Global stock markets versus Apple 26 January, 2013.

Global stock markets versus Apple  26 January, 2013.

Good news is that major stock markets are all up.  Dow Jones Industrial Index, FTSE 100, Hang Seng Index are all making 4 years high.  US Debt Ceiling looks like a moving finishing line and turning into a political drama rather than a financial matter.  Wait until the rating agency shows US a yellow card for living on debt forever.  This could cause a wobble.  UK stock market has quietly outperformed its European peers.  If you ask UK citizens outside London, they probably struggle to understand why the stock market is so strong.  FTSE100 are dominated by global companies like BHP Billiton, Royal Dutch Shell, HSBC, Vodafone, BP that make money in many countries outside UK.  FTSE100 has little to do with domestic economy.  Hong Kong stock market has been turbo charged as institutional investors and media see upside in China stock markets.  Perhaps not so much because of China GDP growth, but a rebound after over 3 years of bear market due to lower valuation and lack of confidence in corporate governance.  Remember Paulson Fund losing USD 750m from their investment in Sino-Forest.  Anyway, the pendulum has swung back and institution money is flowing into ETFs listed in Hong Kong.  If trend is your friend, US, UK and Hong Kong could give you a ride.

Abenomics could be a catalyst to a weakening Japanese Yen.  Yen depreciates from JPY 78 to USD 1 in October to now hovering around 90 Yen to a Dollar.  That’s a 15% move in a major currency.  The weakest since mid-2010.  Investors expect a weaker Yen will improve Japanese exporters’ competitiveness and Nikkei 225 rallied from 9,500 level in the beginning of December to test 11,000 level in the end of January.  Abe Shinzo was Prime Minister from September 2006 to September 2007.  Since then, 5 people took the driving seat before Abe’s return.  Jose Mourinho left Chelsea FC in September 2007 and since then, 8 managers and Mourinho has not returned yet.  Between Obama in US, Xi Jinping in China and Abe in Japan, there is a clear favorite of who is going to leave the office first.  So Abe has to race against time and think out of the box to detour Japan from its 3^rd lost decade.  A weaker yen, a 24/7 money printing machine and 2% inflation are going to be painful to Japan’s aging population but in Abe’s eyes, necessary for the future generations.  There are institutional investors eyeing Japan market.  Is this just another season with high hope but no trophy like Arsenal?  Or a real game changer likes Manchester City?

An Apple a day, my money has chipped away.  Shocking.  When Apply launched iPhone 5, its share price hit USD 705 in September 2012.  It dropped to below USD450 after it reported record quarterly net profit of USD 13.1 billion.  Apple shares look very attractive at this level but the problem is that it already looked attractive at USD 600 in November and at USD 500 in December.  So the bargain hunters or value investors are getting run over by stop loss orders.  Again, if trend is your friend, this is not the right train.

Gold is going nowhere?  It has formed a downward zigzag trend since it tested USD 1,800 level in October.  It is at USD 1,660 level as of 26 January, 2013.  Gold as an inflation hedge maybe true but a rising stock markets have lured investor interest away from gold.  To hedge against inflation, perhaps property is a better investment.  Quite a few people have mentioned their recent investment in US single-family homes.  Buying them at distressed prices and collecting nice rental.  As yield seekers move in, prices of these single-family homes go up.  There are Real Estate Investment Trusts (“REITs”) focus on such investment.  Worth giving your financial advisor a call to find out more about REITs if you believe in mighty America recovery.