Is it time to sell? Dow Jones seems to reverse itself after running up consecutively for the past couple of weeks. Stock markets taking a breather or changing direction down again?
I still think I would stay a little longer in the markets for the reasons cited before:
1. Equity valuations are still attractive. According to Luke Richdale, client portfolio manager at JP Morgan, we are near 1.5 times P/B for emerging markets, and emerging markets historically made money for investors on a 12-month basis when the P/B hit 1.5. During such times, investors should see returns of 65% p.a.
2. There should be further rate cuts and policy action soon. In this regard, China is expected to benefit the most. In fact, Credit Suisse expects the Shanghai market to trade up to 2,800 in 12 months time. (Of course, this is for reference only)
3. Other markets are also expected to go higher from now onwards, as bad news are priced in (although road ahead will be rocky). We should eventually see Hang Seng trade to 23,500 and STI at 3,300, according to Credit Suisse.
Of course, it would be very good if these projections indeed come true. For now though, I am on the side of bullish analysts. (But, things may change in the next few weeks).
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