Quick musings before critical weeks ahead
Stock market this week was fairly resilient (except for STI who fell sharply on Friday due to impending 'circuit breaker'), despite worldwirde virus spread further accelerated.
Have finally decided to sold away my weak holdings at huge loss, putting an end to these mistakes made back in 2018. They are either commodity stocks (Geo Energy, Xiwang Steel) or cyclical manufacting stocks (Sunningdale, Kingboard Holdings). Cash level up about 10% to 30%, with additonal 40% warchest for standby; based on initial capital injected in 2018. If this is based on eventual portfolio size after warchest deployment, then current cash level is 50%.
Next two weeks would be critical, whether the virus spread would finally peak in US and would also slow down in Europe. Otherwise, we could embrace for another round of shockwave. Will there be another round of liquidity fire-sale? I am not too sure, since no one knows how much deleveraging has been taken out during previous melt down. If stock prices go down too quickly forcing margin calls again, we know what will happen again.
On macro environments, I did a look quick look on India & Indonesia, and both countries are expected to have hugh spikes of patient numbers in coming days. Should they failed to curb the spread, how long can their economy survive? Their currencies are depreciating rapidly against US dollar, but their foreign reserves seem strong. India's foreign reserves can cover 10 months of import, while Indonesia can support 7 months. And their sovereign debts rating are both Moody's Baa2 grade, with no recent rating change. But how long can they withstand the double whammy of huge budget to support worsening economy and currency depreciation? Turkey is not doing very well.
On another note, among G7 countries, Japan has the least cases, but Tokyo seems likely to have an outbreak soon.Should Japan declare state of emergency, will Asia markets take another beating?
Let's wait and see how these events will unfold. I am more inclined to position myself to be able to take more advantage of stock crisis should it happen. Patience is a virtue, and patience for crisis-level stock price is basis for excessive returns. Of course, melt down may not happen, that's why I am not 100% cash.
Have finally decided to sold away my weak holdings at huge loss, putting an end to these mistakes made back in 2018. They are either commodity stocks (Geo Energy, Xiwang Steel) or cyclical manufacting stocks (Sunningdale, Kingboard Holdings). Cash level up about 10% to 30%, with additonal 40% warchest for standby; based on initial capital injected in 2018. If this is based on eventual portfolio size after warchest deployment, then current cash level is 50%.
Next two weeks would be critical, whether the virus spread would finally peak in US and would also slow down in Europe. Otherwise, we could embrace for another round of shockwave. Will there be another round of liquidity fire-sale? I am not too sure, since no one knows how much deleveraging has been taken out during previous melt down. If stock prices go down too quickly forcing margin calls again, we know what will happen again.
On macro environments, I did a look quick look on India & Indonesia, and both countries are expected to have hugh spikes of patient numbers in coming days. Should they failed to curb the spread, how long can their economy survive? Their currencies are depreciating rapidly against US dollar, but their foreign reserves seem strong. India's foreign reserves can cover 10 months of import, while Indonesia can support 7 months. And their sovereign debts rating are both Moody's Baa2 grade, with no recent rating change. But how long can they withstand the double whammy of huge budget to support worsening economy and currency depreciation? Turkey is not doing very well.
On another note, among G7 countries, Japan has the least cases, but Tokyo seems likely to have an outbreak soon.Should Japan declare state of emergency, will Asia markets take another beating?
Let's wait and see how these events will unfold. I am more inclined to position myself to be able to take more advantage of stock crisis should it happen. Patience is a virtue, and patience for crisis-level stock price is basis for excessive returns. Of course, melt down may not happen, that's why I am not 100% cash.
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