Following a brief break from Money Matters due to the QingMing Festival holiday in China last week, and with Easter ahead this weekend, it has certainly been an interesting couple of weeks around the world! During the last edition of Money Matters we pointed to the tensions in Crimea as a story to keep an eye on. The situation seemed to briefly lose steam before picking it up again. This has seen 100 point swings (in both directions) on multiple trading days for the Dow. With some low level clashes between Ukraine and Russia keeping tensions up and the possibility of the U.S. sending arms to the Ukraine, and the accusation by the UN that the Crimea vote was rigged, this story still has legs and will continue to affect the global markets.
A key story that has emerged but has been lost amongst the other stories in the last couple weeks is the launch of what is being called the “ Shanghai-Hong Kong Connect” (just rolls off your tongue doesn’t it?) which is a pilot program to establish a mutual stock market between the Mainland and Hong Kong. Horrible moniker aside, this project could really bridge the gap in share prices between the two financial territories. This story will be developing further over the year as the launch is currently planned for October of this year, so stay tuned and we’ll continue to report back periodically on the progress of this and the potential impact on markets and opportunities as an investor.
On the topic of China, Q1 data showed the economy expanded at an annual rate of 7.4% which beat analysts’ estimates of 7.3% but fell short of Beijing’s 7.5% annual target. This shows a deceleration in economic growth but at a slow pace. Combined with a report that China’s money supply slowed to the slowest pace on record, investors will be watching to see how this could affect stimulus plans already announced to try and reach the 7.5% growth target for the year.
So where are we today? With the recent volatility we have the Dow Jones Industrial Average (DJIA) at (-1.09%) YTD, & the S&P500 (+0.60%), FTSE (-2.62%) and Hang Seng (-2.87%) over the same time frame.
During the last two weeks we have seen a bit of a roller coaster in commodities. Gold has been buoyed by fed comments, then weakened on profit selling, then bolstered by Crimea, then weakened by a strong US dollar! Gold now sits $1297/ ounce. GLD ( the worlds largest physical gold ETF) sits up 6.37% year to date despite losing -4.67% over the last month. Keep an eye on gold though, despite the downward pressure seen in the last week due to a strong US dollar there are still factors that could set up a gold rally later in the year. In the near term though, this would come from the intensified conflict in the Ukraine.
And with the continued roller coaster seen over the last few weeks, we do continue to suggest that investors hold a well balanced and diversified range of asset classes within a portfolio and that any time that they wish to review their specific portfolio holdings or discuss any necessary changes or opportunities, that they contact their Adviser to do so.
For Austen Morris Associates’ investors – talk with your advisor about any repositioning to take advantage of markets at this time. For more information about Austen Morris Associates please visit our website.
Jordan Morley
Austen Morris Associates Wealth Management & Investment Team
www.austenmorris.com
