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ASEAN STOCK WATCH Asean Affairs   4  April  2011

Strong Week in Asean

Shayne Heffernan

Wall St will touch a high point this coming week, the highest point it has seen in nearly three years after more positive signs from the jobs market, and an ever-sinking dollar, but think before you buy.

At these levels you will not be able to just stick a pin in the board and come up with a winner, research is now key and Paul Ebeling and I agree it is now time for many investors to rethink their portfolio especially those like us that have built portfolios with a strong dividend component.

Apart from the tsunami of cash the Fed has released into the market, the root cause of the financial crisis has not been addressed, in fact in a rush to find a scapegoat many US-based financial institutions have been punished for no apparent reason, the net result is that Wall St is about to be globalized.

Not that this is a new thing, many of the Fortune 500 companies have been seeing an increasing amount of their revenue coming from markets outside the USA, as banks, hedge funds and brokers are forced offshore by the Volcker Rule, new financial centres will emerge.

Singapore and Hong Kong loom large as the prime contenders, Hong Kong is seeing record- breaking IPO's every year and Singapore is catching up fast due to the aggressive and skillful management of Marcus Bocker.

Everyone should now look at their portfolio on a global scale, how much of that income is in USD, is it is over 50 percent, then it is time to make some adjustments.

Once upon a time it was not a concern for the average American what was happening elsewhere, they earn in USD and spend in USD, fluctuations outside the nation were not important.

Now, what the average American puts on his dinner plate will be a function of the global economy, food prices will rise, energy prices will rise and that rise will be exacerbated by a falling USD. Anyone earning in USD anywhere in the world now must look at alternatives to spread their country exposure.

Singapore rates highly as a centre for finance, the Singapore Dollar and the Singapore Exchange are two must own items for any good portfolio.

Food and energy, these two items will see spiking demand for a decade to come, strong agricultural economies in emerging markets will do very well from this, make sure you have some exposure to them.

For dividend buyers, it is time to move on, as I outlined in a note to HCM clients last week your dividends are being reduced in real terms by the falling USD, start to look harder at the total country risk and currency risk in your portfolio. Some idea's that were included in the note were CEL, OZM, STD. Market Focus this week

The robust recovery shown in recent economic data has some investors nervous that the Federal Reserve may end its easy money policies before schedule and hike interest rates in the second half of the year, although this would be a good thing in economic terms it may see a selloff at some stage.

That could be spell trouble for risk assets such as stocks and commodities that have benefited from the added liquidity provided by the Fed's $US600 billion Treasury bond buying. The program, known as quantitative easing, or QE2, that will end in June.

One Fed official poured cold water on that idea on Friday, saying he saw no reason to reverse course even as the economy adds jobs. The comments helped cement optimism over the jobs data.

There is little doubt now that the S&P 500 will hit 1350 next week.

The Dow traded at its highest level in three years intraday on Friday, recovering most of its losses since February after US employment recorded a second straight month of solid gains in March and the jobless rate fell to a two-year low.

The jobs report indicated that U.S. recovery is becoming self-sustaining, something suggested by Paul Ebeling in his unemployment opinion in June 2010.

However, even though the US is well on its way back, some uncertainty arising from world trouble spots shows no signs of abating and is likely to cap stock prices.

Crude oil will be a factor. Oil hit its highest this year, driven by spiraling unrest in the Middle East.

Weekly jobless claims data Thursday will be closely watched and are expected to highlight the improving trend in the labor market, while a report on the non-manufacturing sector on Tuesday is also tipped to point to growth.

Investors will also look to other Fed officials to confirm those sentiments next week.

Chairman Ben Bernanke will speak on Monday, Atlanta Fed President Dennis Lockhart has three speaking engagements and Richmond Fed President Jeffrey Lacker will speak on Thursday.

An optimistic but cautious view from the Fed is likely to keep expectations for an interest rate hike under wraps.

Even when the S&P 500 does get up to its recovery high of 1344, it is likely to run into some resistance when traders that bought at the high close out positions at break-even.

However, investors who like market seasonalities, have reason to be bullish. April is the best month for the Dow industrials, which have averaged a 2 percent gain during the month since 1950, according to the Stock Traders Almanac.

In Asia

Singapore and Thailand are value this week, as are the Singapore Dollar and Thai Baht. In Europe I am favoring Norway and the nation’s fish industry.


Shayne Heffernan brings more than 25 years of trading experience in Asia and hands on experience in Venture Capital, he has been involved in several start ups that have seen market capitalization over US$500m and 1 that reach a peak market cap of US$15billion. He has managed and overseen start-ups in Mining, Shipping, Technology and Financial Services.


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This year in Thailand-what next?

AseanAffairs   04 January 2011
By David Swartzentruber      

It is commonplace in journalism to write two types of articles at the transition point between the year that has passed and the New Year. As this writer qualifies as an “old hand” in observing Thailand with a track record dating back 14 years, it is time take a shot at what may unfold in Thailand in 2011.

The first issue that can’t be answered is the health of Thailand’s beloved King Bhumibol, who is now 83 years old. He is the world's longest reigning monarch, but elaborate birthday celebrations in December failed to mask concern over his health. More


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