Dan | Income, Investing & Planning

China’s rally is just an opportunity to sell for many global funds with US and European long only fund managers taking profits on the recent rally while downgrading their China’s rating. At the moment, Chinese stocks are trading below its five-year average multiple of over 12 time. BOE raises rates to 5.25% with warning that their policies will remain tight until inflation comes back down to their 2% target which is estimated to occur in 2025. The bank had also cut its growth forecast over the next two year as a result of their fight against inflation. BOJ Intervenes for second time this week to slow yield spike, underscoring its determination to curb sharp moves in rates even as it makes room for them to rise. At the moment, it is still unclear if the bank is focusing on the level or the speed of the yield rise. 👀 Prefer watching instead of reading? You can catch the video format on Instagram, YouTube & TikTok

Fitch’s rating downgraded US government debt from AAA to AA+ which sparked criticism among the US government despite being fully justified given what has transpired this year. Despite that, the bond market shrugged off the downgrade with many dismissing this as a midterm concern. China puts pressure on local government in pro-growth push as regulators have told the local authorities to use up this year’s quota of special purpose bond by end of next month. That said, it is still unclear as to whether this will have material impact on growth this year. China chips firm soar on report of advance in fabrication tech, spurring hopes that the country can lessen its reliance on US semiconductor techniques. That said, it is still unclear whether the Shanghai firm can deliver such machines in bulk. 👀 Prefer watching instead of reading? You can catch the video format on Instagram, YouTube & TikTok

Wall Street economist are looking at a September rate pause as the recent inflation report and diminishing wage pressure has provided the federal reserve with more room to wait and see. This is especially so given that the fed is now basing their action on data rather than forecasting. Tencent becomes market laggard as China traders sell off their position as they felt that the stock has remained too volatile and does not trade according to fundamentals. The next test for the firm will be its second quarter earnings which many continues to remain optimistic about the company’s fundamentals. Strategists scramble to catch up as S&P500 rally rumbles on as many of them revised their end of year price target higher for the S&P 500. That said, while strong, the bull narrative has not completely taken over as many others remain sceptical of the soft landing scenario. 👀 Prefer watching instead of reading? You can catch the video format on Instagram, YouTube & TikTok

Euro Zone returns to growth as core inflation stays strong as second quarter GDP advanced by 0.3% after shrinking and stagnating in the two earlier periods. That said, looking ahead, the regions outlook is expected to be gloomier with further rate hikes expected. China property stock is set to enter into a bull market on policy support with the market gaining more than 20% from July 24 Low. This extended a rally from last week after Chinese leaders have made stronger pledges and showed more support in reviving the economy. Morgan Stanley says that US stocks are in a 2019-like rally which suggests to them that we are in a policy drive, late cycle rally driven by speculation and not fundamentals. The divergence between main street and wall street is resulting in mixed calls which requires more input before a conclusion can be drawn 👀 Prefer watching instead of reading? You can catch the video format on Instagram, YouTube & TikTok

Stock crush “year of bond” in biggest sentiment shift since 1999 as investors adopts a risk on behaviour and are shifting their funds into stocks rather than bonds despite the high interest rate environment. The other two instance of such behaviour is in 2003 and 2009, right before the bull market. China will announce more measures to boost consumption, tackle youth unemployment and boost wages to ensure residents income grow in line with the economy. This further reinforce the government’s urgency to attempt to combat the weakening growth as seen from recent data. US economy set to show resilience with both a strong labour market which also signals confident demand outlook. The steadfast labour market has been a key fuel source for the economy in a time when the federal reserve is tightening monetary policy to contain inflation. 👀 Prefer watching instead of reading? You can catch the video format on Instagram, YouTube & TikTok

Here are my 2-cents as to why Singapore's residential property is not as attractive as it was before and why I will not invest in a second property for wealth accumulation purposes in the long term. https://www.danconsultancy.com/post/2-reasons-why-property-investing-is-not-what-it-used-to-be-in-singapore

Wheat hits five month high after Russia attacked Ukraine port which had led to severe damage and disrupted the exports from Ukraine. While the world still has a large buffer of wheat stockpiles, the situation might be worsen if this continues as Ukraine plays a large role in global wheat exports. China traders hope that president Xi’s lifeline will sustain the rally as they bet that a more forceful pro-growth tone from the top will be enough to fuel a tradable recovery. That said, it is too early to call for a sustainable recovery as global headwinds are still strong and investor conviction is still weak. IMF expects Germany to be the only G7 country that contracts this year with the source of weakness coming from the manufacturing sector at the back of elevated energy prices. At the moment, Germany’s PMI is suggesting that the slump may not be over. 👀 Prefer watching instead of reading? You can catch the video format on Instagram, YouTube & TikTok

Xi’s pitch to investor hinges on revitalizing state-owned firms as officials shifted their focus on boosting the valuation of SOE. China’s SOE-heavy sector has a history of trading at a discount when compared to its private peers which puts the current CCP stance to be favourable should valuations normalize. China holds off on major stimulus as it signals more property easing. While the move is largely in line with the party members intention to address the slowing momentum and boost consumption, it is unlikely going to shift market sentiment as investors are expecting “bazooka” level of stimulus. Sri Lanka Rupee goes from the best to worst performer in three weeks and is poised to extend its losses amid headwinds from interest rate cuts and loosening import control. Both measures are expected to further deteriorate the country’s trade balance which results in a weaker fundamental. 👀 Prefer watching instead of reading? You can catch the video format on Instagram, YouTube & TikTok

Rising consumer pain triggers wall street concern as pressure builds up on US consumer spending growth now that the pandemic savings are disappearing. At the moment, consumer sentiment is still high as inflation eases and the job market remains strong but things can change quickly. China addresses investors concern in meeting with global funds. While the meeting was seen as a positive event, it was received with scepticism as investors continue to call for faster and stronger stimulus. This is because over the years, companies are accustomed to China’s “No Action Talk Only” business stance. There’s growing concern that the twin engine of 2023 tech stock surge are waning as investors are disappointed with earnings and the Fed is still expected to raise rates. The euphoric sentiment are on shaky grounds with more earnings due next week while valuation remains elevated. 👀 Prefer watching instead of reading? You can catch the video format on Instagram, YouTube & TikTok

Updated analysis of Mapletree Industrial Trust - Included my findings and comments from 2023 Annual Report in section 2. https://www.danconsultancy.com/post/fundamental-look-at-mapletree-industrial-trust-is-it-worth-investing-in-2023

Morgan Stanley moves 200 tech experts from China to Hong Kong and Singapore after the country tightened access to troves of data stored onshore. MNCs across industries are now reassessing the way they operate in China as the government tightens its grip on data. US stock returns are forecasted to slow to around 4% a year over the coming decades based on the readings from the long term cyclically adjusted price to earnings ratio. That said, analyst are expecting higher growth rates derived from AI driven productivity gains. Euro-Area’s core inflation quickened more than expected in June with the main gauge of inflation coming in at 5.5%. Despite that, core inflation appears to have plateaued and any actions by the ECB beyond July is now a possibility and by no means a certainty. 👀 Prefer watching instead of reading? You can catch the video format on Instagram, YouTube & TikTok

US bank regulators are set to release their plan for a sweeping overhaul of capital rules which will raise the weights for many residential mortgages compared with international standards. The possible additional requirement would risk raising borrowing cost further for home owners in America. Oil holds two days drop as China angst offset Russia export cuts. The WTI traded above $74 a barrel after falling by 1.7% on Monday after several Wall Street bank slashed their forecast at the back of demand concerns driven by China’s lacklustre recovery and Fed’s aggressive rate hike. Australia saw a stronger case to hold rates at 4.1% as policy makers are now focused on the risk of sharper economic downturn especially with inflation is now showing signs of slowing down. That said, traders are still pricing in a 40% chance for a hike in August. 👀 Prefer watching instead of reading? You can catch the video format on Instagram, YouTube & TikTok

China’s growth disappoints as GDP growth momentum has slowed in the second with attention now shifting to a meeting later this month in hopes of more stimulus. Unfortunately, the drivers of growth are still missing as Chinese households are more cautious with savings rate above pre-pandemic levels. Yellen says that US investment curbs will not fundamentally hurt China as the curbs are designed to narrowly target only key technological industries. The planned investment curbs came after her trip to China of which the administration paid lip service of an intention to improve ties. Economist are expecting the ECB to bring rates to 4% peak in September which would signify another two more quarter point hike. Behind the change in opinion is a worsening outlook for inflation as price gains in the 20 nation eurozone are not moderately as quickly as previously expected. 👀 Prefer watching instead of reading? You can catch the video format on Instagram, YouTube & TikTok

China intensifies military drill with Russia amid US sanctions with as the two nations have aligned even closely in an attempt to counter US military power. That being said, the scale of the drills between Russia and China are generally smaller than those between the US and its allies. China’s murky debt corner faces funding squeeze as China’s poorer area faces higher financing cost which increases the risk of implosion which will send shock waves throughout the local banking system. This problem has also impeded China’s ability to support the economy through fiscal stimulus. Middle eastern wealth flows to China amid an increasing anxiety about the future of their long-standing security partnership with the US. In the middle east, China is now seeing the tide turning in its direction with deepening ties beyond energy trade. 👀 Prefer watching instead of reading? You can catch the video format on Instagram, YouTube & TikTok

My 2 cents on Parkway Life REIT! Good business model but valuations are just too rich to justify investing. https://www.danconsultancy.com/post/fundamental-look-at-parkway-life-reit-is-it-worth-investing-in-2023

Inflation at 3% flags a potential turning point for the federal reserve in addition to other better than expected economic data. That said, one favourable CPI print is unlikely going to hold a great sway with the federal reserve officials as it is still above their 2% target. President Xi gets serious about boosting private sector as economy slumps with officials making a series of high-profile actions designed to signal further support from the state. That said, until the government maintains their stance for a prolonged period, it is unlikely that the confidence will be restored. Fund titans are betting on everything gaining against the dollar at the back of a peaking US interest rates and increasing impact of the fed’s aggressive tightening. At the moment, hedge funds have flipped to short the dollar position with the dollar gauge seen breaching a key technical support level. 👀 Prefer watching instead of reading? You can catch the video format on Instagram, YouTube & TikTok

Federal reserve officials say higher interest rates are needed to reach 2% inflation goal, solidifying the odds of two more rate hikes and diminishing the likelihood of a cut this year. Officials are expecting the restrictive stance to slow down the economy further which is in line with expectations. Big tech dominance in the stock market hits a breakpoint for Nasdaq 100 as they have became too large even for the index that are tracking the tech industry. Index provider has stepped forward and announced adjustments to address the overconcentration in the index with more information due later this week. Temasek posts its worst return in seven years as market slumps with the firm registering a -5.07% for the year ended March 2023. Part of the slump in performance relates to the market risk and drop following the start of the Russia-Ukraine conflict in 2022. 👀 Prefer watching instead of reading? You can catch the video format on Instagram, YouTube & TikTok

Powell is haunted by a potential Repo crisis as the federal reserve aims to cut their balance sheet with the brunt of the QT program expected to be felt in the coming months. That said, at the moment, Powell and the market participant agrees that things have been going smoothly. China slides to brink of deflation as core inflation slowed to 0.4% from 0.6% while producer prices fell 5.4% from a year earlier, which is the deepest pace since 2015. Both gauges add to evidence that the recovery is weakening which spurs more speculation of more potential stimulus. China will extend policies to support ailing property market which was in line with the expectation of the market as the government needs to take more steps to revive demand. That said, unless the asset class regains its appeal, it is unlikely that the property market will see a reversal in trend. 👀 Prefer watching instead of reading? You can catch the video format on Instagram, YouTube & TikTok

Yellen says US-China ties on “surer footing” after her trip to China that came during a time where relationship between two country at all time low. That being said, China’s local narrative for the visit cast doubt as to whether the current stance of the United States is consistent with their future action. Bruised bond investor face long road beyond Fed’s July decision with higher rates volatility that are predicted to persist for a longer duration. Investors remain deeply divided due to conflicting economic data coupled with an undecisive federal reserve which remains open for more hikes if necessary. ECB Rate hikes to end soon at “high plateau” to ensure that the impact of higher rates will continue to be felt in the economy in order to keep inflation rate down. At the current rate, the ECB expects inflation to be brought back down to 2% by 2025. 👀 Prefer watching instead of reading? You can catch the video format on Instagram, YouTube & TikTok

Yellen arrives in Beijing for economic talks amid tension with the goal of finding common economic ground and opening communication challenge in the midst of worsening competition. Expectation for the outcome of the visit is set very low with many expecting just an improvement in mood. India-dominated clearing union moves towards Rupee settlement as all South Asian countries are on board with the plan to settle trade in local currency to reduce USD dependence as the movements in the USD has hurt the emerging market currencies greatly over the last two years Top Asia IPO gainers are in Japan as the nation lures global fund at the back of the “buy Japan” investment angle that is ongoing right now. Japan’s top performance also came at a time when the nation boast a strong stock market at the back of a weaker currency and easy monetary policy. 👀 Prefer watching instead of reading? You can catch the video format on Instagram, YouTube & TikTok