Market Watch I Kristal Weekly Feed I 11th November 2019
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Kristal Weekly Feed | 11th November 2019

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In a hurry? Here’s a short summary of some major global headlines over the last week.

Positives

  • U.S. stock market has a good week; Disney among stocks that saw a rise
  • YES Bank rises from the deep to post biggest gain globally in past month
  • Santa Claus Rally might help U.S. stock markets in December: Fundstrat Advisors

Negatives

  • European shares go up before dipping on Friday due to trade-deal chaos
  • The world’s billionaires see a dip in wealth for the first time since 2008

 

Now, for more detail.

 

Positives

1. U.S. stock market has a good week; Disney among stocks that saw a rise

What You Should Know

The ‘will they, won’t they’ of the trade deal could not touch the U.S. stock market this last week as the major indices all posted a gain. The Dow Jones Industrial Average added 6.44 points to its kitty; rising 0.02% to close at a new record of 27,681.20. Similarly, the S&P 500 moved up by 7.90 basis points, or 0.26%, to achieve a fresh closing high of 3,093.08. The Nasdaq Composite Index also rose 40.80 points to settle at 8,475.31.

What You Should Look Out For

The American economy has been resilient for a while now, but Trump’s dilly dallying about the China deal still posits trouble. Kevin Philip, of the LA-based Bel-Air Investment Advisors said that full employment, and the Fed’s rate cut have helped the market remain steady in recent times.

Suggested Reading

 

2. YES Bank rises from the deep to post biggest gain globally in past month

What You Should Know

YES Bank was the world’s biggest stock market sob story for most of 2019. Until it wasn;t.

The brand’s shares have rallied about 50% in the past month, which is the biggest gain among global peers valued at more than $1 billion. The surge comes after founder Rana Kapoor was forced to sell his holdings and a new team was put in place to combat bad loans.

What You Should Look Out For

While the lender’s stock market gains make for a good headline, its September returns are nothing to write home about. YES Bank saw a dip in earnings in the September quarter and its bad loan ratio grew worse. Recent funding from billionaire investor Rakesh Jhunjhunwala, and a $1.2 billion funding injection from an undisclosed global investor, have helped keep the lights on at YES Bank for now. The bank’s CEO Raveneet Gill is also trying his hardest to raise more funds to keep the bank afloat for the next 24 months. The optimism around the bank’s stock market surge is cocooned in caution, for now.

Suggested Reading

 

3. Santa Claus Rally might help U.S. stock markets in December: Fundstrat Advisors

What You Should Know

For investors still reeling from last year’s December stock market meltdown, here comes some good news from Tom Lee, head of research at Fundstrat Global Advisors. Lee predicts that the Santa Claus rally this year will have none of the ugliness of 2018, and that he is confident another leg higher for stocks is in the offing. Despite flat earnings growth for most of 2019, he predicts that the market will catch up to the rapid earnings growth seen last year.

What You Should Look Out For

The Santa Claus rally is a calendar effect which usually leads to a rise in stock prices during the last trading week in December, and the first few trading days in the following January. According to Lee, since 1998; when the S&P 500 was up more than 9.5% from the beginning of the year through the first week in November, the average further gain has been 4%. He also said that a resolution to the trade war is not a necessity for the rally to occur, since “companies have shown in the face of this trade uncertainty that they’ve been able to maintain margins and outperform expectations. It’s a deterioration of the situation that would hurt equities, but not maintaining the status quo.”

We are all eyes, just like you. Here’s hoping for a merry Christmas at the stock market indeed!

Suggested Reading

 

Negatives

1. European shares go up before dipping on Friday due to trade-deal chaos

What You Should Know

Europe had a mixed week with stocks rallying for 5 days straight before nose-diving after news of a delay in the trade deal being finalised broke out. On Friday, the President said he has “not agreed to roll back tariffs on China”, fuelling uncertainties on where the two economic giants actually stand vis-a-vis the trade deal.

What You Should Look Out For

The pan-European STOXX 600 index ended 0.3% lower after gaining 2.5% over the last five sessions. Defensive plays including healthcare .SXDP and utilities .SX6P were the only sectors to rise, suggesting appetite for risk remained muted. Analysts have said that they recommend adopting a defensive position into the weekend. The Spanish elections – the fourth in four years – which are currently underway at the time of writing this piece, are also not expected to bring any change to the current political landscape in Europe.

Suggested Reading

 

2. The world’s billionaires see a dip in wealth for the first time since 2008

What You Should Know

According to reports from UBS and PwC, the geopolitical tensions across the world have had an unexpected effect: the world’s billionaires are a little less well-off than they were a decade ago. According to the report, wealth fell by $388 billion globally to $8.539 trillion, with sharp declines seen in Greater China and the broader APAC region.

What You Should Look Out For

China is the world’s second-biggest home for billionaires after the US. Many private banks, including UBS, have previously reported about the decline in trading as high-profile investors shied away from risk. The world’s richest (most of them) have preferred to instead hold on to their wealth; a reflection of the uncertainty that has been rampant in the global markets this year. UBS chief Simon Smiles does expect the number of billionaires to keep going up; but says that it may be more muted than normally seen.

Suggested Reading