Almost eight out of 10 Moomoo users in Singapore were profitable in the first half of the year, with portfolios allocated as follows: 75% in US stocks, 16% in Singapore stocks and 9% in Hong Kong stocks. According to Moomoo Singapore CEO Gavin Chia, 13% of users outperformed the top two indices.
In his keynote speech at MooFest 2024, Chia highlighted that these users outperformed the Nasdaq Composite and Nikkei 225, both of which were up about 20% in 1H2024. They achieved this by trading against volatility using instruments such as options and foreign exchange trading.
“These investors turn big swings into winning opportunities and I got to say, it is paying off in a very big way for them. It proves one thing — with the right tools and knowledge, you can do more than just to survive in a volatile market. You can actually succeed,” says Chia.
Moving further into 2H2024, the market is expected to face ongoing political and economic uncertainties, including upcoming elections and potential interest rate cuts. In light of this, it is encouraging to see many users already taking steps to rebalance their portfolios in anticipation of continued market volatility, says Chia. Users are leveraging Moomoo’s money market funds as a safety net while exploring other asset classes for long-term growth.
“Our clients are not merely reacting to uncertainty; they are actively planning for it. It is fantastic to witness clients utilising Moomoo tools to build resilient investment strategies capable of withstanding any financial storms,” he adds.
Navigating volatile markets
In 2H2024, there are three main themes to look forward to, says Isaac Lim, chief market strategist at Moomoo Singapore. The first is the possibility of a “credibility cut” by the US Federal Reserve. In his presentation “What’s in store for investors in 2H2024”, Lim explains that the key function of a central bank is to maintain credibility to keep the stability of the financial markets.
He notes that Jerome Powell and his team have been discussing potential rate cuts extensively, initially projecting three rate cuts at the beginning of the year, followed by more in subsequent years. Currently, the market is anticipating a rate cut by the end of 2024, with additional cuts likely in 2025.
Lim emphasises that if the US Fed fails to follow its long-standing message, its reputation and credibility could be at risk. Therefore, he believes that when the Fed begins cutting rates, it will likely implement cautious and credible cuts that may not substantially impact the market.
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The second key theme is navigating Vuca markets amidst heightened geopolitical tensions. A term borrowed from the military, “Vuca” stands for volatile, uncertain, complex, and ambiguous. This is due to increasing strain between the US and its allies against China, unexpected developments in global elections, and ongoing conflicts, such as the Russia-Ukraine war in Europe and the Israel-Hamas conflict in the Middle East, which is drawing in more parties and escalating the situation further.
The final theme to consider for the rest of 2024 is “more than meets the AI’’, says Lim. While many are drawing parallels between the current AI frenzy and the dotcom bubble, there are significant differences. For one, while price-to-book ratios and valuations are high, they are not as elevated as during the dotcom bubble, Lim says, citing research from Bloomberg Intelligence.
During the dotcom bubble, internet adoption was limited to a few companies in specific sectors. In contrast, while AI adoption remains limited, its potential spans various sectors. This distinguishes AI from the dotcom era, highlighting its broader applicability and impact.
Lim also believes that there is further upside to US equities, which are poised for a fresh launch following a near-term weakness he describes as a “healthy reset”. Comparing the performances of the S&P 500 market cap index and the S&P equal weight index, Lim says historical patterns suggest that the spread between the two indices will eventually narrow. For this reason, he does not foresee a major recession for the remainder of 2024.
With structural reforms underway, Japan has seen the largest wage hike in 33 years, and corporate boards are now focusing on bringing more value to shareholders and improving efficiency. Therefore, Lim believes there is still merit in focusing on Japanese equities. “It is worth noting that Japanese stocks also stand to gain as part of the global semiconductor chain. If you were to look at the Moomoo app, you will see Japanese names in the supply chain analysis for companies like Nvidia and AMD,” he adds.
Singapore a bright spot
Although the Singapore market may not be as thriving as its regional neighbours, it serves as a solid hedge against unforeseen market shocks. The Monetary Authority of Singapore (MAS) has consistently defended the Singapore dollar through various crises, including the dotcom bubble, the 9/11 attacks, the 2003 Sars outbreak, the 2008 Global Financial Crisis, the 2010 flash crash, and the 2020 Covid-19 pandemic, Lim adds.
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He adds that Singaporean stocks generally offer higher dividend yields, making them a reliable hedge in Vuca markets.
R Sivanithy, senior editor and trainer at the Securities Investors Association Singapore (Sias), agrees, noting that the Singapore market is known as a good defensive play. While prices do not fluctuate wildly in times of high volatility, the market is also seen as “boring” due to limited upside. However, during a panel discussion, Sivanithy stressed that savvy investors can find returns if they are willing to examine the fundamentals of each stock and do their homework.
Beansprout CEO and founder Gerald Wong disagrees that the market is boring. He notes that while Singapore companies offer attractive yields, many are also significantly evolving. “Take Singtel, for example. Known primarily for mobile and broadband services, Singtel is now heavily involved in data centres, which drove its share price to a 52-week high last week. Similarly, top-performing stocks in the Straits Times Index, such as ST Engineering, have also recently announced investments in data centres,” he adds.
Wong adds that retail investors are increasingly interested in these evolving businesses and ask more questions during webinars hosted by platforms like Sias, Moomoo and Beansprout. He also notes that it is encouraging to see investors actively pursuing attractive themes and researching opportunities.
