In today’s briefing:
- A Bigger Crash?!
- The Bears Threw a Party But No One Came
- China Blinked, But Can It Save the World Again?
- Korean Prefs Vs Common: Closing the Gaps on Select Stocks
A Bigger Crash?!
- Global Liquidity Index (GLI) tests a low 29.5 (range 0-100). World economy now in recession
- World Central Bank Liquidity even weaker at index of 15.9, with US Fed Liquidity at index 41.6, trailing other policy-makers notably ECB . More squeeze ahead
- Risk exposure of investors still too high at index 19.1 (range -50 to +50) given upcoming recession
The Bears Threw a Party But No One Came
- Market psychology has taken a sudden shift from bullish to bearish as recession risks have surged, but the stock market has become increasingly numb to bad news.
- We interpret this to mean that equities are undergoing a bottoming process.
- Downside risk is limited and upside potential is high, though investors should be prepared for some short-term bumpiness.
China Blinked, But Can It Save the World Again?
- The China stimulus news may be a catalyst for a relief rally of unknown magnitude.
- While a V-shaped recovery is always a possibility, the odds favour a re-test of the old lows in the coming weeks.
- The bears aren’t done yet, and the FOMC fear and rally cycle may not be done either.
Korean Prefs Vs Common: Closing the Gaps on Select Stocks
- We discuss two positive factors pushing greater demand for Korean preference stocks (value & new government) offset by one major negative factor (market liquidity) this year.
- The 28 common shares are on average down 17% YTD versus their preference counterparts which are down on average 17.3% YTD.
- The sharp increases in common vs preference shares on Amorepacific Corp, Hotel Shilla, and LG H&H last month may be a bit excessive and the gaps are likely to narrow.
Before it’s here, it’s on Smartkarma
