BCA’s Arthur Budaghyan made in a presentation following keypoints about Chinas property market and its influence on emerging markets equity:
In the last two years, the global recovery was driven by government stimulation of Chinese housing/construction. Properties rallied additional 45% in the12 year old bull marked. The Chinese government seems now to be concerned and increased interest rates to stop the overheating property market. Last time the Chinese government increased interest rates (end of 2007), commodities and emerging markets tanked 6 months later (usual time lag of monetary policy). Arthur thinks QE2 ignites only a short rally and in 3 months a bear market will start hitting emerging markets hard.
Other indicators of a market peak are increased IPO activity by commodity traders (commodities and Emerging Markets correlate highly) such as Glencore (remember Goldman Sachs IPO was in 1999 and Blackstone in 2007).
Moreover, trading volume in emerging markets went ballistic because of indiscriminate purchases and massive capital inflows.
Also, in the last months commodities rallied in USD terms but not in CHF or JPY termsf (defensive currencies). The former is a sign of USD weakness and the latter of a non-confirmation of sustained emerging market performance.
Hence, the prefered asset class is cash. Arthur is also not negative on the USD since he believes that QE2 will not feed into the real economy which would be consistent with a deflationary scenario
Keine Kommentare:
Kommentar veröffentlichen