Showing posts from February, 2014

World equity market: Do not worry – it is climbing the wall

FBM KLCI: 1,785.88    (2014 Year-end Target: 1,900 points)
The world is transitioning to a more normal monetary as well as macro environment.
The US Fed is slowly taking away  the  QE3  liquidity  punchbowl  with  the  pace  of  monetary  normalization  “tied  to  what  happens  in  the economy”.  While  the  recovery  in  advanced  economies  has  thus  far  been  rather  measured,  nonetheless  it  is  also uneven  at  times  hence  the  transition  process  will  not  likely  be  smooth  and  predictable.  This  uncertainty  may contribute to intermittent heightened volatility in the world’s risk asset prices.

In  our  Strategy  note  dated  28  June  2013  (para  4&5), we  alluded  to  the  following  outcomes  in  light  of  the normalizing monetary and macro environment:
There  are  instances,  principally  during  a  period  when  the  real  economy  is  gaining  on  its  recovery traction, wherewith the trend in equity prices might turn out to be flat and even scalin…