Finally, investors need to face the moment of truth after FOMC had officially made the rate hikes of 50 basis points in effect last week. The global stock market was the first to response with a massive sell-off, especially the big Tech companies like Amazon, Apple, Meta, Tesla... none of them was spared from the rapid selling from the hedge funds and institutional investors.
Another market that had turned topsy-turvy at the same time by the rate hike is the forex (FX) market. Many major currencies had been heavily traded in the past few weeks, as the rising US dollar has been forcing traders to quickly buy into USD to unwind positions. On the other hand, various global central banks are acting in reversal to support the domestic currencies by buying them back in the markets especially those which are pegged to the U.S. dollars, in avoidance of sliding into currency depreciation.
The next victim that came in line was none other than the cryptocurrencies. TerraUSD stablecoin had tumbled last week together with its sister cryptocurrency, lunaLuna token, which also plunged 97% on the same day... this melt-down was indeed devastating to the bitcoiners, seeing the values of their wealth diminished within such a short time. But that wasn't happened without a reason. Just remember when a market started to tumble for correction, all the fund managers beside just cutting loss, will also quickly lock in their profits by selling all their profitable investments even upsides is still intact.
The following 3 pointers are my highlights this week as we transit into a new epoch. And more elaborations will be made on the following in the near futures.
When the growth of companies started to plateau and yet the interest rate is incrementally advancing, this could affect the income-driven counters like REITs end of the day in keeping investors to stay on since a higher interest can be earned else where.
The news about Finland and Sweden joining NATO, may further aggravate the shortage of commodities supply. And today, India just announced of banning all wheat exports over food security risk. That will eventually add on to the global supply crunch.
On Monday, China stocks retreated with the disappointing economic data released on Sunday as shown below. Looking ahead, investors need to be cautioned with the contracted economy of countries like China, as it could generate the ripple effects to other exporting countries which relying on one another for material supplies.
Country | Economic Data (dated 15th May 2022) | Actual | Forecast | Previous |
CNY | Industrial Production, yoy | -2.90% | 0.40% | 5.00% |
CNY | Chinese Industrial Production, ytd | 4% | | 6.50% |
CNY | Retail Sales, yoy | -11.10% | -6.10% | -3.50% |
CNY | Chinese Retail Sales, ytd | -0.17% | | 3.27% |
CNY | Fixed Asset Investment, yoy | 6.80% | 7.0% | 9.30% |
Reference:
China stocks decline as economic data disappoints
The CSI 300 climbed 2 per cent last week amid a global sell-off, boosting hopes of a turnaround for the battered Chinese stock market. Down 20 per cent this year, the benchmark is one of the world’s worst-performing major equity gauges this year, as a series of policy steps and vows of market stability from the authorities since mid-March have only brought fleeting gains.
Reference:
Wheat prices have surged about 60% this year, raising the cost of everything from bread to noodles.
Other Focus:
Genting Singapore reports 17% y-o-y NPAT of $40.4 mil for 1QFY2022
SingPost reports 188.1% y-o-y surge in 2HFY2022 earnings of $48.1 mil
Riverstone Holdings reports earnings of RM108.7 mil for the 1QFY2022, down 79.2%
Kimly reports 14.7% lower earnings of $18.5 mil for 1HFY2022; proposes interim dividend of 0.56 cents
ThaiBev reports 20% higher earnings of $285.4 mil for 2QFY2022
SIA renews F1 title sponsorship for three years
ComfortDelGro reports 30.4% higher 1QFY2022 PATMI of $76.7 mil
SBS Transit reports 33.5% lower profit after tax of $15.5 mil in 1QFY2022
First Resources reports 1QFY2022 earnings of US$73.6 mil, 8.4 times higher y-o-y
Stashaway raises projected rate of Simple to 1.1% p.a.
And for Tesla's followers:
Elon Musk says US$44 billion Twitter deal temporarily on hold
Coming Focus (Extract):
Monday, May 16, 2022 | |
Holiday | Singapore - Vesak Day |
USD | FOMC Member Speaks |
SGD | Non-Oil Exports, mom, yoy |
SGD | Trade Balance |
Tuesday, May 17, 2022 | |
USD | Core Retail Sales, mom |
USD | Retail Sales, mom, yoy |
USD | Industrial Production, mom, yoy |
USD | Fed Chair Powell Speaks |
USD | FOMC Member Speaks |
USD | API Weekly Crude Oil Stock |
Wednesday, May 18, 2022 | |
GBP | PPI, CPI |
USD | Crude Oil Inventories |
USD | Gasoline Inventories |
USD | Housing Starts |
Thursday, May 19, 2022 | |
USD | Philadelphia Fed Manufacturing Index |
Initial Jobless Claims | |
USD | Existing Home Sales, mom |
CNY | PBoC Loan Prime Rate |
Friday, May 20, 2022 | |
GBP | Retail Sales |
News on Blockchain, NFTs and the Metaverse
MELT DOWN
The meltdown on cryptocurrencies last week is indeed a hell to a lot of bitcoiners, the reference link below is for your reading on the detailed happening... and this week, I will cut the long story short on cryptocurrencies as followed:
The bitcoins today is hovering around 30,000 level, and one simple question is "Can buy or not?"... to summarize, I will not take any long position on cryptocurrencies now. And my target for Q2 is below 20,000 level, buy call at 18,000 level. Month of Entry: About the end of August. [My Personal Point Of View]
But bear in mind, the hedge funds can exist from any kind of cryptocurrencies, and left the retail investors in a lurch... therefore, please do your homework, and only stay vest with the robust one based on their market capitalization, or the total value of all of the coins currently in circulation.
Meanwhile, I will continue to look out for the latest trends on blockchains for your reading pleasure.
Reference:
TerraUSD stablecoin tumbles and luna token plunges 97% as rescue attempts fail to avert 'death spiral'
UST had tumbled to $0.375 Wednesday as of 9.31 a.m. ET, according to Coingecko, having earlier dropped as low as $0.306.. Luna, which is free-floating, was down 97% to $0.869. It traded as high as ...
Investment Tips 💡 this month (May 2022) :)
Last week commentary: "My call is be a short-term trader for this month. If it's happen that you bought any stock cheap enough, no harm to take profit if price rebounded. The volatility will always be there for you to get in and out of market. Else spread your buying over this quarter, no need to load up one shot in this volatile market.“
[For the above, my verdict remained.]
But one point to highlight, Cathie Woods (CEO of Ark Invest) seemed doing portfolio restructuring for ARK... Honestly, some attentive fund managers probably selling some of their holdings in tech stocks and finding opportunities in energy and cyclical stocks during this time of uncertainties. Heartfelt, they are not wrong to do so but bear in mind that the material costs are on the rise under the shortage of raw material supplies. Therefore, business operators may contemplate to passing on costs to customers, may hold back after all as it could end up losing their market shares to their competitors. Therefore, these counters could eventually deliver a better earning reports as forecast to their investors, remain uncertain. But during this transitional period, investors need not to rush in as what they did for Q2.
What is cyclical stocks?
"Cyclical stocks represent companies that make or sell discretionary items and services that are in demand when the economy is doing well. They include restaurants, hotel chains, airlines, furniture, high-end clothing retailers, and automobile manufacturers." Quote from Googles Reference:
Cathie Wood Sells Some Tesla Stock and Buys Some GM Shares It may sound like sacrilege, but ARK Invest founder Cathie Wood sold some Tesla stock and bought some General Motors shares. It's a bit of a surprise, but the devil is in the details.
Earning announcements continue...
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