Singapore Stock Market News

Equity Strategy - Prudence

StockFanatic
Publish date: Tue, 05 Nov 2013, 12:52 PM
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We are not convinced that Asian markets will rise much further into year-end. While the path of least resistance remains up - supported by seasonality, easy liquidity conditions, a weak dollar (key to currency reversal and low inflation concerns across the region), the potential for positive reform announcements out of China and further evidence that the global growth backdrop is improving - we think that the magnitude of recent price gains and proximity to year-end might limit adding to long positions with the next move likely to be on the short side. Admittedly, none of the conditions necessary to trip markets up are prevalent.

However, the window for remaining bullish is closing before fears of QE tapering and the consequences of a stronger US$ re-emerge. A low-conviction, low-volume squeeze higher is an opportunity to trim positions, particularly for ASEAN markets where external vulnerabilities have diminished but not disappeared.
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