One thing I wanted to do more of in 2018, which I somehow forgot to include in my 2018 expectations and goals, was to grow more professionally and personally through additional qualifications (if any) or classes. In that spirit I attended a course on Python over the past 2 days (which left me even more confused about programming than when I started) and a Dinner talk organised by ISCA on the 2018 Economic & Market Outlook, which I just came back from.
The talk was delivered by Song Seng Wun, Director at CIMB Private Banking. In a Goldilocks market scenario, there was not much new on offer. Here’s the key points raised:
- Great Economic indicators:
- Rising Global trade index in 2017
- Rising Purchasing Manager Index (indicating increasing sentiment)
- Historic low Baltic Dry index (low ship building cost)
- Mild food inflation
- US – Increasing wages, 17 year low unemployment but retail sector jobs contracted on technological disruption. Increased retail and discretionary spending towards year end.
- Eurozone – Increasing GDP, increasing industrial output
- China – Moving away from export driven economy, consolidation of President Xi Jing Ping’s power provides stable growth path, One Belt and Road Initiative to drive investment and future growth
- Asia – Macro news driving external demand as seen by GDP growth, coupled with low inflation
- Key Risks (which he rates as low likelihood of occurring)
- Investor complacency over Goldilocks market scenario
- Accelerated tightening of monetary policy
- Policy missteps by China over soft-landing of property market
- Geo-political risks in Middle East, South China Sea and Korean Peninsula
- Cryptocurrency crash – but in his view, unlikely to spill over to widespread portions of the market
- Inflation risk resulting from reduced supply of commodities as a result of La Nina effect
- Straits Times Index outlook
- Firm growth on the backs of improved global trade
- Improving property market
- CIMB has a STI target of 3,600
- Expect 7.6% Earnings per Share (EPS) growth in 2018
- CIMB favours recovery stories and strong re-rating potential
- Stocks in particular in the telecom, e-commerce/logistics, consumer and property sectors.
- Rising rates good for banks, potentially affect S-REITS. If S-REITS pull back, to buy the dip. He’s particularly interested in Hospitality S-REITS on record tourist arrivals among other factors.
Well if all this is true, hallelujah right? My portfolio has already gained approx 5% in 9 days since the New Year on nothing, so I’m skeptical at the moment, but cautiously optimistic. We need earnings season to start soon, to provide some justification on all these moves.
Do you agree with the assessment made by Mr Song?
Happy Hunting,
KK