No Reduction Yet

No Reduction Yet

No Reduction Yet 556 523 AMA Team

Screen_Shot_2013_09_22_at_11.57.16_PMGood day. Our Shanghai Head Office is returning from a brief break for the Mid Autumn Festival and for any of our China readers, we trust you too had a good break and enjoyed many a Moon Cake!
It was a busy week in the markets after the US FED surprisingly announced not to action any reduction or slow down to their current stimulus, and instead, leave the current $85 billion per month bond buying to continue as it stands. This seems to have caught most people by surprise, myself included, as the markets were priced in for some kind of reduction and provided the FED with a chance to do what they’ve been hinting at since the start of the year. However, the conclusion from their minutes was not at this time nor this meeting. And with this, most asset classes bounced following the news.
Screen_Shot_2013_09_23_at_12.08.05_AMWith most markets and asset classes responding positively to the news initially, we saw the US S&P ending just above where it started, the UK FTSE ending the week down over -0.6%, but Asia took a majority of the beneficial news with the Hang Seng ending the week over 2.6%. Our readers may recall that we mentioned in a previous Money Matters that South East Asia was down on capital outflow concerns but that the region should rebound when the markets stabilize. Well, although the markets haven’t yet stabilized following the unexpected news, it did help South East Asia as it was one of the better performing regions on the week with the individual countries seeing a surge of capital inflow.
Screen_Shot_2013_09_23_at_12.41.05_AMThe delay in stimulus reduction is likely to be just that – a delay – and that’s what the markets will expect so it will likely be a repeat come the end of October and December when the FED meets again in terms of uncertainty. It’s possible they’ll use this time to adjust some target projections or perhaps they’ll just wait and see. Maybe China can print some further positive data and with Europe also looking to be turning a corner, it’s all rather a mixed bag of opinions on the markets out there. However, in the mean time, we’ll continue to spread our asset classes and try to take advantage of some buying opportunities such as South East Asia which remains volatile but still full of potential. With stimulus still going this should continue to drive equities up, and with some emerging markets also on the rise, it will be important to maintain a strong balance as some volatility remains but so do the growth opportunities.
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.
Darren Cox
Co-Head of Portfolio Management
Austen Morris Associates Wealth Management & Investment Team
www.austenmorris.com

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