190509 Asia Open

Morning all,

Apologize for yesterday's miss for update. Overnight, the downtrend got snapped by some positive data over the weekend and overnight, as housing starts in US has increased in April, while overnight suggested confidence among U.S. homebuilders in May increased to the highest level since September, by The National Association of Home Builders/ Wells Fargo index, which, MAY, point towards a floor for the housing market. Further, with the threats by Nigerian Militant, this also fuels crude to jump, whilst Lowes results beating mood that lifts the market up.

As suggested by the currency leads, this has fueled optimism for the equity market, as dollar lowered against a basket of currencies, with Euro up 100 pip, Aussie up 200 pip and Pound up 200 pip. This led DJ and S&P to rally 2.85% and 3.04% respectively, fueled by significant increases in Financials by 7.19%, while consumer discretionary up 4.27%. Increases in crude also led to 3.30% increase in the energy sector and 3.57% in the material sector.

However, I remain to state my short term bearish view on the market, given that I believe a further correction should come about, as oppose to this spike in confidence. This is on the basis of queries over demand resumption, given continual limited credit available across the economy, esepecially for consumers. We may continue to see bad debts rising to the surface, though we question the treatment of these bad debts. I believe we will see further capital raising across banks and also corporates given that the deleveraging theme has not passed away from our current situation. Thus, I remain to see treasuries yield to lower, while USD continue to appreciate on the theme of flight to quality, as investors continue to question the validity and speed of the recovery.

But looking a day ahead today, we will see US optimism spur over Asia, and we may generally expect a 2% increase across the board. The magnitude of jump in ASX may be greater than the other Asia peers due to the sharp spike in oil prices overnight.

I would rotate the winnings from defensives, and be a seller of Towngas (1071) and HK & China Gas (3) and Singtel (SGT) whilst believing that Energy players will be the winner today, and I would look to buy CNOOC (883), SINOPEC , and Angang (347) and Magang (323).


Thats about it today.
Happy tradiung!
ongy out.