Singapore Stock Market News

Equity Strategy - When stars align

StockFanatic
Publish date: Thu, 19 Sep 2013, 02:06 PM
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The world's major economies appear to have entered a synchronised, but in all likelihood modest, growth upswing. Expect this to drive further outperformance by Asian cyclicals, which still have significant cushion for growth disappointment but little upside for growth surprise built into valuations. To date, Asian cyclicals have risen only two-tenths of the average return when regional LEIs have historically been in recovery mode. Should growth momentum disappoint, either in scope or duration, cyclicals will clearly lose their most powerful tailwind.

However, the bet on defensives has also become less attractive as ASEAN growth prospects have collapsed. Stay long North Asia over ASEAN and continue to add to cyclicals.
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