FSM Investment Forum: When is the Big Recovery coming?

Fundsupermart.com (FSM) held its first ever investment forum this evening in the NTUC Auditorium at Raffles Place. The forum panel included reps from Soc Gen, UOB Asset Management, Schroders and FSM of course. What were their views, and, how was the event from CashBench’s perspective?

Key Views:

CashBench brings you a first hand account of the key views of the 4 reps at the forum. All of them largely agreed that a recovery in the stock markets should arrive in the third or fourth quarter of this year. They were however quick to point out that investors must remain cautious and have a longer investment horizon. In particular, Mr Albert Tse, Head of Retail Sales from Schroders suggested an investment horizon of 3 years. Those with a shorter timeline of 6 to 12 months can consider bonds because interest rates are expected to remain low in the short term.

In terms of specific sectors and countries, the panel suggested firms dealing in commodities and resources can be good investments. They were still bullish on the emerging markets because there were no serious economic structural issues, unlike in the US. Countries cited included Australia, China, India, Brazil and other countries that has a growing domestic demand for goods and services. For bonds, the forum panelists particularly like investment-grade bonds, and to a lesser extent, high yield bonds.

Snap Shots:

Mr Anthony Joseph Raza, Director of Asset Allocation at UOB Asset Management has a chart that represents the economic boom and bust as a cycle. The chart suggests we are more than halfway through the recession, but Mr Anthony verbally discussed the possibility of a square-shaped recovery: a recovery that can take 7 or 8 years.

Mr Albert Tse also shared that credit recovery is a pre-requisite for equity markets to recover. He described it as the process where companies restructure their balance sheets and focus on cash generation and survival rather than profitability.

Ms Mah Ching Cheng, Head of Research at Fundsupermart.com focused on the more pessimistic numbers. She was however willing to be more specific and suggested the STI can recover to 2100 in the short term. However, Mr Marco Wong, Chief Investment Officer at SG Asset Management also pointed out that markets can “overshoot” or “under-shoot” and like the rest of the other panelists, did not commit to specific numbers for the STI.

CashBench’s Take:

CashBench was glad the forum did not push for any particular products sold by FSM or the reps’ firms. Overall, the forum did at least try to provide some views on when “recovery” will occur. Much of the analysis pushed forth was based on the opinions of the forum panelists and their analysis of “leading indicators”, economic statistics and events from the distant past, essentially the tools of the trade of many analysts. Where there were minor disagreements, it was largely because of the specific indicators or other trends they were focusing on.

It may or may not be surprising that the panel therefore did not focus very much on the specific steps taken by governments to stimulate the global economy or other events that hogged the news recently. For example, there was no mention of the impact of the potential bankruptcy of GM or Chrysler until someone from the floor asked.

CashBench agrees with the FSM panelists that a recovery will occur sooner or later. That is a given. The key is to invest only what you can afford. Mr Marko Wong suggested to invest only if you can still continue to sleep at night and go on holidays. :)

Lastly, even if you do not have a single penny to invest, the FSM investment forum was generous on the refreshments offered. :P