drove riskier assets such as miners and oil to fall back. Sentiment in Asia was further dampaned by the Bank of Japan's Tankan survey for December showing that confidence among big manufacturers fell for the first time in seven quarters. Spanish shares led Europe lower on debt fears as Moody's warned that it may downgrade Spain's debt. US markets fell due to inflationary concerns reflected in the bond market as yields keep rising.
On Thursday, Asian markets fell except for Australia and India on low volume. This is a sign that investors are cutting back on exposure to equities in the region for the rest of the year. European stockmarkets closed flat and mixed although Spanish bond yields were forced higher during an auction of sovereign debt. US stocks rose as it was reported that jobless claims fell slightly and housing starts rose in November. Also, European leaders agreed to change the EU treaty to create a permanent financial safety net which further boosted sentiment.
This morning Asian markets rose after two days of declines although on declining volumes. European stocks fell modestly on another Irish debt downgrade. US stockmarkets fell although the U.S. Congress passed an $858 billion bill extending for two years all Bush-era tax cuts.
Sentiment has been bullish this week on strong economic data in the USA as it was reported that jobless claims fell slightly and housing starts rose in November and on some positive policy announcements in the United States in the past weeks especially the plan announced by the U.S. administration this month to extend all Bush-era tax cuts for two years. December's reduced trading volumes and holidays typically cause whippy price action and make big bets difficult to hold for long, so we may see volatility over the last two weeks of this year.
Emereging markets and commodities have hardly moved this week probably due to low volumes. Let's hope that we have a January rally based on the improving economic news that we have been seeing this month.
Monday, December 20, 2010
Thursday, December 16, 2010
Weekly Market Review
by Raymond Chatlani
On Monday, Asian stocks rose amid investor hopes for more Federal Reserve action to boost the U.S. economy, although the Nikkei fell modestly due to pressure on Japanese shares from a stronger yen. European stockmarkets closed mixed with banks falling and oil shares rising. US markets fell modestly with investors taking profits and looking for further action from European officials to prevent a debt crisis from spreading. Gold temporarily hit a record high of $1,429.40 an ounce with silver reaching a thirty year high.
On Tuesday, Asian stockmarkets all rose except for Japan due to a strengthening Yen and India. European and US stocks rose due to the agreement by President Obama and Republicans to extend the Bush-era tax cuts for two years, along with an extension of unemployment benefits and a 2% cut in payroll taxes.
On Wednesday, Asian markets mostly fell amid expectations of Chinese interest rate hikes. European stockmarkets closed mixed. US stocks rose as much of the focus remained on President Obama's decision to help middle class Americans with the two-year tax cut extension.
On Thursday, Asian equities were higher across much of the region with Sydney hitting a four-week high on strong employment data while a weaker yen overnight continued to boost Japanese shares. European markets rose boosted by technology and bank shares. US Stocks closed mixed as traders waited to see whether a tax compromise brokered by the White House and Republicans would pass the Democratic-controlled House.
This morning, Asian indices were mostly down on profit taking. European stocks rose modestly on easing sovereign concerns. US markets are modestly down at the time of writing.
This week European and US markets rose as debt concerns eased and on improving US economic data. Commodities and emerging markets lost some ground this week on fears that China will raise interest rates this weekend.
Perhaps the most important event this week is that bond yields are appreciating which is decimating the price of bonds. As investors flee, where will this money go? Cash has almost no return, so stocks could benefit over the next few months. Also, volatility has been tame this week compared to the last few months. This is generally a good sign for markets to appreciate.
On Monday, Asian stocks rose amid investor hopes for more Federal Reserve action to boost the U.S. economy, although the Nikkei fell modestly due to pressure on Japanese shares from a stronger yen. European stockmarkets closed mixed with banks falling and oil shares rising. US markets fell modestly with investors taking profits and looking for further action from European officials to prevent a debt crisis from spreading. Gold temporarily hit a record high of $1,429.40 an ounce with silver reaching a thirty year high.
On Tuesday, Asian stockmarkets all rose except for Japan due to a strengthening Yen and India. European and US stocks rose due to the agreement by President Obama and Republicans to extend the Bush-era tax cuts for two years, along with an extension of unemployment benefits and a 2% cut in payroll taxes.
On Wednesday, Asian markets mostly fell amid expectations of Chinese interest rate hikes. European stockmarkets closed mixed. US stocks rose as much of the focus remained on President Obama's decision to help middle class Americans with the two-year tax cut extension.
On Thursday, Asian equities were higher across much of the region with Sydney hitting a four-week high on strong employment data while a weaker yen overnight continued to boost Japanese shares. European markets rose boosted by technology and bank shares. US Stocks closed mixed as traders waited to see whether a tax compromise brokered by the White House and Republicans would pass the Democratic-controlled House.
This morning, Asian indices were mostly down on profit taking. European stocks rose modestly on easing sovereign concerns. US markets are modestly down at the time of writing.
This week European and US markets rose as debt concerns eased and on improving US economic data. Commodities and emerging markets lost some ground this week on fears that China will raise interest rates this weekend.
Perhaps the most important event this week is that bond yields are appreciating which is decimating the price of bonds. As investors flee, where will this money go? Cash has almost no return, so stocks could benefit over the next few months. Also, volatility has been tame this week compared to the last few months. This is generally a good sign for markets to appreciate.
Wednesday, December 15, 2010
The versatile portfolio manager
A myth often observed by investors is that in order to spread your risk into more sophisticated investments and alternative strategies requires substantial capital. The reality is that you can gain exposure to hedge funds, managed futures and structured notes etc at very low entry levels so long as you have a portfolio manager who is able to pool investors' capital.
A diversified portfolio
Having your capital protected is very popular, especially to the new investor. Some High Street Banks offer these as retail products and clients can participate in this 'plain vanilla approach'. But what if the investor wants to invest in gold or oil or the Brazilian stockmarket as opposed to the traditional standard FTSE or Eurostoxx offerings ? Can his advisor do this for him and protect his capital also ? Typically the response is negative as minimum levels for such structures are often in the region of €1 million. If on the other hand, your advisor or portfolio manager can gain access to international banks then the door is opened to a world full of choice. Whereas the minimum trade may be €1 million, the manager can pool individual trades, often from as little as €10,000 then place the one aggregate trade of €1 million.
The same principle applies to many hedge funds or alternative investments. Often perceived only for the rich and famous, investors can now trade from low levels if their manager has a good relationship with the fund managers. Having a sizable asset base allows the manager to bring in new investors who piggy back onto the fund without having to commit large amounts.
Exchange Traded Funds
If you do elect to invest internationally, a mistake often made by investors is to only consider investment funds from recognised banks and financial institutions. There is however a much cheaper, easily accessible way of investing into almost any global stockmarket, commodity or currency in the world. Exchange Traded Funds (ETFs) and IShares are used by many portfolio managers to allow them to trade intra day without surrender penalties or lock in periods like many investment funds. Imagine therefore the following hypothetical portfolio :
| Commodities | Equity Indices | Alternatives |
| Gold Bullion ETF | IShares Brazil | FTSE100 Autocall 11% |
| Short Silver ETF | IShares Eastern Europe | Blue Chip Income Note 8.1% |
| Leveraged Crude Oil ETF | IShares Australia | 3 Year Phoenix Note 18% |
| Grains ETF | ||
| Global Nuclear Energy ETF |
The above contains a truly global exposure to commodities, equities and income notes, the latter being in the form of structured income notes that pay a fixed income with inbuilt capital protection. To the average investor, the use of ETFs and IShares will be unheard of but they are a fabulous way of investing cheaply and effectively into almost any market you choose. You avoid initial fees that you incur with fund managers and they also carry a much lower annual management fee.
A portfolio manager's job is not only about performance but controlling costs also. If he can give the investor a truly international portfolio that includes alternative investments, capital protection and the use of low cost trading tools then the investor is really getting a portfolio that may be perceived to require a very high capital investment. In reality the manager could offer his services and give a diversified approach for in the region of €50,000 upwards - therefore appealing to a lot wider clientele and not just the super rich.
Mark Hollingsworth, Director, Hollingsworth International Financial Services Ltd
Tel: +357 99066840, +356 21316298
e-mail: info@hollingsworth-int.com
Website: www.hollingsworth.eu.com
Authorised by the Malta Financial Services Authority to provide investment services, license IS/32457
Monday, December 6, 2010
Weeket Market Summary
by Raymond Chatlani
EU finance ministers on Sunday endorsed a bailout package of 85 billion euro to help Dublin cover bad bank debts and bridge a huge budget deficit, and outlined a permanent system to resolve the euro zone debt crisis in which investors could share the cost of any future default.
On Monday, Asian mostly rose on the Irish bailout news. European and US stocks fell sharply as concerns about the European debt crisis took the edge off a strong weekend of holiday sales in the USA. US shares recovered late in the session and closed modestly down.
On Tuesday, Asian markets fell as Chinese shares slid on fears of an interest rate hike and the European Union's bailout of Ireland failed to convince investors the continent's debt crisis has been contained. European indices fell as the spread between Spanish 10-year bond yields over those of Germany widened by 20 basis points to 297 basis points, while Italian 10-year spreads rose for a fourth day to 210 basis points. US stocks slid as continuing European debt woes and an 0.7% decline in the Standard & Poor's/Case-Shiller 20-city home price index offset a five month high in consumer confidence.
On Wednesday, gold rocketed to just below $1,400 an ounce with silver exceeding $28 an ounce. Asia markets rose broadly as sentiment was boosted by data showing China's factories revved up production in November with the official Chinese purchasing managers' index (PMI) rising to a seven-month high of 55.2. European indices rose calmed by indications that the European Central Bank could subtantianlly increase purchases of eurozone bonds and on stronger Chinese data. US stocks were sharply higher as upbeat U.S. and Chinese data lifted investor confidence about a global economic recovery. USA data showed an improvement in construction spending while manufacturing activity expanded for the 16th consecutive month.
On Thursday, Asian stock markets rose sharply after improved economic indicators powered big gains on Wall Street and worries eased about Europe's debt problems. European stocks rose on expectations that the ECB would signal action to fight a eurozone debt crisis. US stocks extended gains after data showed pending sales of existing homes unexpectedly surged in October.
This morning, Asian markets closed mixed on good US data and fears that China would raise interest rates. European and US indices were mixed as the US unemployment rate climbed to 9.8 percent in November from 9.6 percent, a seven-month high, as hiring slowed.
At the beginning of the week, markets continued to fall after last week's losses. In the past few days, markets and commodities recovered on improving US data, ECB intervention in the form of purchasing bonds and a statement that unlimited liquidity would be provided to Eurozone banks till the end of March 2011. Chinese data this week also reversed sentiment to a positive stance. Commodities, especially gold, silver and oil appreciated significantly.
It looks like the Korean and EU debt crisis are diminishing in investor's minds and they are focusing on improving US economic data.
EU finance ministers on Sunday endorsed a bailout package of 85 billion euro to help Dublin cover bad bank debts and bridge a huge budget deficit, and outlined a permanent system to resolve the euro zone debt crisis in which investors could share the cost of any future default.
On Monday, Asian mostly rose on the Irish bailout news. European and US stocks fell sharply as concerns about the European debt crisis took the edge off a strong weekend of holiday sales in the USA. US shares recovered late in the session and closed modestly down.
On Tuesday, Asian markets fell as Chinese shares slid on fears of an interest rate hike and the European Union's bailout of Ireland failed to convince investors the continent's debt crisis has been contained. European indices fell as the spread between Spanish 10-year bond yields over those of Germany widened by 20 basis points to 297 basis points, while Italian 10-year spreads rose for a fourth day to 210 basis points. US stocks slid as continuing European debt woes and an 0.7% decline in the Standard & Poor's/Case-Shiller 20-city home price index offset a five month high in consumer confidence.
On Wednesday, gold rocketed to just below $1,400 an ounce with silver exceeding $28 an ounce. Asia markets rose broadly as sentiment was boosted by data showing China's factories revved up production in November with the official Chinese purchasing managers' index (PMI) rising to a seven-month high of 55.2. European indices rose calmed by indications that the European Central Bank could subtantianlly increase purchases of eurozone bonds and on stronger Chinese data. US stocks were sharply higher as upbeat U.S. and Chinese data lifted investor confidence about a global economic recovery. USA data showed an improvement in construction spending while manufacturing activity expanded for the 16th consecutive month.
On Thursday, Asian stock markets rose sharply after improved economic indicators powered big gains on Wall Street and worries eased about Europe's debt problems. European stocks rose on expectations that the ECB would signal action to fight a eurozone debt crisis. US stocks extended gains after data showed pending sales of existing homes unexpectedly surged in October.
This morning, Asian markets closed mixed on good US data and fears that China would raise interest rates. European and US indices were mixed as the US unemployment rate climbed to 9.8 percent in November from 9.6 percent, a seven-month high, as hiring slowed.
At the beginning of the week, markets continued to fall after last week's losses. In the past few days, markets and commodities recovered on improving US data, ECB intervention in the form of purchasing bonds and a statement that unlimited liquidity would be provided to Eurozone banks till the end of March 2011. Chinese data this week also reversed sentiment to a positive stance. Commodities, especially gold, silver and oil appreciated significantly.
It looks like the Korean and EU debt crisis are diminishing in investor's minds and they are focusing on improving US economic data.
Thursday, December 2, 2010
Hollingsworth Daily Post
- Qantas has begun legal action against the engine supplier Rolls-Royce following the explosion of an engine on one of the airline's Airbus A380s.It said the legal action was back-up in case a settlement could not be reached.Earlier, Australian air safety authorities said they had identified a serious manufacturing fault with some of Rolls-Royce's Trent 900 engines.Rolls-Royce said the Australian findings were "consistent with what we have said before".Qantas has resumed flying some of its A380 planes after grounding the fleet for safety checks following the incident on 4 November.
- The euro has risen in value after the European Central Bank (ECB) confirmed it would continue to purchase European government bonds.The confirmation was given by ECB president Jean-Claude Trichet, although he declined to give any further details.He also confirmed that the ECB would continue its support of struggling banks within the eurozone.The euro was up to $1.3145 from its earlier low of $1.3059.The main share indexes were also higher, with Germany's Dax adding 0.4%, France's Cac up 0.5%, and the UK's FTSE 100 advancing 1.3%.
- Soft drinks maker PepsiCo has said it is buying a 66% stake in Russian dairy and fruit juice maker Wimm-Bill-Dann for $3.8bn (£2.4bn).PepsiCo said it would also seek to buy the remaining shares in Wimm-Bill-Dann when the initial deal is completed.The deal is the biggest foreign investment in Russia outside the energy sector."Wimm-Bill-Dann is a terrific business with significant opportunities," said Zein Abdalla of PepsiCo Europe.
- Brazil's Congress has modified laws relating to the country's oil sector which could increase development of its offshore oil fields.The bill ensures that the state-run oil company Petrobras will have a 30% stake in any new joint exploration ventures in Brazil's offshore fields.Exploitation of the reserves could turn Brazil into a global energy exporter.President-elect Dilma Rousseff helped to draft the proposals while chief of staff in the current government.
- A presidential panel set up to help trim the US budget deficit has called for steep spending cuts and tax rises.The proposal would cut defence, social security and other spending, slashing a total of $4.1tn (£2.62tn) from the budget deficit by 2020.But analysts say the panel is unlikely to ratify the plan with a vote, calling into question whether the US Congress will act on its recommendations."The solution will be painful," the plan reads. "There is no easy way out."The US had a budget deficit of $1.3tn in the year to September, and critics have said the government should do more to narrow the gap
BBC Business News 2nd December 2010
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