As my usual habit, I attended HSBC's investment outlook series held at Makati Shangrila Hotel last Monday. The salad with duck strips was fantastic. The greens were of the bitter variety. The main course was salmon teriyaki with potato risotto. Salmon was superb! I skipped the dessert, as usual. But they served some sort of raspberry chocolate mouse. As I was extra hungry that day, I got two bread rolls as well with generous servings of butter.
I usually enjoy HSBC's road show. They invite distinguished speakers who gives its audience lots of data analysis and investment themes. But this particular talk was a real downer. One speaker had an accident which left us with only two speakers. And one of those speakers simply gave us Portfolio Strategy 101. Too bad I didn't get his name. I should have. He talked as if we were a bunch of nincompoops who never heard of diversification, correlation, hedge funds. Based on the questions thrown at him, majority of the audience were informed educated investors. In all the years I have attended their talk, the questions were as interesting as the speakers' analysis.
Investment Themes:
1. Asian credit growth rates would continue to slow down.
2. US Fed is reducing its holding duration. They are selling their 10 year bonds. US rates are creeping up especially at the long end of the curve.
3. US domestic recovery still faces debt headwind.
4. Despite the Chinese bull run, Chinese fundamentals have not really significantly improved. Although investment in Chinese stocks seems like a no-brainer these days, we have to tread slowly and invest only in fundamentally sound chinese companies.
5. US dollar would decline. Historically, US Dollar weakens after a rate hike. I know it doesn't make sense. But this happens consistently, maybe because the US dollar is actually an expensive currency, just like the Swiss francs. And they are dropping hints they would increase interest rate , probably would happen around September of this year, It might also be a good idea to invest in Gold. Historically, Gold improves when US Dollar declines.
6. HSBC is underweight on fixed income. However on a personal note, I would think HSBC's outlook on fixed income is more towards the developed countries. I don't think our fixed income market in the Philippines would decline that much.
7. HSBC is going neutral these days with the Chinese market. I think they are merely being prudent on this. I still see some action for the chinese market for the rest of the year. But let's pick those stocks that are fundamentally sound. I, for one, believe HSI 's real value would be around the 29000 level. So there's still room for growth.
8. HSBC is going overweight on hedge funds. We may all be afraid of the word hedge funds that is also synonymous to illiquid, long term, high entry, discretionary funds. But there are funds out there these days that are very liquid and fully disclosed the invested assets. One good thing about hedge funds is that it invests across various asset classes that would provide us that much needed diversification in our portfolio. My account office offered me one hedge fund that is liquid (I can withdraw it anytime), has low investment capital, offers full disclosure and manageable volatility (4%). Problem is its return is just around 7% p.a..
I usually enjoy HSBC's road show. They invite distinguished speakers who gives its audience lots of data analysis and investment themes. But this particular talk was a real downer. One speaker had an accident which left us with only two speakers. And one of those speakers simply gave us Portfolio Strategy 101. Too bad I didn't get his name. I should have. He talked as if we were a bunch of nincompoops who never heard of diversification, correlation, hedge funds. Based on the questions thrown at him, majority of the audience were informed educated investors. In all the years I have attended their talk, the questions were as interesting as the speakers' analysis.
Investment Themes:
1. Asian credit growth rates would continue to slow down.
2. US Fed is reducing its holding duration. They are selling their 10 year bonds. US rates are creeping up especially at the long end of the curve.
3. US domestic recovery still faces debt headwind.
4. Despite the Chinese bull run, Chinese fundamentals have not really significantly improved. Although investment in Chinese stocks seems like a no-brainer these days, we have to tread slowly and invest only in fundamentally sound chinese companies.
5. US dollar would decline. Historically, US Dollar weakens after a rate hike. I know it doesn't make sense. But this happens consistently, maybe because the US dollar is actually an expensive currency, just like the Swiss francs. And they are dropping hints they would increase interest rate , probably would happen around September of this year, It might also be a good idea to invest in Gold. Historically, Gold improves when US Dollar declines.
6. HSBC is underweight on fixed income. However on a personal note, I would think HSBC's outlook on fixed income is more towards the developed countries. I don't think our fixed income market in the Philippines would decline that much.
7. HSBC is going neutral these days with the Chinese market. I think they are merely being prudent on this. I still see some action for the chinese market for the rest of the year. But let's pick those stocks that are fundamentally sound. I, for one, believe HSI 's real value would be around the 29000 level. So there's still room for growth.
8. HSBC is going overweight on hedge funds. We may all be afraid of the word hedge funds that is also synonymous to illiquid, long term, high entry, discretionary funds. But there are funds out there these days that are very liquid and fully disclosed the invested assets. One good thing about hedge funds is that it invests across various asset classes that would provide us that much needed diversification in our portfolio. My account office offered me one hedge fund that is liquid (I can withdraw it anytime), has low investment capital, offers full disclosure and manageable volatility (4%). Problem is its return is just around 7% p.a..
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