Martin Lee @ Sg
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Wong Sui Jau on Market Updates and Facing a Volatile 2008

Another speaker during the SMART Expo that pulled in the crowd was Mr Wong Sui Jau, the general manager from Fundsupermart iFAST Financial Ptd Ltd. Here are some pointers from his presentation as well as his recommended sectors for 2008.

US Economy

In the next 12 months, US will fall into a recession. Consumer sentiment is going to get worse. A large portion of these consumers are still spending on credit and paying mortgages.

High Oil Prices

  • Oil prices hit US$110 on 13 March 2008.
  • The previous two oil shocks were artificially created and the extent was greater.
  • OPEC now only produces 36% of the world’s oil and has less influence over the pricing.
  • China and other emerging market growth in economic leading to a higher demand.
  • Falling US$ also contributes to the rise in oil prices.

Star Ratings (on a scale of 1-5, 5 being overweight)

  • Emerging markets 3.5
  • Asia ex-Japan 3.5
  • US 2
  • Japan 2.5
  • Europe 3
  • India 2.0
  • China 3.0
  • Singapore 3.5
  • Hong Kong 3.0
  • South Korea 3.5
  • Taiwan 3.5
  • Thailand 4.0
  • Malaysia 3.5

Asset Allocation

  • Neutral on equites versus fixed income
  • Underweight on Japan and US
  • Overweight on Thailand (PE at 8.6 and 8.0 for 2008 and 2009) and Singapore (PE at 13)
  • For contrarian play, Singapore financial stocks can be considered as they have been beaten down quite badly due to the US subprime crisis even though their fundamentals are quite strong.

Is cash the best alternative for investors?

  • High inflation
  • Bear markets do not last forever
  • Our emotions cause us to buy high and sell low
  • Choosing to sell out of markets will only make it harder for investors to re-enter the market later

Tips for handling volatility

  • Markets cannot drop 5-10% every day.
  • Focus on long term investing
  • Diversify

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