Those people who know me, will know that Christmas is my favourite time of the year. Not because I am a religious person, just that I grew up loving the thought of the existence of Santa Claus and lots of presents. Many people are now asking me whether Christmas will bring about a rally in the markets to deliver the greatest gift of all...money. Just like how I grew up to realise that Santa Claus is nothing more than a fairy tale, I am afraid that the market is going to disappoint everyone this December. Why? Simple...The USD is rebounding, this will lead to some unwinding of the carry trade and will cause markets to weaken. The downgrading of sovereigns in Europe is causing weakness in the Euro and this gives Dollar bulls some hope. Just as long as the dollar remains strong, we will see the market remaining weak or tepid. Lets hope this rebound in the dollar is just a technical bounce and not a bottom.
The market is reaching a point where it looks a little lethargic and peakish. Of course, we cannot ask for too much as the market has performed admirably this year. I believe that we are at a point of cross roads. Saying this makes me fear the coming year even more.
The time has come for us to become more defensive. To position our portfolios into more defensive stocks that have strong fundamentals, low downside or have an impending deal that is going to go through. My picks for defense would be Hwa Hong, Novena (yes I am sticking my neck out for this), Hong Leong Asia, Tianjin Zhongxin etc. I am really mentally too tired to explain my picks but I think that you will have to trust me on this.
I had a really bad day so I am just going to leave it here.
SVI
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