Weekly Technical Review

Transcription

1 Ucap Hong Kong Asset Management Limited Weekly Technical Review 12 th January 2015

2 Highlights (1) Equity Markets MSCI World Index Weekly TheMSCIWorldIndexhasnowbrokenthe6yearTRENDLINEthatwetestedlastyearinSeptemberat The index closed below the neckline of the Head & Shoulders pattern at We can therefore consider the trend is broken & a pull-back of up to 250 points is to be expected. Shorter term, a potential bounce of up to 4.00% can be expected during the course of the week giving room for reducing risk in portfolios. BE CAUTIOUS. S&P500 Daily The leading US equity Index has now had 8 consecutive negative trading sessions and almost went to test the support line at Between current levels & 1880, the S&P 500 should see an INTERMEDIATE bottom with potential retracement to to Investors should take advantage ofareboundtoreduceriskinportfolios. DJ Eurostoxx 50 Weekly Similarly to the US Equity Index, the DJ Eurostoxx 50 has pulled back to retesting the 2015 lows currently coinciding with the 50 Week Moving average. We believe in a bounce over the coming sessions so investors should cover short position / increase longs in order to target before reducing exposure. Shanghai Composite Weekly The Shanghai market remains very weak as authorities have tried and failed to boost it. Technicals point to further downside and the index should return to pre-intervention levels around Nikkei 225 Monthly The Nikkei suffers from the weakening of the Yuan and the relative rebound of the Yen. A monthly breakbelow18 000wouldleadustocloseourlongs.

3 Highlights (2) Global Markets UST-Note Weekly In the current risky environment, US bonds could remain firm and a break above could propel the T-Note higher. Please note that despite the rate hike in the US, the 2Y-10Y yield curve has flattened below 1% and has further room to go down if inflation expectations remain low. DollarIndex Daily The US Dollar remains our FAVORITE underlying in We continue to believe the US Dollar is a buy against majors (EUR/CHF/JPY) in the event that we remain above on a Weekly Basis.DonothesitatetogolongorsellPUTSlinkedtotheunderlying. USDJPY-Daily The Yen has actually rebounded against the Dollar in the recent days, possibly because of the unwinding of CNH/JPY carry trades. We remain long USD as a basket but be very careful if we close below 116.5(Stop long USDJPY positions). Gold-Monthly WeremainstructurallybearishonGoldandhaveashorttermtargetatUSD1 030.Weshorted the recent bounce and believe that many investors are uninterested in the precious metal even if we are in times of increased volatility for riskier assets. Only buy a clear break of USD onaweeklyclose. CrudeOil-Weekly Crude Oil remains in a downtrend and has broken the lows of Given the extreme short positioning of the market, a short squeeze could still occur. Be ready for a potential USD 10 dollars pop.

4 Highlights (3) Sectors and relative value EuroStoxxvs.S&P500-Daily We see more upside on the EuroStoxx than the S&P 500 given our view on the Dollar and the technical pattern of each index. The relative performance remains close to multi years lows and there is ample room for a rebound. This view can be implemented as a long/short trade using mini-futures. European Banks(iShares EStoxx Banks) Daily The sector has lagged the broader market after the recent earnings season. As for the broader index,weexpectashorttermpullbackthatcouldleadustoeur USBanks(SPDRS&PBankETF) Daily Higher rates and good economic growth in the US offer a good environment for US banks. The sector should outperform again in 2016 after the Fed continues to raise rates. USPharma(SPDRS&PHealthCareETF) Daily After years of a strong and regular performance, the US Health Care sector entered a lateral corrective movement in October. The noise about price controls was an excuse for investors to take some profits and reduce their overweight positions. The trading range has now been broken. Stay aside until the market stabilizes. US Consumer Discretionary(SPDR ETF) Weekly Long term trend remains positive. Wait for a rebound above $77 to add positions.

5 Asset Management Highlights (1) TheMathOfLoss-Missing10WorstDaysFarMoreImportant Risk Management = Avoiding Down Days = Controlling Volatility is key to stable returns The chart above shows the comparison of $ invested in the S&P 500 index and thesubsequentreturnswhenavoidingthe10worstdays/missingthe10bestdays

6 Asset Management Highlights (2) Comparing Returns& Volatility since we launched our investment Funds Asset 31/12/2015 Data Update 2015 Return 2015 Volatility (Weekly) Average Y Return Since Creation (April 2008) Average Y Volatility Since Creation (April 2008) 7-10yr US (ief) 1.50% 6.97% 4.99% 7.08% 3m $ Tbill Cash 0.10% 0.01% 0.70% 0.02% S&P 500 (price) -0.70% 13.69% 7.30% 18.54% Iboxx Corp Bond (lqd) -1.25% 5.97% 6.15% 7.61% MSCI World (price) -2.70% 13.17% 5.16% 18.86% HFRI Index -3.50% 3.77% -2.26% 4.21% Iboxx High Yield (hyg) -5.00% 7.56% 7.69% 12.32% MSCI Emg Mkt % 22.93% 0.03% 26.71% CRB Index % 14.52% 0.23% 18.05% Velocity 1.66% 5.36% 6.78% 5.36% Fixed Income Allocator -1.81% 2.88% 4.64% 2.88%

7 Global Equities -YTD Performance Review Equity Indices Value Local YTD % Chg USD YTD % Chg EUR YTD % Chg North America Dow Jones 16' % -6.12% -6.40% S&P 500 1' % -6.16% -6.44% Nasdaq 100 4' % -7.25% -7.53% Europe EuroStoxx 50 3' % -7.09% -7.35% FTSE 5' % -4.82% -7.32% SMI 8' % -6.50% -6.79% DAX 9' % -8.29% -8.54% CAC 4' % -6.74% -6.99% MIB 19' % -7.51% -7.76% IBEX 8' % -6.64% -6.90% Asia & Emergings Nikkei 17' % -4.75% -5.06% HSCEI 8' % % % Kospi % -6.48% -7.03% TAIEX 7' % -6.59% -6.59% IBOV 40' % -9.07% -9.38% Nifty 7' % -4.81% -4.81% Russian RTS 11' % -4.90% -4.90% MSCI EM % -8.51% -8.79% MSCI World 1' % -6.09% -6.38%

8 EQUITY MARKETS

9 MSCI World Index Weekly The MSCI World Index has now broken the 6 year TREND LINE that we tested last year in September at The index closed below the neckline of the Head & Shoulders pattern at We can therefore consider the trend is broken & a pull-back of up to 250 points is to be expected. Shorter term, a potential bounce of up to 4.00% can be expected during the course of the week giving room for reducing risk in portfolios. BE CAUTIOUS.

10 S&P 500 Daily The leading US equity Index has now had 8 consecutive negative trading sessions and almost went to test the support line at Between current levels & 1880, the S&P 500 should see an INTERMEDIATE bottom with potential retracement to to Investors should take advantage of a rebound to reduce risk in Portfolios.

11 DJ Eurostoxx50 -Weekly Similarly to the US Equity Index, the DJ Eurostoxx50 has pulled back to retesting the 2015 lows currently coinciding with the 50 Week Moving average. We believe in a bounce over the coming sessions so investors should cover short position / increase longs in order to target before reducing exposure.

12 Shanghai Composite Weekly The Shanghai market remains very weak as authorities have tried and failed to boost it. Technicalspoint to further downside and the index should return to pre-intervention levels around

13 Nikkei 225 -Monthly The Nikkei suffers from the weakening of the Yuan and the relative rebound of the Yen. A monthly break below would lead us to close our longs.

14 GLOBAL MARKETS

15 US T-Note -Weekly In the current risky environment, US bonds could remain firm and a break above could propel the T-Note higher. Please note that despite the rate hike in the US, the 2Y-10Y yield curve has flattened below 1% and has further room to go down if inflation expectations remain low.

16 Dollar Index Daily The US Dollar remains our FAVORITE underlying in We continue to believe the US Dollar is a buy against majors (EUR/CHF/JPY) in the event that we remain above on a Weekly Basis. Do not hesitate to go long or sell PUTS linked to the underlying.

17 USDJPY-Daily The Yen has actually rebounded against the Dollar in the recent days, possibly because of the unwinding of CNH/JPY carry trades. We remain long USD as a basket but be very careful if we close below (Stop long USDJPY positions).

18 Gold -Monthly We remain structurally bearish on Gold and have a short term target at USD We shorted the recent bounce and believe that many investors are uninterested in the precious metal even if we are in times of increased volatility for riskier assets. Only buy a clear break of USD on a Weekly close.

19 CrudeOil-Monthly Crude Oil remains in a downtrend and has broken the lows of Given the extreme short positioning of the market, a short squeeze could still occur. Be ready for a potential USD 10 dollars pop.

20 SECTORS AND RELATIVE VALUE

21 EuroStoxx vs. S&P 500 -Daily We see more upside on the EuroStoxx than the S&P 500 given our view on the Dollar and the technical pattern of each index. The relative performance remains close to multi years lows and there is ample room for a rebound. This view can be implemented as a long/short trade using mini-futures. Relative performance of the EuroStoxx versusthes&p500since2011.

22 European Banks Daily The sector has lagged the broader market after the recent earnings season. As for the broader index, we expect a shorttermpullbackthatcouldleadustoeur

23 US Banks (SPDR S&P Bank ETF) Daily Higher rates and good economic growth in the US offer a good environment for US banks. The sector should outperform again in 2016 after the Fed continues to raise rates.

24 US Pharma (SPDR S&P HealthCare ETF) Daily After years of a strong and regular performance, the US Health Care sector entered a lateral corrective movement in October. The noise about price controls was an excuse for investors to take some profits and reduce their overweight positions. The trading range has now been broken. Stay aside until the market stabilizes.

25 US Consumer Discretionary (SPDR ETF) Weekly Long term trend remains positive. Wait for a rebound above $77 to add positions.

26 Disclaimer Ucap Hong Kong Asset Management Ltd has issued this document for information purposes only. This document may not be distributed to the United States, Canada, Australia or to any other jurisdiction in which its distribution is unlawful. If you require investment advice or wish to discuss the suitability of any investment decision, you should contact your professional advisers for financial, legal or tax advice when appropriate. This document is not and should not be construed as an offer to sell or a solicitation of an offer to purchase or subscribe for any investment or service. Ucap Hong Kong Asset Management Ltd has based this document on information obtained from sources it believes to be reliable but which it has not independently verified. Ucap Hong Kong Asset Management Ltd makes no guarantees, representations or warranties, and accepts no responsibility or liability as to its accuracy or completeness. Expressions of opinion herein are subject to change without notice. Members of the Ucap Hong Kong Asset Management Ltd and/or their officers, directors and employees may have positions in any securities mentioned in this document(oranyrelatedinvestment)andmayfromtimetotimeaddtoordisposeofanysuchsecurities(orinvestment). In the case where this document is distributed in the United Kingdom by a person who is notauthorized by the United Kingdom FinancialServices Authority; itis only intended for persons who (i) have professional experience in matters related to investments or (ii) are persons falling within Article 49(2)(a) to (d) ("high net worth companies, unincorporated associations, etc") of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2001 (as amended) or to whom it may otherwise lawfully be communicated by such an unauthorized person (all such persons together being"relevant persons"). This communication must not be acted on or relied on by persons who are not relevant persons. Any investment or investment activity to which this document relates is available only to relevant persons and will be engaged in only with relevant persons. Past performance is not necessarily a guide to future performance. The value of any investment or income may go down as well as up and you may not receive back the full amount invested. When an investment is denominated in a currency other than your local or reporting currency, changes in exchange rates may have an adverseeffecton thevalue, priceor incomeofthatinvestment. In thecaseofinvestments for which thereis no recognized market, itmay bedifficultforinvestors to sell their investments or to obtain reliable information about their value or the extent of the risk to which they are exposed. Investment in any market may be extremely volatile and subject to sudden fluctuations of varying magnitude due to a wide range of direct and indirect, influences. Such characteristics can lead to considerable losses being incurred by those exposed to such markets. Copyright. Ucap Hong Kong Asset Management Ltd 2015 ALL RIGHTS RESERVED No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, whether electronic, mechanical, photocopying, recording or otherwise, without the prior written permission of Ucap Hong Kong Asset Management Ltd.