Twice a year, I would attend the luncheon seminar hosted by HSBC at Makati Shangrila Hotel. Although I have switched careers, I still find it enjoyable to attend this function.
This time around, we were served greens for starters and grouper garnished with beets and carrots for main dish. Dessert was warm apple crumble with vanilla ice cream.
"A Good But Not a Vintage Year"
My take home notes for this affair are the following:
1. Consensus expects moderate pick up in GDP Growth. Their biggest bet this year is the Eurozone, followed by US. They aren't as optimistic for EM and Japan this year.
2. There is divergence between US retail sales growth and imports from EM Asia. Why? Common answers would be that US is merely using old inventory, but the more likely culprit would be the cheap labor of their European neighbors.
3. China growth rebounding based on infrastructure growth, rising property prices and strong credit growth.
4. Some country calls: US - Neutral
Europe - Overweight
Japan - Underweight
Asia ex-Japan - Neutral
5. For 2014, bet is on the developed world, with Europe outshining the US. They expect Europe to outperform global equities and deliver double-digit returns. Also, Europe's valuations are attractive compared to US. ECB is in easing mode and there are no signs of overconfidence among investors.
6. For developed market equities , AVOID Japan, Europe Cement, Europe Food Retailers, and Europe Healthcare. Why? Japan PM Abe's 3rd policy "arrow" to revive economy will be difficult to implement. Cement markets oversupplied (capacity utilization is just 70%) . Retailers continue to expand despite the demand going flat.
7. For developed market equities, GO FOR European banks, European real estate, global materials, disruptive technology (like Apple some years ago)
8. For Asian Equities, they expect only single-digit percentage gains as their ROE is under pressure. Having underperformed in 2013, Asia is likely to play catch up in 2014. Bets for Asian Equities is KOREA AND TAIWAN. They are the proxy for mainland economic growth. As China's economy stabilizes, North Asia is to benefit the most. AVOID India, Hong Kong and Asia Shipping. Why? India continues to wrestle with high inflation as its economy slows. Hong Kong is vulnerable to any rise in US interest rates due to the HKD peg, especially the real estate sector. Overcapacity of asia shipping coupled with weaker demand.
9. For EM/LATAM Equities, Go For Mining, LATAM Oil and Gas, Mexico. AVOID Russia Oil Gas, South Africa and Brazil. Russian tax system is getting so complex. South African retailers face serious problems in managing credit risk. Brazil is facing some tail risks. Aside from the World Cup football event that benefitted some retailers, their education sector faces major challenges due to the peak in enrollments.
10. For BONDS, AVOID India, Brazil and Turkey. GO FOR Korea, Singapore, Europe and Philippines.
11. For FX, GO FOR US$, CNY, KRW, TWD and NOK. AVOID INR , GOLD, GBP, AUD, IDR.
12. Gold is unlikely to do well as US FED tapers Quantitative Easing.
This time around, we were served greens for starters and grouper garnished with beets and carrots for main dish. Dessert was warm apple crumble with vanilla ice cream.
"A Good But Not a Vintage Year"
My take home notes for this affair are the following:
1. Consensus expects moderate pick up in GDP Growth. Their biggest bet this year is the Eurozone, followed by US. They aren't as optimistic for EM and Japan this year.
2. There is divergence between US retail sales growth and imports from EM Asia. Why? Common answers would be that US is merely using old inventory, but the more likely culprit would be the cheap labor of their European neighbors.
3. China growth rebounding based on infrastructure growth, rising property prices and strong credit growth.
4. Some country calls: US - Neutral
Europe - Overweight
Japan - Underweight
Asia ex-Japan - Neutral
5. For 2014, bet is on the developed world, with Europe outshining the US. They expect Europe to outperform global equities and deliver double-digit returns. Also, Europe's valuations are attractive compared to US. ECB is in easing mode and there are no signs of overconfidence among investors.
6. For developed market equities , AVOID Japan, Europe Cement, Europe Food Retailers, and Europe Healthcare. Why? Japan PM Abe's 3rd policy "arrow" to revive economy will be difficult to implement. Cement markets oversupplied (capacity utilization is just 70%) . Retailers continue to expand despite the demand going flat.
7. For developed market equities, GO FOR European banks, European real estate, global materials, disruptive technology (like Apple some years ago)
8. For Asian Equities, they expect only single-digit percentage gains as their ROE is under pressure. Having underperformed in 2013, Asia is likely to play catch up in 2014. Bets for Asian Equities is KOREA AND TAIWAN. They are the proxy for mainland economic growth. As China's economy stabilizes, North Asia is to benefit the most. AVOID India, Hong Kong and Asia Shipping. Why? India continues to wrestle with high inflation as its economy slows. Hong Kong is vulnerable to any rise in US interest rates due to the HKD peg, especially the real estate sector. Overcapacity of asia shipping coupled with weaker demand.
9. For EM/LATAM Equities, Go For Mining, LATAM Oil and Gas, Mexico. AVOID Russia Oil Gas, South Africa and Brazil. Russian tax system is getting so complex. South African retailers face serious problems in managing credit risk. Brazil is facing some tail risks. Aside from the World Cup football event that benefitted some retailers, their education sector faces major challenges due to the peak in enrollments.
10. For BONDS, AVOID India, Brazil and Turkey. GO FOR Korea, Singapore, Europe and Philippines.
11. For FX, GO FOR US$, CNY, KRW, TWD and NOK. AVOID INR , GOLD, GBP, AUD, IDR.
12. Gold is unlikely to do well as US FED tapers Quantitative Easing.
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