Equity indexes’ underlying technicals are on an uptrend, Phillip Securities says, noting its Overweight Asean, Underweight US stance.
For 4Q12, it tips going long on Singapore plays with quality business models and the ability to grow earnings and dividends, such as SIA Engineering, SATS, ST Engineering, Sembcorp, ComfortDelGro and SingTel. It tips going long on gold on QE3, citing SPDR Gold Trust ETF.
It recommends going long on mortgage-backed securities and US homebuilders, citing Vanguard MBS ETF and SPDR S&P Homebuilders ETF, as the Fed’s plan to buy US$40 billion MBS/month indefinitely will lower mortgage yields and help increase home construction.
It tips going long emerging-market and Asia debt, citing iShares JPMorgan USD Asia bond ETF, iShares Barclays USD Asia high-yield bond ETF, iShares JPMorgan USD EM bond ETF (EMB) and iShares EM high-yield bond ETF (EMHY); “risk-on or risk-off, portfolios will have to explore beyond traditional safe havens which yield too low and have doubtful credit ratings. EM nations, on the other hand, have nominal GDPs compounding faster than debt and +3.5% yields to boot.”
It adds, while global equities appear set for another bull market, it advises remembering fundamentals are weak and keeping a “traders’ mindset” when going long ETFs; it cites SPDR STI ETF, CIMB Asean 40 ETF and SPDR S&P 500 ETF.
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