SINGAPORE (Oct 14): What’s next for the US Market? Will the Standard & Poor’s 500 Index rise or fall? Should you stay invested in the US dollar? We have the answers on Oct 19 at The Edge Singapore’s US Markets Investment Forum.
Whether the US market rises or falls depends on your time horizon. For traders who plan to take positions between now and Christmas, US equities could prove to be the most risky asset class. For investors with a five- to 10-year view, equities are likely to be the least risky and most rewarding. Over the long term, equities have almost always risen. This is because despite external shocks, systemic risks, war, trade wars, protectionism and economic contraction, 90% of the time, economies are expanding.
In the immediate future, the earnings season is upon us. According to estimates compiled by FactSet, major US companies’ 3Q profits will be 4% lower y-o-y.
Just to recap. FactSet points out that over the past five years on average, actual earnings reported by S&P 500 companies exceeded estimated earnings by 4.9%. During this same period, 72% of companies in the S&P 500 reported earnings per share above the mean EPS estimate. This implies average q-o-q earnings growth in the past five years of 3.7 percentage points because of the positive earnings surprise.
So, what of the 4% y-o-y forecast decline in earnings? Well, during the first three quarters of the year, EPS outperformed, owing partly to share buybacks that shrank the number of shares outstanding. This earnings season, investors will be keeping a close eye on the outlook that management articulates — given the challenge of the ongoing trade war, slowing global growth and rising geopolitical tensions as a result of the maverick US president’s actions.
Chris Brankin, CEO of TD Ameritrade Singapore, will be sharing his insights on the US market on Oct 19 at the National Gallery’s Ngee Ann Kongsi Auditorium.
China theme
The burning question for the next decade and decades thereafter is: Will the US dollar’s hegemony be challenged by the rise of the renminbi? Inevitably, China’s economic power is likely to grow, in part because of US threats to its progress. China is likely to speed up technological prowess in 5G, artificial intelligence, robotics, data mining, space travel, sustainability.
Yes, China is accelerating the process of technological independence for fear of losing access rights. The Chinese are set to develop their own software solutions faster than any US system. In 10 years’ time, you could have a Chinese economic, technological and financial system co-existing with a US one.
How will all this affect investors? Suppose you have a 10-year horizon — how would you invest to be part of this megatrend? In the future, investors may have to consider Chinese equities and bonds as separate asset classes. For example, it would be MSCI Asia ex-China because, by then, China would no longer be an emerging market. The renminbi would be part of a trinity that includes the US dollar and euro, as reserve currencies. It would no longer be a unipolar world but a multipolar world.
Vishnu Virathan will share his views on how investors can play this theme.
Visit https://dedge.news/US-Markets to get your tickets now.
