After months of French political discontent, the opening ceremony of the Olympics Games sailed beautifully down the River Seine as the city basked in tricolor and the quadrennial spectacle of sport kicked off.
Fortunately, the anti-globalisation elements that disrupted several rail lines connecting to Paris have not managed to do more, and the world can hopefully come together for a summer of sport without more disruptions.
It is impossible, however, in today’s “woke” world amplified by social media, that politics doesn’t rear its ugly head from time to time in matters from markets to sports.
Last weekend, as I watched with admiration the tenacity and composure of 14 and 15-year-old Japanese skateboarders working hard to maintain Japan’s dominance in the sport, my news feed was full with all sorts of flaming — both the accidental kind where the South Koreans were called Northerners, and deliberate political memes agitating emotions with selective facts and false narratives to exploit fault lines for various conflicts across the world.
In a “post-truth” world, my wishful thinking still harbours the hope that people will rely on boring logic and understanding of the facts instead of emotions being stirred by 60-character tweets and retweets, adding fuel to fires sometimes lit by themselves.
Hope springs eternal, however, as a recent debate about social mis- sions and commercial realities here makes its way from Facebook argu-ments and Forum page letters to Parliament.
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In a panel discussion that I moderated last week on the new Sustainability Philanthropy Framework launched by the Ministry of Social and Family Development at the APEX SBF Conference at least, there was a clear consensus that for corporations to do Good, and do so Sustainability, they must first do Well — without which there is no pie to share or safeguard at all.
It’s a hot summer
Last week, we speculated about the beginning of the end of the current AI optimism fuelling US tech stocks and — ipso facto — the Nasdaq and S&P rallies since 2023.
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The Nasdaq 100 in particular has shed 8% from 10 July since and counting. Not quite a summer meltdown yet, but the signs are ominous.
There was a temporary Kamala Haris bounce — where investors cheered the US Democrats getting their act together coalescing around the once-pilloried Vice President of Joe Biden.
She is now the great progressive hope of youth (59 is younger than Trump’s 78) and big tech stocks had a small “dead cat bounce” which petered out as Republicans wrote themselves back into the narrative.
The technical comment was deliberate insofar it was a reference to US senator JD Vance’s comments calling Democrats a “bunch of childless cat ladies with miserable lives”, which sparked angry responses from celebrities including Jennifer Aniston and lots of Taylor Swift cat memes.
Vance, backed by Silicon Valley VCs who do not like the potential taxes on unrealised gains in private equity for investors, was perhaps better off sticking to being champion of “little tech”.
Then again, although he has been the master of reinventing his views thus far, herding angry cats is no easy task.
Together with Trump — who is viewed favourably by Crypto bros, as reflected in the market rally for cryptocurrencies and stocks — and following the attempt on his life, in- vestors have been trying to figure out who could be the clear market beneficiaries of a potential Trump presidency.
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A Chinese tea shop chain with bitcoin mining plans which was the most traded stock in December last year has made a recent comeback amongst the memes and penny stocks (in the US, the definition of a penny stock is under US$5 ($6.70) per share with compulsory delisting from NYSE and Nasdaq if trading below US$1 for a period of time).
Trump looked a certain shoo-in for the presidency for just about a week as he basked in his bandaged ear, until an unexpected “coup”, as he described it in the Democratic Party, unleashed the most “radical left” candidate of “Kah-MAH-la” — Trump deliberately mispronounced her name more and more feverishly as polls begin showing her narrowing Biden’s debate gap and even pulling ahead in some cases.
A week is a long time in politics and there are still three months to go.
While the politics will certainly get noisier, some inevitable truths are starting to light up in the mar-ket, and it may pay to be on the right side or stay very nimble.
Truth Social and the Trump trade
Given Trump’s mercurial ability to do deals, it is harder to predict the winners, but easier to see the losers in a potential Trump second term.
Some Chinese businessmen believe that he will be good for China, which has spent a long time re-basing its economy and whose markets are still slowly crawling — not quite out of the woods yet.
There is hope (I think false) that he will do a trade deal with his businesses and reverse the industrial policy that Biden built on his initial platform that caused a lot of global industrial realignment.
In any case, one cannot be confident even if there is a “beautiful” deal, that he will keep to it.
For those optimistic on China from this point — which I am partial to, the working premise has to be China finding its own economic strength from common prosperity as it gradually sorts its real estate speculative hangover.
China’s domestic businesses (not just Maotai liquor), rather than export-dependent ones or those requiring access to Western markets, should be safer bets.
Leaving crypto aside, anything goes. Perhaps the best proxy for a Trump trade for those who like volatility, and rock and roll, is the former spac that the Truth Social startup merged into last year: Trump Media and Technology Group Corp.
A “spactacular” success that went from US$10 to just shy of US$80 on March 24 this year, this roller-coaster stock, which promptly plunged three weeks later to US$22, has seen periodic bursts of speculative activity.
For instance, trading above US$50 in May and June, followed by meandering back down to US$26.
At that price, it’s still a hefty US$5 billion market cap, with a stock currency that would make many small and mid-caps in Singapore trading well within their net asset values envious.
The bullet in the ear saw an im- mediate 50% pop-up to US$42, after which it promptly traded down, inversely correlated with the direction of how Kamala was polling.
Perhaps, instead of Nvidia — which looks a bit more suspect now after Chew On This recently pointed to a potential technical double-top in June and July followed by a neckline breach keeping bros up at night — this isn’t the place to be unless one was sophisticated enough to buy puts or go short.
After all, the financial media is now coming up more regularly with questions about the robustness of AI revenue streams juxtaposed with the stratospheric valuations of big tech, as an almost 20-month rally in the West led by a handful of stocks initially has reordered and started to sputter.
Dollar beware
What about the USD? In a Bloomberg interview, Trump talked about deep “currency problems” with respect to the strong USD and “massively weak” yen and yuan.
He would “fight” the unequal trade balances that makes US companies trying to sell their wares abroad uncompetitive.
Estimates from Deutsche Bank in a note sent to clients last week pointed out that the USD will have to drop 40% to close the trade deficit.
Aside from the potential global financial risks from a big swing in the dominant global currency of trade, it would be extremely costly, requiring up to US$2 trillion of US government debt to be issued, devastating many countries’ USD reserves, assuming the Fed could even raise it.
The analysts worked out that the Japanese government spent US$62 billion between April and May in a futile attempt to keep the yen from depreciating further — thus enabling Singaporeans to visit Japan for their shopping holidays.
A two-week campaign, it was pointed out, would need a US$1 trillion intervention! That said, I regret not buying more yen just a couple of weeks ago as I have a couple of trips to Japan in late September and November.
It could be coincidence that the yen started to rebound sharply around the time of Trump’s interview, but perhaps it has more to do with currency traders starting to position themselves for a long overdue start of the downcycle of the Fed interest rates.
The unwinding of the carry trade, should rates come down, should normalise the extremely strong US dollar since 2023 anyway, irrespective of Trumps’ views.
With my (attempted) retirement clearly predicated on being in sunny Singapore, I see my base currency for investing as SGD and not USD.
I am starting to think how to hedge or outright convert and bring the limited USD asset exposure back to SGD.
Head and heart
Staying at home which has been nicely boring, stable and rewarding thus far for the vast majority of my portfolio that already sits here.
The STI breaking out and a long hoped- for REIT revival looks on the cards into the 4Q.
Markets move first before the events happen, and it does look like both the US and local markets have started to reverse course, and continue to play to expectations Chew On This had shared at the start of the year.
As we continue to enjoy the fruits of our stability, security and positive returns reflected in our blue-chip STI index through the Summer Olympics, l will be confining my flames of emotions and national sporting pride to 200% behind Team Singapore Olympians and Paralympians, separate from more mundane matters which have to be anchored on an objective sense of dollars and cents.
Chew Sutat retired from Singapore Exchange S68 after 14 years as a member of its executive management team. During his watch, the exchange transformed from an Asian gateway into a global multi-asset exchange, and he was awarded FOW’s Lifetime Achievement Award. He serves as chairman of the Community Chest Singapore
