Hi all,
The Trade War between China and US has caused an economic slowdown in China. US companies that are exposed to China have indicated that their revenue are affected.
The US interest rate hikes in 2018 increase the financing cost of doing business and caused emerging market currencies to depreciate relative to the US$ and hence funds to flow out of the emerging markets.
However, Federal Reserve of US recently indicated that they are leaning towards a more dovish stance for 2019 because US companies in China are experiencing weaker sales(this can cause a decline in US Govt Tax Revenue) and higher interest rates would be higher debt repayments for the US Govt(US Govt has high debt).
In my opinion, we are unlikely to see a repeat of the market slump in 2015 and 2016 unless there are major cases of insolvency affecting the banks in Singapore.
Many Analysts and Broking houses are recommending investors to stick to the defensive high dividend yield stocks and Reits. I am in the same line as thought as them for bigger lump sum investments.
The STI is still trading more than 10% below than 2018 high at 3641.65. Cyclical sectors such as Banking, Property Developers and Manufacturing Sectors are still trading more than 20% below 2018 peak.
Since it is difficult to predict and buy at the exact bottom, the US-China Trade War is still unresolved, and the US Govt remains shut at the moment, hence in my opinion, gradual accumulation of cyclical stocks will enable investors to position themselves at a low price for the next Bull Run.
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