Annual Bonus – A market overview and how to invest your bonus02 February, 2016
If you would have slept through the beginning of 2016 and were planning to get into action after Chinese New Year – you would be facing an altogether different world.
As we said good-bye to 2015 and were preparing to launch ourselves in 2016 it was very apparent that the year was going to be difficult. But no one had predicted the fall out to be so sudden and pronounced.
Within the first month itself:
- Dow Jones and SPX have lost 5.0% +,
- European equity markets are down anywhere between 3 – 13%, and;
- Asia investors keep pinching themselves to make sure that Shanghai Composite has indeed lost them 22%.
The fulcrum of the markets also seemed to have shifted with the European and US Markets taking their cue from Asia, specifically China and the cloak of invincibility that adorned Chinese mandarins being lost forever.
The turmoil of equity markets has not been in isolation.
- Crude which started the year at 38.17 dipped to 28.35 before recovering a bit to 33.62.
- 10 year US Treasuries despite 25 bps rate increase last year and expectations of 3 rate hikes this year languish at 1.921%.
- The emerging market currencies have lost anywhere between 3% to 5% in Jan’16.
- The Japanese regulators were hard pressed to pull a rabbit out of the hand to keep economy enroute for 2% inflation. This last week for the first time in history Japan joined its European counterparts to adopt negative interest rate on deposits that led JPY to depreciate 2%+ to 121.13.
It is not what has happened so far that is scary. It is the absence of any growth driver in the near future that is even more unnerving. The last time the world faced such situations, there had been a US, Euro on Japan put at rescue or a China growth pull under play.
This time around though the regulators in the US seem hard pressed to reverse the rate hike given their vocal public assessment just not so long ago. European action remains hosted to the unfolding refugee and border crises. The Investors cannot but develop disbelief in any semblance of success on the third arrow of Abenomics while China retreats more into its own mist.
The coming months thus are expected to be more treacherous for equity, commodity and credit markets. Dividend plays in equities may not materialize while value plays may experience repeated bouts of volatilities. Commodities seem to have lost their way bereft of inflation. Gold and Silver are not working anymore as portfolio hedge. Credits remain a safe heaven though the yields seem very squeezed in high grade without adding duration and high yields remain fraught to defaults at the back of lack of growth / cash flows and refinancing capabilities in the market.
With annual bonuses just coming your way – the above market conditions will more likely keep all of us more in cash and here is where Monexo (www.monexo.co) – an Online Peer-to-Peer Lending Marketplace comes in. We offer you screened borrowers from Hong Kong who are willing to pay 7% to 24% interest per annum to borrow against future rental income or salary.
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