Tuesday, November 21, 2006

Gawd, I Hope Nobody Finds Out That I Am So "Average"
An Investment Pro's Biggest Fear

Why so harsh on JP Morgan Asia? Well, just have a look at the share prices in Southeast Asia, which have climbed three times faster than in the Asia-Pacific region. Stocks in Indonesia, Malaysia, the Philippines, Singapore and Thailand, tracked by the FTSE/Asean Index, have gained 27 percent in dollar terms this year. FTSE Group's Asia Pacific Index has risen 8.6 percent. ... and our JP Morgan friend has the audacity to proclaim in a report just a few days old that they JUST RAISED Thailand equities to overweight and JUST RAISED Malaysia and Indonesia to NEUTRAL. So, Malaysia and Indonesia were to be underweighted or an avoid for the past few months, I guess! Its people like that that gives investment analysts and strategists a really bad name.

Let's checkout a recent Bloomberg survey on what investing pros were saying and rate their statements by their insights and intelligence, or lack of.

'`We're still buying heavily into Southeast Asia,'' said Ian Beattie, who manages US$1 billion in Asian equities at New Star Asset Management Ltd. in London. ``Fundamentals are still sound even with the recent performance.
(the key here is "still buying", as usual, the sharper SEA fund managers are based out of Europe)

Indonesia's economy, the largest in Southeast Asia, expanded in the last quarter at the fastest pace in a year. The Asean index climbed 1.1 percent last week, beating the 0.1 percent gain in the Asia Pacific measure. The Straits Times Index in Singapore, Southeast Asia's biggest market, performed the best among Asean country indexes by rising 1.9 percent. Southeast Asia produced the best-performing benchmark in all of Asia this year: Vietnam's Ho Chi Minh Stock Index, which has jumped 87 percent.

Asian equities strategists at Merrill Lynch & Co., Macquarie Securities Ltd. and JPMorgan Chase & Co. recommend investors hold more Southeast Asian shares than are represented in benchmark indexes because lower borrowing costs will spur economic growth in the region. The central bank in Indonesia reduced its benchmark interest rate this month for the sixth time since May. The Philippine central bank on Nov. 2 effectively trimmed borrowing costs for the first time in three years by reducing the interest paid to lenders for deposits.
(many strategists cite lower borrowing costs as the kicker for SEA markets, that's a bit underdone for me, its the currency stupid, just have a look at the underlying strength of each of the country's currency, that explains the lower production cost per man hour and hence the more competitive exports, its that each of the SEA currency is at least 15%-25% undervalued still... with the exception of Sing dollar. The strategist at Merrill's (interviewed below) also seems to have missed the bigger picture just like the JP Morgan guy..)

Indonesia's Jakarta Composite Index has advanced 44 percent this year, the third-biggest gain in Asia behind Vietnam's index and China's Shanghai and Shenzhen 300. The Philippine Stock Exchange Index has climbed 36 percent. Policy makers have yet to lower rates in Malaysia, where the Kuala Lumpur Composite Index has risen 16 percent this year, and in Thailand, where the SET Index has risen 2.8 percent. The Malaysian central bank has held borrowing costs unchanged since April, and Thailand last month kept rates steady for the third straight meeting.``Indonesia and the Philippines have been driven up by falling rates and an improving economic outlook,'' said Spencer White, a Hong Kong-based strategist for Merrill. ``Looking into 2007, Thailand and Malaysia both look interesting. Rates will fall in both and there will be a cyclical recovery in the domestic economies. ''Singapore's economy grew at an annual 5.7 percent rate in the third quarter, after expanding 3.9 percent in the previous three months, according to revised estimates released today by the trade ministry.Indonesia last week reported 5.5 percent growth from a year earlier during the quarter. The country outpaced expansion of 2.7 percent in Japan, Asia's largest economy, and 4.6 percent in South Korea, the region's biggest emerging market.

``Growth is still in the emerging world rather than developed economies,'' said Franki Chung, who oversees US$700 million of Asian equities at CIBC Global Asset Management (Asia) Ltd. in Hong Kong. Emerging markets ``will continue to do better than, say, Japan or Australia.
(nothing spectacular, but at least he is saying something decent and a worthwhile opinion, rather than a wishy-washy one... you know one .. the one hand, and on the other hand statements...)

``The potential for surprise in Southeast Asia is really that domestic consumption has yet to be mobilized,'' said Anthony Muh, who helps manage US$1 billion at Alliance Trust Plc in Hong Kong. ``We've bought into the story and I think it will continue.'' His biggest holdings in the region are in Singapore. Because emerging markets dominate Southeast Asia, the region tends to be hit relatively hard when fund managers switch to less risky investments. FTSE's Asean index tumbled 19 percent between May 8 and June 13, exceeding the 15 percent loss in the Asia Pacific index, as stocks fell worldwide.
(at least this guy gave a worthwhile opinion)

'`If there's a global slowdown or investors become risk averse, they will withdraw money,'' said Grace Tam, a manager of investment services at JF Asset Management in Hong Kong, which holds US$78 billion of assets in Asia.
(sure, this may have been taken out of context, but statements like these should never be printed, its like saying my mum is a woman ... adds zero value and makes the investment pro look bad ... bad business journalism)

Fund managers appear bullish for now. Investors were the most optimistic this month about equities since April, according to a Merrill survey of 216 fund managers that was published Nov. 14. Respondents investing in the Asia-Pacific region excluding Japan rated Singapore, Indonesia and Thailand as favorite.``We see a lot of fund inflows into Southeast Asia,'' Tam said. ``We prefer Southeast Asia more than Northeast Asia right now because of falling interest rates and also because of strong domestic demand.''
(at least Tam was quoted better this time around, and the opinion has more meat in it)


doraiddd said...

Malaysia = Neutral = stop selling for the time being but sell more on the way up??

Fund managers = monkey see = monkey do

just continuing my caustic irreverence... its still raining semen outside...

Salvatore_Dali said...


what is galling is that JP morgan is RAISING Malaysia to Neutral, so what was it before, AVOID or REDUCE or SELL ... and the market has risen 15% this year, then they upgrade to Neutral?? What does that mean?? So, they r telling client to avoid for the past 12 months, and now prices are much higher to go Neutral -i.e. buy or not also can??!! But they were told not to buy for the past 12 months!!! What a fucked up recommendation, and no apology.

First come clean, say sorry you were wrong for the past 12 months, then upgrade to Neutral. Just pushing the thing to Neutral is just stupid and assumes your audience is stupid. In the end, the writer is the ass.

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