Category: Policy

Bold Calls: Jan 2017

On By Chen Yu YanIn Equity, Fundamental Analysis, Futures, Policy, Retail, Sector, Technical Analysis, TradingLeave a comment

Dear Uninformed Readers,

Wow… what a year. I made two calls last year and both were pretty good. I admit that gold came a bit short but come on, what’s $20 between friends (I don’t actually have friends, that’s why I blog). So to sum up, gold was slightly underwhelming stopping just pass $1380/oz whereas bitcoin did exactly what I anticipated and flew right through the big $1000 mark (I know it collapsed based on selling pressure from mainland China but hey, I never said it wouldn’t come back down).

I am once again aiming to do some decent analysis this year as well so here we go.

For 2016, I called on currencies. This year I’m calling on equity. Actually, equity markets to be precise. Because I live in Australia, I am going to start with the ASX S&P200 index. It is currently trading around 5650 as I write (it’s a Friday and markets closed around 4 hours ago so yeah… it’s 5654.80 to be precise). I am looking out for the big 6000 mark. That’s where it all went wrong early 2015 and I think we’re gonna go tempt fate again by trying to smash that ceiling. My reason is fairly simple. With tightened controls around foreign investment (property in particular), property prices are going to stall. Those seeking returns will be driven to the equity market (I know there are those seeking yield but come on, who seeks yield phft…). The money will flow into the equity space which hopefully drives the market past that 6000 mark.

And because I like the Shanghai market, I’m gonna go with the Shanghai composite on the next prediction. Shanghai stalled at 3123.14 and I honestly don’t see it moving much this year. However, I just have a good feeling about the technical patterns. On the fundamental side, we have a similar situation as in Australia. P2P lending has gone way too big in China to yield anything generous these days. Real estate is a big joke in all the major cities as things are simply getting too expensive for people to invest. Hence I anticipate a near 20% increase to the 3500-3600 level. This also happens to be a resistance level (technically) from 2015 so my eggs are certainly all in one basket this year.

To sum up for 2017, equity UP! Property not so much (in Australia and China at least).

Yours sincerely,

The Uninformed Trader

Bold Calls: Jan 2016

On By Chen Yu YanIn Bitcoin, Equity, Fundamental Analysis, Futures, Policy, Technical Analysis, TradingLeave a comment

In private, I’ve made some bold calls. This affects my trading and I see it as a way for me to exercise my ability to predict long term movements based on an unique style of analysis. I won’t bore you with specifics as that isn’t the point of this entry.

In 2015, over a ramen lunch with close friends, I made a bold call to say that the US equity market will fall 30% from the peak, the Aussie will fall 40%, and China 50%. This was around June 2015. So far, China is looking to have almost hit my target as it is almost touching that magical 2600 mark. Honestly, being a massive Chinese hedge fund, the Australian markets is gonna tank a little as well. I guess we’ll see some results by mid year. The US markets are probably the most difficult to predict. I believe it will be heavily affected by who gets elected for presidency this year.

My new bold call for 2016 is Gold (gold vs US to be precise). I am fairly bullish on gold and I expect an initial target of $1200/oz followed by a rally to $1400/oz (it is currently $1100 as I am writing this). This is based on increasing volatility, the distrust in the growing Chinese/other emerging economies, a beautiful technical bottom plus reversal patterns emerging.

My second call would be for bitcoins. As mentioned in my very first post here, the block chain technology is worth a lot of money. The ability to decentralize the settlement system alone is enough to save enough money to make Scrooge McDuck drool. This along with the fact that we’re half way to mining everything out means that suddenly there is a supply squeeze that can raise the prices faster than twitch chat raising dongers (a very specific reference so kudos if you got this one). My personal target is $1000/coin but I believe we have to wait for around the end of the year for that to come about.

To sum up, bitcoin and gold will be the best performing currencies in 2016 (I’m counting gold as a currency because it pretty much is) and your phone is ringing because I’m calling it!

Condoms and Nappies: A Tale of Two Commodities

On By Chen Yu YanIn Policy, TradingLeave a comment

Today is the so called “Singles’ Day” in China. The name derives from the fact that it is 11th of November, thence 11-11 #foreveralone (though I can be certain that you won’t be reading this on the 11th). Mainly because I had to gather some data (population growth, policies, and equity market index figures to be precise) which took far more time than it should. Could this be the time that I bust out the charts and tables? No. I already have a shit time doing that for my actual research project (No, seriously, so many tables and charts. I feel that I should have taken pure maths, which seems to have ironically less maths than finance… also, on a different note the spelling for ‘ageing’ really irks me. If I ever start learning German, English grammar is the culprit that drove me into it. )so I don’t want it to flow into this, which is something I actually enjoy immensely. As for why I gathered the data, I’ll get to that in a little bit. Anyways, the reason I bring up Singles’ Day is several folds. I want to talk about the loosening of China’s One Child Policy (OCP) which is now a Two Child Policy (TCP); Japan’s rapidly ageing population; purchase patterns according to population change and how that interacts with our markets.

Now, now, I know that the TCP has been all over the news and I promised to cover things that isn’t so mainstream. Well, to draw the parallels, today’s story needs to start here. China is feeling the weight of its OCP in the recent years. With an ageing population and massive gender imbalance, China sense, correctly, that it is not going to have a good time if the OCP persists. A close neighbor, close distance wise at least, Japan, is already a strong cautionary tale. Faced with a declining workforce, and an ever ageing population that just refuses to die, the next generation has work cut out for them. Good luck! This is made worse by the recent social phenomenon where young adults actively avoid marriage due to financial burdens.

Now, a correlation between population growth and economic growth is undeniable. If I had one person working, and now I had two, then I am going to assume that I’m getting more work done (though GDP per capita isn’t really directly correlated. It’s more to do with technology and policy choices but I digress…) Taking Japan once more as an example, post World War Two population boom really pushed the economy to a whole new level. Contrary to widespread belief, Japanese policies back then were not really great. The boom pretty much came from an immense boom in population and a focus in technology.

It should be noted that the policy changes are affecting how many condoms and adult diapers are being sold. It should also give you some longer term investment goals in mind. For example, Okamoto Industries (Japanese condom maker) dropped in price as soon as the TCP was announced. I didn’t check the stock prices for the parent companies of Durex or Trojan because I’m lazy like that and you shouldn’t expect too much from me.

On the other hand, milk powder and nappies… holy shit! Expect a rise in that. The fucking power (this is one of the rare cases where ‘fucking’ isn’t being used as an adjective) of 1.5 billion people should not be underestimated. Given the problems with Chinese milk, milk powder should be considered on the near and medium term future. Possibly more if the Chinese government takes up more actions to loosen policies regarding population control. On the ASX, anything to do with milk is getting boosted via the powers of what is expected to be an incredible population growth.

I am going to keep this short because I just got better so if you were expecting another thousand word entry, sorry. On the other hand, if you were looking for shorter snappier entries, then yeah, totally did all of these just for you, so be thankful! So that’s all for now.