Monday, December 16, 2013


DBS Private Bank strategy: DBS CIO Lim Say Boon has their strategy outlook for 2014. Note that global equities were likely to stage a modest correction in near term going into 2014, from technically overbought conditions. Suggest investors ignore the noise from the markets, especially in regards to the Fed budget. Three main themes to note: 1) US monetary policy remains accommodative: Fed reserve will start tapering after US debt ceiling obligations are resolved in Feb, and probably in March. Policy rate likely to stay close to zero for 2014. 2) We are in the midst of synchronized global upturn: WIth China, EU, Japan and US showing growth 3) Corporate earnings in developed markets continue to grow: Current US earnings positive for mkts sentiment and confirms continued corporate earnings growth. Overall, bullish on equities for 2014, and the markets are getting less bothered by US debt talks according to the house research, and any scenario will likely end the way it is in the past. Arguable if QE now still has any meaningful impact on the US economy. Going forward, US Govt bond yields will likely increase which will create more volatility and push up the spread of emerging mkts bond yields. In recent mths, consensus has been downgrading expectations of emerging markets and Asia ex-japan economy growth for 2014. Until the house see a pick up in upgrades and stronger growth momentum of emerging mkts and Asia ex-japan growth, it will be hard to see these markets sustain their outperformance. When tapering starts, some emerging countries will be struggling with the deficits on their current accounts. Overall, the house is cautious on Asia ex-Japan in the near-term, with a neutral weight call, noting technical postures beginning to worry the house. Not withstanding long-term view in Asia ex-Japan, continue to favour developed markets over emerging markets.

No comments:

Post a Comment