You heard it.
Corporate earnings disappoint. Companies face challenging market conditions, from softening of the retail climate to rising costs of rent, manpower and production. Externally, oversupply of oil with prices plummeting and there are few signs of recovery. Slowdown in China with China Central Bank imposes further interest rate cuts.
Locally, Developers are pressing for favorable regulations to incite buyers’ interest in properties. Commodities slump as demand drops heavily from China, Russia and India.The story of “emerging Asia” becomes a theme of the past as funds flow outwards to Europe. Standard Chartered is the latest bank to retrench their staff and begin their corporate restructuring. Other financial institutions are also reducing headcount and cutting back on wayward lending.
In Europe, recovery remains fragile after Eurozone crisis due to piling of corporate debts, high national deficit (e.g. Greece) and unresolved unemployment, from Spain to Italy.
Many share investors feel jittery and are tempted to head for the exit. Some think that this must not be the right time to put their money in the stock market – perhaps consider fixed income instruments instead. For investors who are getting emotionally charged and begin to think irrationally, I do strongly encourage you to step back, off your computer and ignore the market till your vision is clear. Take a piece of paper. At the centre, write down your main purpose of investment - the words as big as possible. Place it somewhere that you can see it daily, such as your kitchen window, your study table or the walls of your bedroom! Your aim can be retirement, financial freedom or to gain a certain amount of funds to pursue a goal.
Look at the situation – are you there yet, halfway on the mark or just started?
For me, I have a clear pathway. From 2021 to 2022 estimated, I foresee the peak of a cycle where positive events converged together, using the historic computation of macro-happenings and business cycles, of industries and sub-sectors. As we see, countries in North Asia to Southeast Asia have readily explored deeper cooperation at regional levels with federation and councils at national level partnered together to map out feasible agreements with lesser cross-border trade restrictions. Technology in seamless applications accelerates productivity and increases output, thus promoting growth at a faster pace.
Disruptive innovation facilitates trend build-up, making consumers like you and I highly excited about new products, including objects that we interact daily – all bundled together at the push of a button. The next phase (from industrialization in the past to artificial intelligence, machinery automation, medical advancement and robotics) may result in breakthrough and this may cause a ripple effect.
I am not a guru. No one is able to predict but I am one who likes connecting dots together. Cycles are meant for benchmarking basis. That said, I envision that my shares (in companies of cyclical nature) will be sold during this period. It’s an exit for me – after all, investment is a tool, never my life and I can pursue something greater. From now till the journey, I am focused on buying more of my cyclical stocks while my income stocks and REITS will provide me with regular dividend returns. Alongside, there can be stock opportunities (I love them!) for me to exploit since I am a commercial person, taking on calculated risks. I am still a Fundamentalist in business analysis; not a Chartist. Of course, patience and discipline are characteristics needed.
Therefore, it’s only at this junction that opportunities appear. STI may not be the lowest and certainly, the index has dropped off the cliff at some percentage points
Without negativity of world events, an Investor will not have the chance to cherry-pick and buy companies at attractive prices. It’s a great moment to keep your eyes peeled closely. Your watchlist helps to provide a good screening of “must buy” companies. And for the bystanders, you can never be assured of a right price at the right time. Have the conviction to buy from your margin of safety after your due diligence is done.
Happy hunting in the stock market for this Christmas!