Carrying on Trade Matters

Once more unto the breach!  Our mentor  has to attend to a sad loss  in the family in  Hong Kong, which may  take his time for a few days. I have offered to step in  to blog  for him.

If you will go to:

 http://anatrader07.wordpress.com/2011/01/

you will read a few blogs pertaining to global outlook for 2011 by a couple of banks.

Last night I attended another dinner talk by RBS Coutts at the Mandarin Oriental and the common denominator is there for the global outlook in 2011.

However,  the speakers have put  emphasis on Forex and Commodities which I would like to relate hereunder.

Forex

In their view,  there will be rebalancing focus on re-alignment of relative currency values.   They expect the strengthening trend  of Asian currencies  relative to those of developed market currencies, such as, USD and EUR. This is expected to continue and probably accelerate in 2011.

This global rebalancing will be in fits and starts and at times at high levels of volatility.

Commodity currencies should continue to perform well. Canada’s  economic links to the US might see its underperformance versus the Australian dollar.

They expect strength in Asian currencies  to be led by the Chinese Yuan, with 5-7% appreciation against the USD. The Korean Won should also appreciate meaningfully in 2011.

On Singapore’s open economy geared to global growth and  its use of the SGD as an explicit tool to manage domestic inflation, The Sing Dollar  is poised to perform well again in 2011 as its inflation has reached its cyclical peak in late 2010.

 Commodities

Gold still stands to win in their opinion. There is jewelry demand in emerging economies of India, China and  the Middle East.  The targeted price could reach USD1600 per troy ounce.

Copper also fares well providing a pro-cyclical exposure than the risk aversion exposure of Gold. Demand for copper  is directly linked to prosperity, with spot price  rising 150% over the last 6 years. They expect copper price to rise higher in 2011.

They are less keen on oil. The short term upside is limited due to the futures market.

Conclusion

The QE2 in the US combined with the fiscal stimulus might mitigate the imminent risk of a relapse in US economy. Europe faces political as well as economic challenges.

China has failed to designate a new vice-chairman of the Central Military Commission in 2009, which typically should be appointed 3 years prior to the leadership transition.Policy discord running up to the 2012 transition may raise policy  error in China.

The ASEAN elections such as in Thailand, Malaysia and Singapore are expected in 2011.

Singapore does not pose any problem but the post-election may see aggressive policies to contain growing asset prices.

IDKIT aka Ana

Ag Moderator

The Living Years
http://www.youtube.com/watch?v=gUdiQWxps5E

10 thoughts on “Carrying on Trade Matters”

  1. Idkit says

    @ Baz, you are gracious.

    @Ray, we join in sharing your sad moments; being a workaholic, you will not keep away if you can.

  2. Hi Paul

    I have no idea – perhaps Ana might. I can’t see why the USD/JPY would be correlated with the CNY/USD.

    In HK we can buy physical CNY. But with so many other more liquid instruments why trade the CNY?

  3. Hi Ray,
    It seems many “experts” think/feel that CNY would appreciate this year, it sound like buying CNY now is a “sure win”??? LOL LOL!

    So, buy and hold CNY (like Gold in 2010)???

  4. Hi Paul

    May be, may be not. With Gold, I could see the charts, have a context by which to guide my actions and a relatively free market to trade in.

    The same cannot be said for the CNY. But that does not mean the experts can’t be right. They consensus (with whom I agreed) were right about gold.

  5. Idkit says

    HK looking to improve liquidity of CNY denominated IPOs this year.

    HK residents can purchase up to 20,000 Yuan per bank account per day.

Leave a Reply

Your email address will not be published. Required fields are marked *