CENTER FOR
                                                  ASSET
                                                  MANAG...
The Art of Forecasting


Big Banks’ US$ Outlook for 2010:

•   US$ has limited downside with respect to Yen and Euro. Cycl...
The Year-to-Date Empirical Evidence
     Euro | Yen | SG$ versus US$              Source: Bloomberg




                  ...
The Year-to-Date Empirical Evidence
     Euro | US$ | Yen versus SG$             Source: Bloomberg




               EUR ...
Comparing Stock Index Price Returns (in USD)
                           Source: Bloomberg




•   From its Mar 2009 lows, ...
Comparing Valuations
                                Source: Bloomberg




                       10YR Median: 17.8




  ...
Volatility Index (VIX)
                                 Reflecting Market Sentiment?                        Source: Bloomb...
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Cherian nusbsa homecoming conf joseph cherian (final)

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Cherian nusbsa homecoming conf joseph cherian (final)

  1. 1. CENTER FOR ASSET MANAGEMENT RESEARCH & INVESTMENTS Panel Discussion Investment Opportunities in 2H 2010 and beyond: Singapore, Asia and Global Markets Moderated by Joseph Cherian May 22, 2010 Alumni Homecoming Conference & Dinner 2010
  2. 2. The Art of Forecasting Big Banks’ US$ Outlook for 2010: • US$ has limited downside with respect to Yen and Euro. Cyclical near-term weakness followed by gradual dollar recovery further out • If global economic growth disappoints, US$ will strengthen • US$ will remain weak but strengthen in late 2010 • US$ downside limited, in fact likely to rally significantly against Euro, especially given the US$-funded carry trade is probably overdone Forecasts dated Jan 2010!! TURNS OUT BIG BANKS ARE BECOMING GOOD AT FORECASTING FX!
  3. 3. The Year-to-Date Empirical Evidence Euro | Yen | SG$ versus US$ Source: Bloomberg EUR weakens significantly JPY slight strengthening SGD flat
  4. 4. The Year-to-Date Empirical Evidence Euro | US$ | Yen versus SG$ Source: Bloomberg EUR weakens significantly USD flat JPY slight strengthening
  5. 5. Comparing Stock Index Price Returns (in USD) Source: Bloomberg • From its Mar 2009 lows, Straits Times Idx the best performing on a 1YR basis Order: Straits Times Index, MSCI Asia Apex 50, S&P 500, Nikkei 225 • On a Year-to-Date basis, S&P 500 down the least Order: S&P 500, Nikkei 225, Straits Times Index, MSCI Asia Apex 50
  6. 6. Comparing Valuations Source: Bloomberg 10YR Median: 17.8 2 ½YR Median: 11.5 10YR Median: 15.0 10 YR Median: 14.3 10YR Median: 25.4
  7. 7. Volatility Index (VIX) Reflecting Market Sentiment? Source: Bloomberg • 2009 was forecasted to be one of the worse periods in the investment Closed at 45.8 on 20/05/10! environment, but it turned out ok Reduction in risk appetite? 10YR Median: 17.8 (STI: 74.7%; HSI: 56.6%; SPX: 26.5%; NKY: 18.4%) • Which by 2010, heralded proclamations that the global economic recovery was here to stay! 10YR Median: 15.0 • VIX now at 46, 10-year average is 21 • But the recent Euro zone sovereign debt crisis, increase in U.S. jobless claims, and drop in Leading Economic Indicators (LEI) are bringing new worries and concerns • Would this be unfavorable for Equities and the Dollar? Favorable for Treasuries and 10YR Median: 25.4 Gold? • Unfavorable for Cyclicals, Telecom, Financials?

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