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Market Review 2012/04

The pace of US jobs creation slowed sharply in March.  According to Mohamed El-Erian, Chief Executive and Co-Investment Officer of PIMCO “...this narrative played out both in 2010 and 2011 but the implications would be even more consequential this time around.”

Indeed.  “…Using our extended data we produced a detailed three-volume analysis of stock, bond and economic cycles, with a view towards developing a road map. We found that the cliché “it’s different this time” was true. It was different every time and, while there are trends and tendencies, none is chiselled in stone templates. Nevertheless, we found that understanding historical tendencies and making intelligent adjustments could be profitable.” ----- Laszlo Birinyi.

The chart below compares the performance among various asset classes:  Bond, Equities and Gold & Precious Metal for the period from 2012/01/03 to 2012/04/04.



Source: iFast Financial Pte Ltd

MSCI Asia ex Japan had delivered the best year-to-date return with 7.75%. FTIF-Templeton Global Total Return ranked second with 6.89%. The worst performing asset class is the gold & precious metals futures (long only) with –0.32% return.

What if we extend the period from 2011/01/03 to 2012/04/04?  The performance is as shown below:


Source: iFast Financial Pte Ltd

Here, the best performing is Aviva’s Global High Yield with absolute return of 9.82%.  It beats the return of S&P with absolute return of 7.32%!  All other indices:  MSCI World, MSCI Asia ex Japan, MSCI Emerging Market and MSCI Europe all incurred losses ranging from 3.66% to 13.01%.

On selected equity and commodity markets:  China, India, US, Asia ex Japan, Resources and Gold & Precious Metal futures (long only), the performance is shown below:



Source:  iFast Financial Pte Ltd

Amazingly, based on the selected funds, India performed the best with year-to-date return of 13.14%; followed by US with 10.99% return.  The worst performing fund is the gold & precious metals futures (long only) with -0.32% return.  Extending the period to 2011, here is the performance:



Source: iFast Financial Pte Ltd

We observed that US is the only equity markets that make a positive return!

Conclusion?   History will repeat itself albeit in different form.  And it pays to take risk and invest in a defensive way.