Views from various analysts on stock market performance in 2011

These views are gathered from an article in The Edge, after interviews with Angus Tulloch (First Inv), Bob Doll (Blackrock), Frederic Lamotte (Credit Agricole), Lim Say Boon (DBS Pte Banking), Mark Mobius (Templeton), Tan Teng Boo (Capital Dynamics) and Xavier Baraton (HSBC Global Asset Mgt).

1. Bull run to continue
Bull run is not over, as markets have not reached the euphoric stage. However, there is an increased need to practise stock selection, and also to pay attention to valuations.

My opinion: Bull run will remain, at least till middle 2011.

2. Emerging markets remain the place to be
Fund flows into emerging markets to continue, but there is a case for developed countries, especially those with operations in emerging economies. However, Tulloch is not too excited on China, citing further interest rate increases needed than market anticipates. He is negative on Chinese banks (oops, China Construction Bank is in my portfolio), as he believes deposit rates will rise more than lending rates, is squeezing margins). Tan(a reputed contrarian who correctly predicted a bull market back in 2009)is however, more optimistic on China. In fact, he sees a recovery in the Chinese stock market next year as valuations look attractive and there are just too many China bashers.

My opinion: The US may have more room to recover, but STI is still the place I am most comfortable investing in, and it will not change in 2011. I just have to pick the right sectors.


3. Gold and commodities price to continue to rise. Emerging market currencies to rise against dollar.

My opinion: My stance is still to long gold and the commodities companies in Singapore.


4. Some events that may derail the stock market recovery
These include the euro soverign debt, Iran, N. Korea, investor concerns with governments running out of stimulus bullets, hard landing in China, deflation and of course, finally an asset bubble that will eventually burst. But, no one believes that the bubble will burst in 2011, yet.

My opinion: I am optimistic, but cautiously so. Valuations are not exactly cheap now, and I will never stake everything on stocks. Especially in 2011, the 3rd year of the bull run that started in early 2009.