All Eyes on the FED

All Eyes on the FED

All Eyes on the FED 455 398 AMA Team

Screen_Shot_2013_09_16_at_2.52.42_PMGood Day. The US FED meeting is upon us this week where they will meet to discuss the current economic conditions and perhaps announce some insight into any tapering or reduction plans to QE3. The FED hasn’t given much insight so far into what we can expect from this week’s meeting, so investors remain cautious whilst awaiting the meeting’s outcomes which they hope will provide some clarity on matters at hand. From our point-of-view, it’s hard to imagine that the FED will be coming out with anything shocking at this time, but, with that said, they should remain careful on how they communicate any decisions from the meeting in order to account for the market reaction on the back of any announcements.
Heading in to this week’s meeting there is also the aspect of the internal development within the US FED that Larry Summers will be pulling out of the race to succeed Ben Bernanke, and this leaves the door fairly wide open for Janet Yellen to head the post. She is considered by many to have an easy monetary stance and thus will be expected to continue with easy quantitative measures as well as the low interest rates that are currently implemented. It’s also unlikely we’ll see any immediate impact (on markets) from these changes within the FED, but we’ll need to continue to monitor how this actually plays out over the coming weeks instead.
Screen_Shot_2013_09_17_at_10.37.20_AMTaking a look at last week’s markets, the Hang Seng and FTSE both ended the week up 0.5%, while the US S&P finished the week up 1.5%. Last week was relatively light on data, so the recent China numbers could be seen as the main driver for the global rises as China continues to gain traction on their recent data figures. In addition, adding the Eurozone to the mix with them recently coming out of recession has helped restore some investor confidence in the Eurozone sector, which combined with China, make up a big portion of the global economy.
This recent stability has helped ease some of the concerns in South East Asia after the hard times that have been faced by the region over the past few months, and the recovery of about 7% in the past two weeks alone has been a welcomed change to all concerned. As mentioned in past Money Matters, we still feel strongly about the underlying indicators out of the South East Asia region, and although the short term volatility is expected to remain for the near term, the past two weeks’ movements should be a good example of how the region can perform once the markets have calmed, and the region should continue to look attractive to investors with a longer term outlook.
With that said, we still advise a balanced and diversified approach, especially in light of the US FED meeting due this week as many investors remain fixated on their intentions. A broad spread of asset classes and geographical diversity should help investors ride through any of the volatility that may arise as we head into these central bank meetings.
Lastly, our Shanghai Head Office will be observing the Mid Autumn Festival taking place in China and as such, we do have revised business hours for the week ahead. Kindly note that our Shanghai Head Offices will be closed from Thursday 19th September through Sunday 22nd September with normal business hours resuming from Monday 23rd September 2013. Our Johannesburg, South Africa offices however remain open as it’s business as usual for them. During this time, should you have any queries or need any assistance, please still continue to contact your Adviser at Austen Morris Associates. Additionally, clientservices@austenmorris.com will be monitored over this time period for any online assistance or general queries you may have.
Darren Cox
Co-Head of Portfolio Management
Austen Morris Associates Wealth Management & Investment Team
www.austenmorris.com

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