Greetings everybody! This week’s Money Matters is coming to you courtesy of Rob Hough, Advisor at Austen Morris Associates’ Shanghai Office.
It’s been getting warmer in Shanghai and with the May holiday break not too far around the corner for those in China, let’s hope it holds out until then. Things have also been warming up in the global markets over the last week too, so let’s take a look at what has been happening…
The frequency and intensity of provocative statements from North Korea has been escalating in the last couple of weeks. Foreign policy is not my area of expertise, but from what I have read, the consensus seems to be that we should not be taking these threats too seriously, as this is more about an internal propaganda campaign to demonstrate the strength of the North Korean leadership, rather than a prelude to a major conflict. Either way, this hasn’t rattled the markets too much as of yet, so let’s hope that continues to remain the case.
Despite being in negative territory on Friday, the U.S. major indices hit new highs through much of last week on the back of more positive reports that the U.S. and other major economies were continuing to grow. However, the U.S. stock market is really only riding on the wave of the QE stimulus the Fed has been injecting into the economy recently and until we start seeing genuine improvements in the fundamentals like the unemployment rate, which is still languishing in the high single digits, this upward movement is unlikely to last too much longer.
In Europe, Cyprus was pretty much out of the news until Friday when the Eurozone leaders met in Dublin and finally approved the terms of a debt rescue. At the same meeting, they also agreed to give Portugal and Ireland more time to repay their loans. Attention is now turning to Slovenia, which has recently been forced to recapitalize its main banks and may finally have to ask for a bailout. Although this has renewed concerns about further contagion in Europe, investors do not appear to be panicking about the situation and the markets still look stable for the time being.
Growth signals from Asia were positive with China reporting a strong rise in imports, surging 14% from a year earlier, when analysts were only expecting a rise of around 5%. Whilst in neighbouring Japan, hopes have been growing that their stimulus programmes are finally starting to bring the country out of the economic doldrums. If this turnaround can continue, the Japanese market offers some great long-term opportunities.
In the commodities sector, we appear to be seeing an investor-retreat from gold as prices dropped below $1,500 for the first time since July 2011. This puts the yellow metal into bear-market territory and marks a decline of 21% since hitting an all-time high back in August 2011. Meanwhile, in the energy sector, whilst oil finished the week at its lowest in over a month, natural gas was at its highest level in 21 months on the back of tighter supplies.
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.
Thanks for tuning in to this week’s Money Matters!
Rob Hough, Advisor
Rob Hough, Advisor, Austen Morris Associates
Rob reigns from the UK and has been an Advisor with Austen Morris Associates since 2009. Rob is based in Shanghai. He specialises in helping foreign and expatriate professionals establish their financial priorities and objectives, which allows him to deliver appropriate solutions for their needs, and provides ongoing support, advice and service to his clients.
Austen Morris Associates Wealth Management & Investment Team