Wednesday, August 29, 2012

Private Bank Views-plus Middle East Moment

This is a quiet period,according to Mark Matthews,Head of Research for Asia at Bank Julius Baer;September will be D-Day.The MSCI World Index is up 10% this year;the US is up 14%,overshadowed by all this volatility.The markets will go down if Federal Reserve Chairman Ben Bernanke doesn't express some kind of positive policy action.It's unclear how the Fed makes decisions.
The US is not doing very badly.China's probably the big problem in the world right now.It's slowing down in a way the leaders are comfortable with.
I like the quality US blue chips;quality high yield bonds;Southeast Asian equities such as those from Thailand and the Philippines.
The Julius Baer Group says it is the leading Swiss private banking group,serving sophisticated private clients,family offices and external asset managers from all over the globe.With its headquarters in Zurich,it has more than 40 offices in over 20 countries.The group was founded in 1890.
Middle East Moment:Any Middle East military action will push oil prices significantly higher,says Helma Croft,a geopolitical strategist at Barclays Capital.Drought and its higher food prices will hurt Middle East fiscal positions.None of these governments can afford to put off subsidies to their people.

Wednesday, August 22, 2012

Asian Market Voices

We probably don't need QE3,or more Federal Reserve asset purchases,in the view of Tim Riddell,Head of Global Markets Research at Australian bank ANZ.I expect a relatively positive end to the third quarter.
It's not over for Greece.They've got a lot of problems.
Mario Draghi has shifted the whole focus of the European Central Bank.He's really doing a good job.
The Shanghai market could be a big shifter into the next quarter.We could get a 10.5% rebound going into the next month or two.The downside risk is only 2-4%.The skew to me is,look to get involved.
I think China's home prices have bottomed,said Nicole Wong,Head of Real Property Research at CLSA.Today 92% of buyers are end users,as opposed to investors,versus 50-60% a few years ago.The supply is getting a little bit tight at this time.
The new governent will have to think about the next few years.A lot of the tightening will stay just a warning.Supply is plummeting and demand is quite stable.Those developers with positive cash flow will be in the best position.
Another rate cut will make money in the bank feel more and more painful.
CLSA stands for Credit Lyonnais Securities Asia.It claims to be Asia's leading and longest running independent brokerage and investment group.The Hong Kong-based firm offers investment banking,equity broking and asset management to global corporate and insitutional clients.Credit Agricole is their main shareholder.

Wednesday, August 15, 2012

Apple Versus Samsung:Tech Heavyweights Slug It Out In Court

A San Jose,California court room has been the stage for an epic legal drama acted out by two bitter rivals of the tech universe,Apple Computer and Samsung.Judge Lucy Koh of the U.S. District Court Northern District of California told the two sides it's time for peace on Wednesday,urging Apple CEO Tim Cook and Samsung CEO Choi Gee-Sung to at least talk on the phone before the case goes to the jury-probably next Wednesday.
The trial is now in its third week,with both sides calling witnesses to support their cases.
Apple seeks 2.5 billion dollars in damages,plus an injunction to halt sales of what it deems are the offending Samsung devices,saying the products were slavishly copied from its own iPhone and iPad.For its part,Samsung denies the allegations and insists Apple was in fact infringing Samsung patents.
The two CEOs had met before the trial began on a court order to seek to resolve the conflict,but were unsuccessful.Legal experts expressed scepticism that,having gone so far,the sides will be willing to turn away from the legal process at this late stage.Their lawyers told Judge Koh,however,that the two men would comply with her last ditch request that they communicate again.
In the course of presenting its case,the normally secretive Apple has revealed both source code and design methodology.Their integration and execution are just a lot better,according to Erin-Michael Gill,Managing Director and Chief Intellectual Property Officer at MBD Capital Group.I don't think it's just a little old man behind the curtain.The execution and ideas generated are universally accepted as being pretty innovative.
In every large company,when you're developing innovation,it takes a lot of confidence to allow design to lead.It's pretty clear that it does at Apple.When you look at Apple,it doesn't look and feel like other consumer electronics companies.It's more like a drug company,with a couple of core inventions that are critical.There are core elements in their process and products they are gonna defend fiercely,Mr.Gill explained.

Wednesday, August 8, 2012

MIT Professor:Finance and Politics

The riskiness of the market isn't nearly as predictable as it used to be,points out Andrew Lo,Professor of Finance at the MIT Sloan School of Management.Factors are pushing the markets.The entire sector is getting hit,not individual companies.
The Americans and Europeans must fix political problems.Fiscal integration in Europe is really inevitable.All of this debt on banks' balance sheets must be dealt with.There must be write-downs,recapitalisation and ultimately privatisation.We're waiting on the edge of our seats for these politicians to get their acts together.
We have to understand the global linkages across all these platforms.Any kind of coordinated activity means that things are really bad.Central banks have relatively few tools.Ultimately it's the political process that has to create the atmosphere for resolution.
We've been dealing with a lot of structural issues.Spending in the short run will help,but it is unsustainable.Ultimately,the only way to do it is cold turkey.Investors are scared.We're staring into the abyss.There are a lot of people in cash.They need to be able to invest in risk assets for their retirement.We need to restore trust in the financial system,Professor Lo reflected.
Dr.Lo has a PhD in Economics from Harvard University.He is an authority on hedge funds and financial engineering.His books include "Dynamics of the Hedge Fund Industry" and "Market Efficiency:Stock Market Behaviour in Theory and Practice."

Wednesday, August 1, 2012

Author Lays Out China's Best Case Scenario

Commodities exhibit a one decade up,two decades down cycle,notes Ruchir Sharma,Managing Director,Portfolio Manager and Head of Global Emerging Markets Equity Team at Morgan Stanley Investment Funds.China is the 100 pound gorilla in the commodity marketplace.
A China slowdown is a principal part of the commodity slowdown thesis.The best case for China is 6-7% growth.It's quite a shock for those who are used to 7-8% growth.It's a very natural slowdown.At a per capita income of 6,000 dollars a year,all developing economies slow down.
China is systematically deploying its wealth,but their debt to GDP is close to 200%.The reason for their slowdown is,the number of people entering the labor force and moving to cities is slowing down.It's demographics.It's like Japan in the 1970s.
We are now in a post-China world.Look to the Philippines,Indonesia and Thailand.For the first time,the Philippines now have a stable political leadership intent on increasing the country's wealth,Mr.Sharma pointed out.
Ruchir Sharma,CFA,is the author of the book "Breakout Nations."A Newsweek columnist and contributor to The Wall Street Journal,he has a BA in Commerce from Shri Ram College of Commerce in Delhi.
Morgan Stanley(MS)