Category: Financial Markets

Bird Flu .. better be worried … How can Singapore stock market be unconcerned?

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Illustration 1: Bird flu onset in Jan 2003 … Hang Seng & Straits Times Index plunge 15% to March-April 2003

Asianmacro remembered the dark days of SARS / bird flu onset circa January 2003.  That was when there was a real sense of doom that is palpable in the air,  especially in Singapore where NOBODY ever voluntarily wears a mask over one’s nose and mouth when he/she has a cold or flu (unlike in Japan or Hong Kong) … you can actually see people in that period in 2003  (if you are lucky to spot a few brave ones out doing grocery shopping!) wearing them.

From Illustration 1, both Hang Seng and Strait Times index plunged about 15% within the next 2 months.  There is a new strain of bird flu with some deaths reported in China http://uk.reuters.com/article/2013/04/05/uk-birdflu-idUKBRE93402H20130405.  Hang Seng is currently off by 600 points (approx -3%) while Straits Times is holding up very well and off only -0.10%.  Looks like there must be a lot of ‘safe haven’ flows buying into Singapore stocks holding them up according to all the brokers!

Maybe it is an opportune time to remind ourselves, firstly, Singapore is not as good a safe haven as before both from an economic, political and geographical stand point.  Secondly, when it comes to bird flu, it is different from bringing your money over from Cyprus, Luxembourg or any other tax-haven of dubious origins to Singapore as the bird flu virus do not differentiate between Hong Kong or Singapore.  In fact, Singapore as a major transportation hub and also with a great number of its residents doing business in China and its companies depending on China, it is just as exposed to Hong Kong to such an exogenous event.

As the 2003 SARS / Bird Flu impact on Singapore stocks has proven before … this time, it shall not be any different.  Anybody who claimed otherwise had better remember the last episode.  as Singapore stocks is far too high up to justify its insulation from what that is panning out whether this bird flu is going to get worse or better, you can be sure that it is not going to get any better first and China always play down negative events!

Short SIMSCI April futures at current 372 level to 360 region as this represent a good risk-reward proposition now!  *This is either a hedge against your underlying cash stocks or outright bet on a decline.

*Asianmacro is a beach bum managing his own wealth.  Besides deciding what to have for lunch (or hitting the gym sometimes), he is mostly found listening to loud music while trading and investing for himself.  While every care has been taken in preparing the information in and/or materials, such information and materials are provided “as is” without warranty of any kind, either express or  implied. In particular, no warranty regarding accuracy or fitness for a purpose is given in connection with such information and materials. The opinions expressed do not constitute investment advice and independent advice should be sought where appropriate. In no event will Asianmacro be liable to you for any direct or indirect or any other damages of any kind arising from or in connection with your reliance on any information in and/or materials attached herewith.  Asianmacro may already have or intend to have a trading or investment position in the financial instruments or products referred to in this communication.  This is not intended as an offer or solicitation for the purchase or sale of any financial instrument and Asianmacro may also have interests different from or adverse to your interests.

The Schizophrenic EUR … Time to Short the Spike !

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Illustration 1: EUR/USD schizophrenic 2 big figure range on 4th April 2013 .. initial plunge followed by spike

The FX market is always taken to be the most efficient in discounting news ahead of all other asset classes.  However, Asianmacro having cut his teeth on the FX and rates market years ago only understand too well that it is also a fallacy since the FX market tends to over simplify things based on ”sound bites” and it often over-reacts.  FX markets are always about daily to intra-day short term momentum and ”’hunting of stops to trigger” in each hour and never about medium term (and God forbids any association with long term valuation discovery!).  As such, from Illustration 1, the schizophrenic plunge and then spike in EUR/USD around the ECB press conference yesterday is just another day in the park.

Asianmacro does not believe that ECB will not at some point find ways to drive EUR weaker as the Central Banks of the world are engage in competitive devaluation ”currency wars” whether openly like BOJ or stealthily like the U.S. Federal Reserve in the past.  Europe cannot afford a strong EUR and short of allowing a breakup and letting the Lira, Peseta and Franc back to the realm, the EUR needs to be weak again to give the mix bag of countries in EU any chance of staying together.

 

 

*Asianmacro is a beach bum managing his own wealth.  Besides deciding what to have for lunch (or hitting the gym sometimes), he is mostly found listening to loud music while trading and investing for himself.  While every care has been taken in preparing the information in and/or materials, such information and materials are provided “as is” without warranty of any kind, either express or  implied. In particular, no warranty regarding accuracy or fitness for a purpose is given in connection with such information and materials. The opinions expressed do not constitute investment advice and independent advice should be sought where appropriate. In no event will Asianmacro be liable to you for any direct or indirect or any other damages of any kind arising from or in connection with your reliance on any information in and/or materials attached herewith.  Asianmacro may already have or intend to have a trading or investment position in the financial instruments or products referred to in this communication.  This is not intended as an offer or solicitation for the purchase or sale of any financial instrument and Asianmacro may also have interests different from or adverse to your interests.

Did BOJ just saved the world ? …. For now …

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Illustration 1: Key Central Banks’ Balance Sheet as % of GDP … BOJ is the Champion and still going strong!

It was looking bleak in Asian markets in the morning with heightened geo-political tension overnight on the news of the U.S. missile defense system deployment to Guan that knocked S&P500 futures off its pedestal and KOSPI down 2% and looking to fall more precipitously.  China and Hong Kong markets were also closed for 清明节 (Qing Ming festival), the annual ”tomb sweeping” custom of praying to one’s deceased ancestors that can potentially usher in the ”Ting Hai (丁蟹) effect” too from 4 April 2012 onwards. http://tradehaven.me/2013/04/01/be-warned-the-ting-hai-%E4%B8%81%E8%9F%B9-effect-may-kick-in/.

But all that was to change with the ever ready-to-please his political masters, BOJ (Bank of Japan) Governor Kuroda when he delivered the QE (Quantitative Easing) manna from heaven at the conclusion of his two day BOJ policy meeting. http://uk.reuters.com/article/2013/04/04/uk-markets-forex-idUKBRE92L08Y20130404 

From above Illustration 1, BOJ is on a viagra inducing roll by increasing its balance sheet even further in both absolute and relative terms to Japan’s GDP.  We can see that the U.S. Federal Reserve has sort of reached a plateau in its QE ballooning of its balance sheet as % of U.S. GDP.  In fact, ECB (European Central Bank) and BOE (Bank of England) have both reduced their respective aggressiveness in QE where their % of GDP has turned and are actually heading lower since Q4 2012.

With the ECB policy meeting announcement due in a couple of hours, it will be interesting what ECB Chief, Trichet will deliver.  While Asianmacro do not expect a rate cut (Good Lord if he does and we will be in high heavens in bunds and DAX if he does that!), Trichet is likely to sound reassuring dovish in the statements and in putting some expectations of that out.  The key is to weaken the EUR (*return of beggar-thy-neighbour FX depreciation policy) as it will indirectly be a ‘devaluation’ option for the Club Med countries that are facing the economic stresses at the moment without the need for them to leave the EUR in going back to their Lira, Peseta, Franc etc.

While it does not change the bigger picture that I have presented in my previous post over the last 2 weeks, in the next hours – days, just be prepared for a short term liquidity boost expectations rally in stocks and for USD to continue to strengthen. Long USD & wear diamonds ! http://tradehaven.me/2013/03/14/beware-the-ides-of-march/

 

 

*Asianmacro is a beach bum managing his own wealth.  Besides deciding what to have for lunch (or hitting the gym sometimes), he is mostly found listening to loud music while trading and investing for himself.  While every care has been taken in preparing the information in and/or materials, such information and materials are provided “as is” without warranty of any kind, either express or  implied. In particular, no warranty regarding accuracy or fitness for a purpose is given in connection with such information and materials. The opinions expressed do not constitute investment advice and independent advice should be sought where appropriate. In no event will Asianmacro be liable to you for any direct or indirect or any other damages of any kind arising from or in connection with your reliance on any information in and/or materials attached herewith.  Asianmacro may already have or intend to have a trading or investment position in the financial instruments or products referred to in this communication.  This is not intended as an offer or solicitation for the purchase or sale of any financial instrument and Asianmacro may also have interests different from or adverse to your interests.

THE ULTIMATE RISK OFF TRIGGER … U.S. SENDS MISSILE DEFENSE TO GUAM!

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Illustration 1: Continental U.S. land based missile defense system cannot cover Guam

You have all been warned by Asianmacro from all my post in the past 2 weeks to prepare for a down leg in risks.  The final trigger can be the news that U.S. will send a missile defense to Guam as it is currently undefended and out-of-range of continental U.S. land based missile defense systems.  You can also refer to the U.S. Department of Defense on their Ballistic Missile Defense Report in 2010 for more details. http://www.defense.gov/bmdr/docs/BMDR%20as%20of%2026JAN10%200630_for%20web.pdf

Let’s make some good money if you have prepared well!

 

 

*Asianmacro is a beach bum managing his own wealth.  Besides deciding what to have for lunch (or hitting the gym sometimes), he is mostly found listening to loud music while trading and investing for himself.  While every care has been taken in preparing the information in and/or materials, such information and materials are provided “as is” without warranty of any kind, either express or  implied. In particular, no warranty regarding accuracy or fitness for a purpose is given in connection with such information and materials. The opinions expressed do not constitute investment advice and independent advice should be sought where appropriate. In no event will Asianmacro be liable to you for any direct or indirect or any other damages of any kind arising from or in connection with your reliance on any information in and/or materials attached herewith.  Asianmacro may already have or intend to have a trading or investment position in the financial instruments or products referred to in this communication.  This is not intended as an offer or solicitation for the purchase or sale of any financial instrument and Asianmacro may also have interests different from or adverse to your interests.

Let’s Drink to That !

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Illustration 1: Liv-EX Fine Wine 50 Index … market has bottomed!

Because of QE and the great amount of liquidity that has been sloshing around the world, many financial assets from bonds to stocks and also hard assets like property, farm land, commodities and also fine wines have all been ramped higher at different points in time over the last five years since 2008.

One of the more interesting market had been in fine wines where the exuberant Chinese had driven Bordeaux and then Burgundies to sky high prices.  The former had corrected significantly since 2011 and a significant bottom could be in place.

The 2008 vintage of Saint-Emilion wine producer Chateau Angelus climbed to a record high of 1,800 pounds ($2,730) a case on the London-based Liv-ex wine market this week, according to data on its Cellar Watch website.

The price was 15 percent up from a transaction last month and 61 percent above a trade conducted last August, according to Cellar Watch data. It was also higher than the HK$19,600 (1,570 pounds at the time) paid for each of two cases in a Sotheby’s (BID) sale in Hong Kong in October, according to Sotheby’s online auction data. Angelus was promoted to the ranks of one of the four top growers in the appellation in September. http://www.bloomberg.com/news/2013-02-26/chateau-angelus-2008-saint-emilion-rises-to-liv-ex-record-2-730.html

Asianmacro is pretty happy as he had previously bought Angelus 2008 en primeur during the midst of the global financial crisis.  (*2008 will always be a lucky year for the Chinese and Angelus in Mandarin/Chinese is 金钟 aka ”Golden Bell” … pretty auspicious for the Chinese tycoons!).  Will be looking to make some room in my cellar for other acquisitions shortly and anybody that wishes to get a case or two from me will be welcomed to send me a private message.  The current price is even higher by another 6% from February last month http://www.farrvintners.com/wine.php?wine=81 but will be available from me at previous auction price of GBP1,800 per case still …. let’s drink to that !

*Asianmacro is a beach bum managing his own wealth.  Besides deciding what to have for lunch (or hitting the gym sometimes), he is mostly found listening to loud music while trading and investing for himself.  While every care has been taken in preparing the information in and/or materials, such information and materials are provided “as is” without warranty of any kind, either express or  implied. In particular, no warranty regarding accuracy or fitness for a purpose is given in connection with such information and materials. The opinions expressed do not constitute investment advice and independent advice should be sought where appropriate. In no event will Asianmacro be liable to you for any direct or indirect or any other damages of any kind arising from or in connection with your reliance on any information in and/or materials attached herewith.  Asianmacro may already have or intend to have a trading or investment position in the financial instruments or products referred to in this communication.  This is not intended as an offer or solicitation for the purchase or sale of any financial instrument and Asianmacro may also have interests different from or adverse to your interests.

Be warned ! …. the Ting Hai (丁蟹) effect may kick in

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*Saving General Yang — comes out on 4 April 2013

 

If you think that the weaker than expected China Manufacturing PMI (official figures or those of HSBC) released in Asian morning were the catalysts for the risk off move lower in Asian stocks and AUD FX …. wait till the ”Ting Hai (丁蟹) effect” kicks in if this time is no different from the past!

 

The person and event to watch is Adam Cheng Siu-chow.  Whenever Cheng’s films hit movie and TV screens, the Hang Seng index tends to collapse.  Cheng’s next movie — Saving General Yang — comes out on 4 April 2013.

 

Cheng had shows airing during the Asian financial crisis of 1998 and the tech bubble burst of 2000.  The market fell during 11 of 17 of his television shows since 1992.  It seems that the markets do worse when the series / shows are more tragic.  (*Do note that Saving General Yang is pretty gory and tragic!).

This phenomenon is called the ”Ting Hai (丁蟹) effect” http://en.wikipedia.org/wiki/Ting_Hai_effect named after one of Cheng’s characters who makes money by shorting derivatives and stocks.

 

Check out the unbelievable statistics of the market risk off downturn from Adam Cheng:

1990s

  • October 1992: The drama series Greed of Man made its debut on TVB. During the time it was broadcast, the Hong Kong’s Hang Seng Index dropped 598 to 600 points
  • November 1994: Instinct (笑看風雲) made its debut on TVB. The Heng Sang Index fell more than 2,000 points.
  • September 1996: Once Upon a Time in Shanghai (新上海灘) premiered on TVB. The Hang Seng Index fell 300 points.
  • June 1997: Cold Blood Warm Heart (天地男兒) made its debut on TVB. The Hang Seng Index accumulated 735 points in losses.
  • December 1997: Legend of Yung Ching (江湖奇俠傳) was followed by a fall of 1.4% in the Hang Seng Index.
  • June 1999, Lord of Imprisonment (神劍萬里追) was followed by a fall of 6.5% in the Hang Seng Index.

2000s

  • September 2000: A loose sequel of The Greed of Man, Divine Retribution aired on ATV. Due to the Tech stock bubble at the time, the Hang Seng Index fell an accumulated 1,715 points, with other stock markets around the world falling as a result also.
  • March 2004: Blade Heart (血薦軒轅) premiered in Hong Kong, the Hang Seng Index fell 550 points over 3 days due to high oil prices and instabilities in the Middle East.
  • October 2004: The Conqueror’s Story (楚漢驕雄) premiered in Hong Kong, followed by a 198-point drop in the Heng Seng Index on the day of the premiere.
  • March 2005: The Prince’s Shadow (御用閒人) broadcast of the first episode, the Hang Seng dropped 100 points by noon, then rose back 90 points by the end of the day.
  • July 2007: Return Home (香港傳奇-榮歸) broadcast and the market to fell 1,165 points.
  • March 30, 2009: The King of Snooker (桌球天王) premiered in Hong Kong. The Heng Seng Index fell 663.17 points.

 

Asianmacro is not superstitious by nature and correlations does not infer causality. However if a sufficient number of people choose to believe in this mumbo jumbo ”Ting Hai (丁蟹) effect”, it might just become a self fulfilling prophecy and the markets de-risk and takes on a life of its own …..

 

 

*Asianmacro is a beach bum managing his own wealth.  Besides deciding what to have for lunch (or hitting the gym sometimes), he is mostly found listening to loud music while trading and investing for himself.  While every care has been taken in preparing the information in and/or materials, such information and materials are provided “as is” without warranty of any kind, either express or  implied. In particular, no warranty regarding accuracy or fitness for a purpose is given in connection with such information and materials. The opinions expressed do not constitute investment advice and independent advice should be sought where appropriate. In no event will Asianmacro be liable to you for any direct or indirect or any other damages of any kind arising from or in connection with your reliance on any information in and/or materials attached herewith.  Asianmacro may already have or intend to have a trading or investment position in the financial instruments or products referred to in this communication.  This is not intended as an offer or solicitation for the purchase or sale of any financial instrument and Asianmacro may also have interests different from or adverse to your interests.