Beyond The realm Of possibilities

Transcription

1 Beyond The realm Of possibilities nd Quarter Report

2 目錄 Table of Contents Market Outlook US Dollar Index. 4 EURUSD... 5 GBPUSD. 6 USDJPY Products Performance Review POWERFUND Ayers Alliance Quantum Fund

3 Market Outlook 3

4 Market Outlook The Dollar continues to be traded in a tight range of and in the second quarter despite the Dollar dipping to a six and a half month low on May 6th. US GDP for the first quarter fell 2.9% annualized rate, lower than forecasted and the worst reading since the first quarter of However, recent economic indicators suggest that the slowdown was weather related and temporary as recent US economy indicators posted some of the most optimistic readings for years. The unemployment rate fell to 6.1%, the lowest rate since September With the strong employment growth supported consumer confidence and spending on big-ticket items such as cars and housing. While headline CPI readings for May came in at 2.1% y/y, the largest increase since October US Dollar Index Daily Price Chart The Fed course continues, set by previous chair Ben Bernanke, the central bank is expected to continue its tapering at a pace of $10bn per meeting. It is widely expected that these long-term asset purchases will be completely winded down by Q4 of this year. While an interest rate hike is expected mid In the remaining of 2014, US economic activity is expected to improve, as pent-up demand from consumers and business investment improves supported by rising wealth due to rising equity and housing markets. Real GDP is expected to advance a strong 3.5-4% in the third quarter, subsequently, as Central Bank s monetary policy continue to diverge with the prospect of a US rate hike should give further strength to the Dollar. 4

5 Market Outlook The Euro hit a 4 month low in June at against the Dollar as the ECB announced the lowering of interest rates to record lows. Economic indicators continue to disappoint, unemployment rate has not changed since April, remaining at 11.6%, despite the economy gaining another 28,000 jobs. Manufacturing Purchasing Managers' Index (PMI) for the Eurozone fell to 51.8 in June compared to May's 52.2 and lower than Aprils Inflation rates remains at a disappointing low, coming in at 0.5%, 0.7% and 0.5% respectively for the three months in the second quarter; well below the ECB s annual target of 2% inflation for EURUSD Daily Price Chart The ECB announced the lowering of its main interest rate to a record low of 0.15% from 0.25%, while the deposit rate for the region s commercial banks was cut to -0.1% from zero. The Central Bank has suspended its SMP sterilization programme to help reverse recent declines in Eurozone liquidity effectively increasing excess liquidity by 164bn. Thirdly, the ECB has decided to implement a 4-year Targeted Long-Term Refinancing Operation(TLTRO), starting with 400bn in September or December the TLTRO aims at lifting crediting growth in which the previous LTROs has failed to do. Despite the Euro resilience, we are expecting weakness in the single currency on the back of relative weak fundamentals. Diverging central bank policies and interest rate differentials should continue to weigh on the Euro for the remainder of

6 Market Outlook The Pound continues to rise against the US Dollar as it hits , a high not seen since The strong performance of the Pound this quarter continues to be driven by its impressive economic gains. The UK in the second quarter grew 0.9%, the highest rate in four years. Additionally, unemployment in the UK continues to fall. Recent figures on the three months to May show that unemployment fell 121,000 to 2.12m, the lowest it has been in 6 years, almost reaching pre-recession levels. Reports also show an increase in consumer spending and business investment GBPUSD Daily Price Chart The BOE has left its 0.5% interest rate unchanged this quarter despite the improving economic conditions in the UK. This is not surprising given that the inflation rate fell to 1.5% in May, which is below April s 1.8% and the Bank of England s target of 2%, signaling that there is no need for the Bank of England to take action to keep prices in check. The 375bn quantitative easing stimulus also remained unchanged this quarter as the recovering economy is given more time to stabilize. Looking forward, it s possible the Bank of England will start increasing the interest rate either near the end of 2014 or into 2015 as the British economy reaches higher points and inflation rates meet the central bank s target. The UK s economy is now expected to grow 3.4% this year, the fastest rate in seven years. This brings it ahead of all developed economies in the world and even surpassing developing economies of Brazil and Russia. Given this pace of growth, it is likely the Pound will progress on its current rising trend. 6

7 Market Outlook The Yen was range bound in the second quarter, between and , as the Yen remained supported despite weakened fundamentals associated with the negative effects of tax reforms. Japan s GDP in Q1 grew at a seasonally adjusted rate of 5.9% q/q - a preemptive boost over this quarter s implementation of the new sales tax. This was attributed to improvements in domestic demands and improved employment, as the unemployment rate fell to 3.6%, the lowest since July USDJPY Daily Price Chart The decisions to increase sales tax on April 1st was designed to control Japan s swelling social-welfare costs and its huge public debt. The repercussions of the increase in sales tax has yet to be seen, though It is expected that second quarter growth is likely to contract at a seasonally adjusted rate of 3% q/q. It would not be surprising if the BOJ decides to implement additional monetary stimulus by extending and increasing the asset purchase program going into the second half of 2014, if the tax hike leads to a stalling of economic momentum and inflation. More range trading is expected to happen for the remainder of 2014, though the Dollar will be more favorable due to relative economic growth and rate hike expectations. 7

8 Products Performances 8

9 POWERFUND 9

10 POWERFUND Stable and Persistent Positive Return The Q2 performance of POWERFUND was in line with the expectation of the fund manager. The fund s NAV was up 2.63% in the 2nd quarter, i.e. bringing the YTD return to 5.06%. In the past three months, the monthly returns were above 0.59%, in line with our target, i.e. diversification through correlations with traditional assets. 10

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13 Ayers Alliance Quantum Fund 13

14 Ayers Alliance Quantum Fund Ayers Alliance Quantum Fund rose 2.15% in Q2 of The return mainly derived from the performance in arbitrary operation. Comparing to traditional equity fund, the Fund demonstrates its capability to disperse risk and attain higher return-to-risk ratio. 14

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17 For further information, please contact Web : Important Notice : This documentation is for discussion purpose only and may not be appropriate for any investor. Without limitation, this document does not constitute an offer. Information, views or opinions expressed in this presentation originates from many different sources and contributors throughout the general community. Please note that the contents do not necessarily represent or reflect the views and opinions of Financial Group or their affiliates. 17