1. WORLD IN PERSPECTIVE PG 2
POTENTIAL RISKS PG 2
US UPDATE PG 3
INTHISISSUE
In our May issue, we highlighted our
continued optimism on the global market
for the long term while expecting a mild
correction in the short term. Our opinion
remains unchanged. Most major markets
are trading at their respective resistance
levels. In particular, Asian markets are range
bound. Any major pullback should present
a good opportunity for investors to increase
their allocation to equities.
Many economies are still facing various
challenges. Thailand is in political turmoil.
Russia is still at loggerhead with US and EU.
Why are we still optimistic? The reality is
that crisis breeds opportunity and investors
are always on a lookout to take advantage
of oversold markets to capture returns. In
the long term, one’s investment decision
should be based on some fundamentals
such as valuation, cost of money (interest
rate policy), easy access to money (liquidity),
opportunity cost, productivity and the law
of supply and demand. Let us touch on a
few of these factors.The return on deposits is
unlikely to outpace inflation for many years
to come. In a low interest rate environment,
investorswillhavetodeploytheirmoneyinto
investments to keep up with inflation. This
push factor will provide a strong support
for the equity, bond and property markets.
However, where the money eventually flows
to depends on where investors see value and
potential. For example, Japan was one of the
best performing market last year because
investors saw a change in government policy
to boost growth through money printing
and inflationary policies. Another strong
factor that will increase demand is the world
population growth. Every month, the world
population increases by approximately
6 million people. Imagine the impact on
consumption from this factor alone!
In general, when demand is greater than
supply, prices go up. Therefore, in the long
run, money must be invested. The stock
market should appreciate over an extended
period of time. Across the U.S., Europe
and Japan (Developed Markets), economic
conditions continue to improve. Emerging
Markets currently offer good value. Their
respective governments have embarked on
fundamental economic reforms, but these
measures will take time to gain traction and
for investors to be convinced. Historically,
emerging market gains have outstripped
those in developed markets. Asian markets
offer the best value globally. GDP growth
forecasts are positive, unemployment is low
and inflation is healthy.
The famed U.S investor Warren Buffett once
exhorted fellow investors to “Always invest
for the long term. In this spirit, I would like
to encourage you to do the same by focusing
on the fundamentals and retaining a long-
term view of your investments.
UK & EUROPE UPDATE PG 4
ASIA AND EMERGING
MARKETS UPDATE PG 5
ISSUE 66 | JUN 2014
Albert Lam
Investment Director
IPP Financial Advisers Pte Ltd
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2. Since the annexation of Ukraine in the first quarter
of the year, Russian president Vladimir Putin
has sent conflicting signals about his intentions.
On 19 May, he ordered Russian troops near the
Ukrainian bases to return to their bases. In addition,
he also expressed support for increased dialogue
between Kiev and the separatists in the Eastern
regions.WhilePutinseemstohavemellowedinrecent
days, it is too early to tell if his passive stance is of a
permanent nature. Investors should continue to pay
attention to news flow emanating from the region.
POTENTIAL
RISKS
JUN 20142
WORLD IN
PERSPECTIVE
IS RUSSIA STEPPING BACK?
MERS: THE NEXT PANDEMIC CRISIS?
A new virus strain from Saudi Arabia baptised
Mers, or the Middle East Respiratory Virus, looks
set to pose a new challenge to healthcare systems
worldwide. In the U.S, a third potential case of
the virus was uncovered in mid-May. To date,
the virus has infected more than 500 individuals
in Saudi Arabia alone, and signs that the virus is
spreading to other countries highlight the potential
for the situation to develop into a global pandemic.
The World Health Organisation has convened
an emergency meeting to discuss the matter.
IPPFA'S OUTLOOK.
• The Fed currently repurchases $45 billion worth of se-
curities each month and expects to reduce the figure to
zero by the end of the year. In an earlier policy address,
Fed chairperson Janet Yellen said that the U.S economy
was“on track”but sounded a cautious note on the state
of the housing market. U.S Non-Farm payrolls data in
May came in at 192K, below the consensus estimate of
200K.The unemployment rate came in at 6.7%, slightly
higher than the estimated rate of 6.6% but unchanged
relative to the previous month. While the reduction in
the scale of Quantitative Easing has been priced into the
market to some degree, investors need to remain vigi-
lant about a rate hike occurring earlier than expected.
• On 13 May, the S&P 500 index attained a historic high
of 1,900 even as major European indices reached six-
year highs. The German DAX traded at the 9,700 level
while the U.K FTSE reached a 14-year high to trade
at 6,873.08. The VIX, a major volatility index, floated
near its one-year low and was quoted at 12.13 at the
close on 13 May. The VIX measures implied volatility
in S&P index options and a lower value indicates that
investors do not expect significant near term volatil-
ity. As the VIX is currently trading below its histori-
cal average of 19, we see significant downside risks
for investors currently long developed market equities.
• The month of May saw Vietnam and regional power-
house China clash over competing claims in the South
China sea. Since 3 May, Vietnamese ships have repeat-
edly clashed with their Chinese counterparts. Each
side has accused the other of using water cannons,
low level aircraft and even ramming tactics to intimi-
date its respective vessels. Both China and Vietnam
claim the Paracel islands and various swaths of the
South China Sea. On 11 May, violent protests broke
out in parts of the country in which many factories
run by Chinese, Taiwanese and Singaporean compa-
nies were attacked. The Vietnamese government has
since moved swiftly to quell the protests by announc-
ing that protesters would be prosecuted. The govern-
ment has also increased the level of security around
the Chinese embassy. Even though there is now some
semblance of calm, it is possible that further action by
China to reassert its claims would worsen the conflict.
• An inconspicuous development in small-cap equities may
give some clues about the future of global equities. From
13 May to 15 May, the Russell 2000 index lost 3.3%
of its value. On 16 May, the same index briefly fell be-
low 10% from a March high. Coupled with the recent
sell down of overvalued technology counters, it is pos-
sible that the lack of strength in small-cap equities may
portend future near-term weakness in global equities.
In the past month, apart from the ferry disaster
in South Korea and the Vietnamese riots, the
month of May was largely uneventful. There
was a mild sell down of small caps in the US
but the major markets moved up 1-4%. The
Dow rose 1.4% while NASDAQ rebounded up
4%. In major Asian markets, Hang Seng was
the best performer, rising 4.3%. STI rose 1.1%.
Looking ahead, we will be transitioning to the
summer season and we are confronted with the old
saying of‘sell in May and go away’. While the stock
market has yet to show any sign of weakness, in
the short term, we want to take risk off the table.
We are unclear of the direction of the market in
the next month as upward pressure of positive
economic news are somewhat negated by short
time overbought sentiments. We are in the opinion
that the market needs to take a breather before
continuing its long term upward movement. We
will reassess the direction of the market at end June.

3. JUN 20143
U.S Non-Farm Payrolls:
288K versus the 210K esti-
mate
U.S unemployment rate de-
clines from 6.7% to 6.3%
MAY 2014
• U.S Non-Farm payrolls came in ahead of expectations. The key metric was
reported at 288K, versus the consensus estimate of 210K and well ahead of the
previous reading of 203K.
• The U.S ISM Manufacturing PMI index came in at 54.9 versus the expected
reading of 54.3. A reading above 50 indicates that the economy is in expansion.
• The unemployment rate for the world's largest economy came in at 6.3%,
compared to the expected rate of 6.6% In the previous month, unemployment
was tagged at 6.7%.
US ISM Manufacturing PMI (Apr) 54.9 54.3
US Nonfarm Payrolls (Apr) 288K 210K
US Unemployment Rate (Apr) 6.3% 6.6%
US Consumer Price Index (MoM) (Apr) 0.3% 0.3%
US Consumer Price Index (YoY) (Apr) 2.0% 2.0%
US Consumer Price Index Ex Food & Energy (MoM) (Apr) 0.2% 0.1%
US Consumer Price Index Ex Food & Energy (YoY) (Apr) 1.8% 1.7%
US Personal Spending (Mar) 0.9% 0.6%
US Markit Manufacturing PMI (Apr) 55.4 55.8
US Average Hourly Earnings (MoM) (Apr) 0.0% 0.2%
Our opinion on the US: In the long term, we are neutral on this market as the huge run-up has
surpressed the possibility of supernormal gains going forward
Data source: FXStreet Economic Calendar
US
ECONOMIC
SNAPSHOT
May YTD
S&P 500 1.61% 4.20%
Dow Jones 0.78% 1.36%
NASDAQ 2.54% 1.69%
KEY ECONOMIC DATA POINTS ACTUAL EXPECTED

4. BoE maintains the bench-
mark rate at 0.5%
EMU unemployment rate
hovers at 11.8%; Sentix
Investor Confidence index
declines
MAY 2014
• The U.K central bank opted to maintain its benchmark rate at 0.5%. This is
significantly below the pre-crisis range of 4 to 5%.
• The U.K ILO unemployment rate came in at 6.8%, in line with estimates.
• The EMU Sentix Investor Confidence index came in at 12.8, falling short of the
estimated reading of 14.2.
UK BoE Interest Rate Decision 0.5% 0.5%
UK BoE Asset Purchase Facility (May) £375B £375B
UK ILO Unemployment Rate (3M) (Mar) 6.8% 6.8%
UK Core Consumer Price Index (YoY) (Apr) 2.0% 1.8%
UK Consumer Price Index (YoY) (Apr) 1.8% 1.7%
UK Consumer Credit (Mar) £1.13B £0.60B
UK PMI Construction (Apr) 60.8 62.0
EMU Consumer Price Index - Core (YoY) (Apr) 1.0% 0.7%
EMU Gross Domestic Product s.a. (QoQ) (Q1)Preliminary 0.2% 0.4%
EMU Markit Manufacturing PMI (Apr) 53.4 53.3
EMU Unemployment Rate (Mar) 11.8% 11.9%
EMU Sentix Investor Confidence (May) 12.8 14.2
Our opinion on the UK & EMU: The huge run-up has reduced the possibility of supernormal gains
going forward
Data source: FXStreet Economic Calendar
UK & EMU
ECONOMIC
SNAPSHOT
JUN 20144
May YTD
FTSE 100 1.32% 3.66%
EURO
STOXX 50
3.25% 6.89%
DAX 3.62% 3.95%
CAC 40 2.56% 7.43%
KEY ECONOMIC DATA POINTS ACTUAL EXPECTED

5. China HSBC PMI index rises
to 49.7
Inflation in India slows to
5.2%
Consumer prices in Russia
gain 0.9% in April
MAY 2014
• The China HSBC Manufacturing PMI index for May came in at 49.7, beating
the previous reading of 48.1.
• Inflation in India slowed in April, with the WPI inflation metric coming in at
5.2% compared to the previous reading of 5.7% This comes as India marks the
BJP's electoral triumph over the Congress party.
• The Russian Purchasing Manager Index Services metric came in at 46.8, a decline
relative to the previous reading of 47.7.
China NBS Manufacturing PMI (Apr) 50.4 50.3
China Non-manufacturing PMI (Apr) 54.8 54.5
China HSBC China Services PMI (Apr) 51.4 51.9
China Trade Balance (Apr) $18.45B $7.71B
China Consumer Price Index (YoY) (Apr) 1.8% 2.4%
China HSBC Manufacturing PMI (May)Preliminary 49.7 48.1
Brazil HSBC PMI Manufacturing (Apr) 49.3 50.6
Brazil Industrial Output (MoM) (Mar) -0.5% 0.4%
India WPI Inflation (Apr) 5.2% 5.7%
India FX Reserves, USD $309.91B $309.41B
Russia Purchasing Manager Index Services (Apr) 46.8 47.7
Russia Consumer Price Index (MoM) (Apr) 0.9% 1.0%
Our opinion on Asia & the Emerging Markets: The Emerging markets offer excellent value
from a valuation perspective
Data source: Bloomberg
ASIA &
EMERGING
MARKETS
ECONOMIC
SNAPSHOT
JUN 20145
May YTD
MSCI Asia
Pacific
ex Japan
3.18% 5.86%
MSCI Emerg-
ing Markets
4.48% 4.38%
Nikkei 225 1.28% -9.14%
Hang Seng 5.16% 0.37%
Shanghai SE
Composite
0.88% -3.36%
Straits Times 1.67% 5.88%
KEY ECONOMIC DATA POINTS ACTUAL PREVIOUS