Sunday, September 15, 2013

End Of QE, End Of Boom – Cautionary Words From Hu Li Yang

13 SEPTEMBER 2013
End Of QE, End Of Boom – Cautionary Words From Hu Li Yang
By Daxx Chong

With quantitative easing (QE) wildly expected to mark the beginning of its end some time this month, Shares Investment had the privilege to have an exclusive interview with investment guru Hu Li Yang. Having captivated the hearts of many with his ability to explain complex financial market phenomena using simple everyday lives analogies, Hu shares his self-devised “Tetralogy Of QE Exit” to illustrate the effects of QE tapering and on why investors should tread the road ahead with caution.

Shares Investment: Speculations are rife that the Federal Reserve will start QE tapering this month, do you think it will materialise?


Hu Li Yang: Federal Reserve officials have on repeated occasions made known their QE tapering contemplation. With that much already said, I think it is highly likely that we will see a September tapering.

Years of QE have resulted in waves of money engulfing the financial world. Every time when you look out of the window, you will see a US$2 trillion vulture circling in the sky looking for profit opportunities. For many asset classes, a large portion of their run-up are supported by the waves of QE money. Now that tapering is on the horizon, it will mark the end of easy return.

SI: How will QE tapering affect different asset classes?

Hu: Making reference to my “Tetralogy Of QE Exit” (Figure 1), the tapering will play out progressively. We have clearly passed stage 1, where the US economic recovery begun gaining traction leading the US dollar to strengthen while commodities domiciled in the greenback such as gold and currencies in the emerging markets to fall.

Currently, we are in between stages 2 and 3. Over the last few months, we have seen a decline in bond prices (rise in bond yields) as well as a fall in share prices. As the tapering effect intensifies, property prices are likely to come down too.

When we eventually reach stage 4, where the Federal Reserve takes off from a near-zero interest environment, I foresee these asset classes (gold, bond, equity, and property) to take another round of beating.

For investors, the road ahead will not be smooth. Investors should therefore tread with caution. One can no longer afford to invest recklessly as in the QE days, a wrong move could well see one suffer for the next 10 years. The key to winning this tapering battle is patience, to wait for safe opportunities to pick up cheap bargains.






Figure 1: Tetralogy Of QE Exit – Stages 2 To 4
SI: We are surprised by your rather pessimistic take. Isn’t the end of QE a vindication of renewed strength in the US economy?

Hu: No doubt the US economic recovery has gained some traction, but the pertinent question is whether it is able to support the current level of the US stock market. Since tapering news broke out, funds have been outflowing from emerging markets and returning to the US. With the US gross domestic product growth coming in at only 2 to 3 percent, how does that justify the current 15,000 level of the Dow Jones Industrial Average index?

The US stock market is my biggest worry: Returning funds have shored up share prices. When the market finally realises prices have ran ahead of fundamentals, we will see a significant fall and that will reverberate across asset classes. Those that have ran up a lot during the QE days will be hit the hardest, prime examples are properties in Hong Kong and London.

SI: With so many asset classes in danger of falling, are there any profit opportunities left?

Hu: The US dollar and Chinese renminbi are safe bets that will see modest appreciation over the medium term. The former is a direct beneficiary of the tapering while the latter reflects the strength of the China economy. With QE money gradually taken off the table, it will be the economic strength of the nation that underpins its currency – I hold a positive outlook for the China economy.

Other opportunities that warrant a close look will be those that had not run up during the QE days, these will include the US property market as well as stock markets in China and Eurozone.

Not to forget, in instances when stock markets that have strong economic fundamentals experience overreaction falls, these are opportunities. I remain confident in the Malaysia and Singapore economies – in the event that the Straits Times Index dips below the 3,000 level, it will be an opportunity to pick up good quality stocks on bargain.

Hu Li Yang will be speaking at the Shares Investment Conference 2013 this October.

Feeling nervous about QE tapering? Join us as Hu offers advice on manoeuvring the road ahead


Source/Extract/Excerpts/来源/转贴/摘录: http://www.sharesinv.com/
Publish date: 13/09/13

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Warren E. Buffett(沃伦•巴菲特)
Be fearful when others are greedy, and be greedy when others are fearful
别人贪婪时我恐惧, 别人恐惧时我贪婪
投资只需学好两门课: 一,是如何给企业估值,二,是如何看待股市波动
吉姆·罗杰斯(Jim Rogers)
“错过时机”胜于“搞错对象”:不会全军覆没!”
做自己熟悉的事,等到发现大好机会才投钱下去

乔治·索罗斯(George Soros)

“犯错误并没有什么好羞耻的,只有知错不改才是耻辱。”

如果操作过量,即使对市场判断正确,仍会一败涂地。

李驰(中国巴菲特)
高估期间, 卖对, 不卖也对, 买是错的。
低估期间, 买对, 不买也是对, 卖是错的。

Tan Teng Boo


There’s no such thing as defensive stocks.Every stock can be defensive depending on what price you pay for it and what value you get,
冷眼(冯时能)投资概念
“买股票就是买公司的股份,买股份就是与陌生人合股做生意”。
合股做生意,则公司股份的业绩高于一切,而股票的价值决定于盈利。
价值是本,价格是末,故公司比股市重要百倍。
曹仁超-香港股神/港股明灯
1.有智慧,不如趁势
2.止损不止盈
成功者所以成功,是因为不怕失败!失败者所以失败,是失败后不再尝试!
曾淵滄-散户明灯
每逢灾难就是机会,而是在灾难发生时贱价买股票,然后放在一边,耐性地等灾难结束
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