Asian Markets

JohnRo

Let's not get hung up on colours You understood the gist, my spreadsheets use black, my main online platform prefers green.

planteria

bigadaj wrote: »

I'm not sure quoting hl articles helps your case...

i'm not defending a case. just thought it was a relevant article.

IronWolf

I have a special pot of money left to me by my grandparents invested mostly in Asia. For that kind of area I chose active management over picking stocks myself. Have to be careful, China in particular as fraud everywhere.

TCA

Asian and Emerging Markets took a decent dive today I see. That's on top of the steady slide over the past while. Aberdeen Asian Smaller Companies is a chunky 3.5% down just on the day! My crystal ball wasn't working too well when I took my Asia Pacific lump sum plunge in Nov/Dec.

I still have cash to either top-up existing AP investments and/or buy my other planned investments in AP or EM, but it's hellish difficult to know whether to stick or twist.

I had a limit order in at £3 for Henderson Far East Income today but must have narrowly missed out. I'm wondering if that's a close escape.

JohnRo

My income portfolio has taken a decent battering across the board this week, nothing we haven't seen before though. I just have JEMI still to add and that might help to offset some of the less than optimally timed purchases in uk, europe and asia I made earlier this week and last.

At least it makes deciding what to do with the dividends a lot easier

TCA

JEMI is about the only trust I'm watching that went up today. Although it took a hefty 3% dive yesterday.

I see the Dow Jones and the S&P 500 closed around 2% down, so I guess that might carry over into Monday when the LSE opens.

TCA

So more tapering of QE in the US and more adverse effect on Asian and Emerging Markets. My trigger finger is ready to buy (more in these areas) but part of me wonders if we'll get further dips after the next Fed meeting!

Interested to hear any viewpoints on this. And please don't reply to say nobody knows the future blah blah blah....I'm only asking for opinions.

grizzly1911

They said last weeks scaling back ward already priced in:beer:

Unless something goes badly wrong I don't see the US reigning back the QE reductions as planned. You would like to think that it should be priced in. Makes me wonder whether some big players are steering the market with the QE as a smoke screen. What is US$10bn per month globally?? The US have cheap fuel now to help cushion too.

No doubt if they did slow down the reductions then that would also be seen as as bad sign too.

A_Flock_Of_Sheep

TCA wrote: »

So more tapering of QE in the US and more adverse effect on Asian and Emerging Markets. My trigger finger is ready to buy (more in these areas) but part of me wonders if we'll get further dips after the next Fed meeting!

Interested to hear any viewpoints on this. And please don't reply to say nobody knows the future blah blah blah....I'm only asking for opinions.

I am too scared to offer an opinion about the Feds next announcement and any resultant market wobbles.

Any time I bring up daily, weekly, or monthly market performance topics on here they usually get shot down in flames by those who consider 500 years to be a minimum investment horizon. Clearly instead of ignoring the "short term" topics and jogging on to a thread more suited to their view some like to behave like a keyboard warrior and batter the poster(s).

A typical example of me attempting to start a shorter term market performance discussion can be found here where bowlhead99 for one clearly seems to dislike "current market discussions" but can't help retorting with a scathing contribution. Apparently talking about short term market performance is "inflammatory". So please bare this in mind and learn from my experience so to save yourself from a cyber telling off. Thinking about the next Fed meeting is far too short term!

https://forums.moneysavingexpert.com/discussion/4879614

So no - nobody knows the future, it all goes up and down and think of your investment as something that will mature in year 2175.

bowlhead99

A_Flock_Of_Sheep wrote: »

Apparently talking about short term market performance is "inflammatory"

hehe, I remember that thread: you started a thread called "markets slammin' " about how markets were taking a right beating - then less than 24 hours later you posted to say that after all that fuss and "mad sell off" the FTSE was going up again; you wondered what the fuss was about. I suggested it was just what markets do and it was only people like you who were spreading the fear and short term fidgety-ness by launching off doomsday threads every time the market slips a couple of percent

But FWIW, it's good to see you're now thinking in terms of buying opportunities in these periods of volatility rather than being scared of them.

TCA wrote: »

Interested to hear any viewpoints on this. And please don't reply to say nobody knows the future blah blah blah....I'm only asking for opinions.

I think you're right that we'll get more dips each and every time the Fed tells us they're doing more tapering. Asia and EM have been supported by the free money coming out of the US and the general "risk:On" attitude that's supported US and UK markets pushing to new highs off the back of anaemic (but improving) growth indicators.

It is sometimes hard to see that EM support so evidently, given the domestic US markets have stormed up while a lot of the Asia-exJP and EM funds are down or flat over the last year or two, or only showing modest returns. The decline from last summer is linked to the realisation that the US QE won't last forever, but without it having existed in the first place they would be a lot further down.

The guy writing the article for HL in Planteria's post above talks about the positive attributes of Asia and rounds up with "all of this is available at a discount" after declines. He works for JM Finn and is pimping the attributes of his funds that invest there, which are advertised on banners within and around the article on the HL website so is of course not impartial.

Whether it is truly a discount to fair value, depends on whether the value it has declined from was fair in the first place. If the recent high was driven by unsustainable QE, then perhaps it was not.

An analogy would be a customer going into DFS or Furniture Village in a January Sale and seeing all the sofas 50% off their RRP. The fact that you have previously priced them at £2500 for a month or two does not make them 'worth' £2500; the going rate for a sofa with those materials and that fabric and that delivery timescale is £1250 as you can see at every other furniture shop. Although they will later rotate the Sale tickets off that product for a period, it is only because they want to re-promote it as a bargain in their Valentines Sale, the Easter Sale, the May Day Sale, the early summer half term holiday Sale, ad infinitum.

So, I would be cautious about piling in to something just because it has gone down. Decent EM Asia funds delivered several hundred percent in the years prior to the credit crunch and seem to have fallen from grace somewhat as they are no longer the 'next big thing'; if something becomes the 'current big thing' and fully valued for exponential growth, it is quite feasible for it to have a few years of declines when expectations normalise towards steady decent growth rather than continuing outrageous growth.

Long term growth is likely from developing nations which will clearly, eventually, increase their share of the worlds markets for all kinds of goods and services relative to developed ones that already have the market share. Of course, GDP projected or actual growth does not always translate to share price performance.

The HL/JM Finn article noted that "Everywhere huge investments are taking place to build greater capacity, to create modern towns and cities and to increase efficiency". This sounds great and you can see people would buy shares in companies doing business in the region after hearing this, so the share prices go up.

However if you visit some of the cities in China you will see that a portion of this huge extra capacity is not actually creating ongoing economic activity. The activity, was building the skyscraping apartment block, road, and shopping centre with huge car park - in the middle of nowhere. It generated employment at the time and was the government's way of doing QE. And someone will buy the apartments because the conservative culture there is to hoard cash and property rather than, for example, speculate on stock market. But nobody moved into the apartments and the shopping centre carpark looks desolate. And even while doing all this spending on stuff that isn't strictly needed, the GDP growth rate is falling.

Sure, Porsche are doing well out of China because there are lots of potential customers. Relatively speaking, the wealthier 'middle classes' are filthy rich compared to the massive majority of people who are normal workers. If they can afford to bring a 40k BMW 5-series or a 25k Ford Mondeo from Europe, they might as well get a 90k Porsche Panamera. But the average person on $5k salary isn't getting one and he isn't getting dragged up the wealth ladder by the fat cats.

I mean, yes he gets to be a security guard at a vacant apartment block, which didn't exist before. Last year he was a foreman while the apartment was a building site. The year before, he did some work on the highway while that was in progress. So they keep finding something for him to do and he keeps getting 5k to spend every year. But it's not obvious how he'll grow that income or grow his consumption of goods and services without further government stimulus, and he and the wife only have one child so the population growth from everyone living longer will get cancelled out.

So, clearly there are counterpoints to the general idea that the only way for all emerging economies is up and everything should be priced for stunning exponential growth. So if they've been priced that way, and you overlay that on a backdrop of major market stimuli being withdrawn, then the prices have plenty of room to go down even though the underlying countries and companies have some good times ahead over the next 20 years. If things become priced more modestly, then that's great for us investors because we all want to get in on these good times ahead.

Personally I'm adding more EM and Asia exposure this year to get back up to the ratio it was before UK/US did so well, but I will add even more if the prices take a few more dips.

grizzly1911 wrote: »

They said last weeks scaling back ward already priced in:beer:

That just means the markets have less far to move when the scale back happens. If the price was 100 and markets think the scale-back is 'likely' to happen knocking 10 points off - they might go down 7 points to 93. Then when the announcement comes they can move down those last few points to 90. If the announcement is that the scaleback is smaller or deferred for longer, which some people are betting on, the price will recover some of the 7 points; and that's the reason it hasn't moved the full 10 already.

So, it is fair to say that at 93 instead of 100, the market has generally priced in the news: in other words, taken into account the fact that it 'might', 'should' or 'is likely to' happen ; but when it actually happens or doesn't happen, there will still be a mini price shock one way or another.

Of course if the news is accompanied by other news - e.g. "QE buying *is* reducing because yesterday's employment stats were awesome", or the other way, "QE is *not* going to taper because last week's reports show homebuilding and manufacturing still needs help, etc etc" - then the net price effect over a week or two might be zilch. But meanwhile in both the very short term and the medium term and the long term there are, and will always continue to be, opportunities for opportunists.