Our Aviva Customer service hall is now open to clients on appointment basis. Please call (65) 6220 7890 to make an appointment in advance.
We use cookies on dollardex.com to provide you a tailored user experience and allow us to understand more about you for more personalised engagement. Please refer to our cookie policy for more information on what these cookies are and how we use them. If you continue using our site you consent to our use of cookies. To decline cookies at any time, simply adjust the privacy setting of your browser.
We use cookies on dollardex.com to provide you a tailored user experience and allow us to understand more about you for more personalised engagement. Please refer to our cookie policy for more information on what these cookies are and how we use them. If you continue using our site you consent to our use of cookies. To decline cookies at any time, simply adjust the privacy setting of your browser.
We use cookies on dollardex.com to provide you a tailored user experience and allow us to understand more about you for more personalised engagement. Please refer to our cookie policy for more information on what these cookies are and how we use them. If you continue using our site you consent to our use of cookies. To decline cookies at any time, simply adjust the privacy setting of your browser.

What to look out for in second half of 2018


market outlook q2 2018

Since our last update, we have seen the impossible: the opportunity for peace on the Korean Peninsula.

As much as we have been critical of this Administration, we would be remiss (and heavily biased) if we refused to recognise this achievement.

But we still have a long way to go.

Underlying this potentially historic event is the market and the question of: “What’s next”? What has been a constant in today’s market is volatility?

Many traders today complain of being stopped out of positions as their stop-loss levels get hit, while others feel they are being mistreated by the investment banks for a lack of understanding and sophistication.

At the end of it all, we seemed stuck. Or, to use the trading vernacular: range bound.

In times like this, let’s be reminded of the old Benjamin Graham analogy that markets are not “voting machines” but “weighing machines.” Inevitably, value will win out.

As weighing machines, we simply must continue to look for opportunities for value (i.e. buying cheaply).

Analysing the global markets, from a price-to-earnings ratio perspective, the USA looks expensive. Europe is slightly less expensive and Asian equities look cheap.

If we analyse it further, there are some obvious catalysts to a continued Asian equity story. Look no further than peace on the Korean peninsula. Would this be bullish or bearish for the region? Logic says the former.

From a sector perspective, analysts now say the Asian consumer is almost independent to variations and volatility in the US economy. This good news introduces another set of variables: which regional country is the least dependent on the USA and therefore immune to “tweets?”

This delineation between sector and regional choices, we will save it for future discussion, but we feel confident that on a relative basis, Asian is worth an over-weighting in client portfolios.

Is there a variable we should be concerned with? Indeed, it is inflation.

Yet again, in the US non-farm payroll number we see no wage growth and unexciting labour participation rates. Despite the gains in the US economy, there seems to be no economic benefit to the worker. All of which points to benign inflation expectations while at full employment (ironically).

So as you evaluate your portfolios this quarter, look for opportunities to buy cheaply. Don’t let a tweet cause you to sell a position you believe in.

Enjoy the news for the entertainment that it is, and not a basis for investing.