Happy 2018!
It has been a hiatus since our last few posts. At every stage of our lives, things evolves which requires more of our attention. Nonetheless, triplehuat would like to wish all readers a blissful, peaceful and bullish 2018! Huat ah!!
As announced by PM Lee yesterday, Singapore's economy performed better than expected by growing 3.5%, more than double the initial forecast. This is good news for the country as we continue to ride on the global economic upswing.
As evident, the prospects for 2018 seems promising and likely to be rosier than past years. How true can this be? Let's delve into four events which could jolt the market this year.
1. US Tax Reforms
Recently, President Trump gifted all US citizens and companies a Christmas present by passing the biggest tax overhaul in three decades. The tax cuts were aimed to entice US companies based overseas to flow their investment back to US. This would certainly lift the economy, create jobs, boost markets and harness economic growth. However, how it truly benefits US remains to be seen. Some predicts that it only benefits the rich and widen the income gap. I view it as positive as we are likely to see higher earnings from US companies which is a big plus for the stock market and global economy.
2. Oil Prices
Lately, there are rising tensions between Saudi Arabia and Iran. The unrest in Libya, Syria, Iraq and Yemen are also going to threaten the oil productions. This would push oil prices up and provide some respite to the beleaguered offshore and marine companies and hopefully end the drought of earnings in the oil and gas sector. However, there is another threat posted by US Shale gas which is poised to increase production alongside the rise in oil prices. As such, oil prices may continue to hover around the range of $50 to $60-ish which could still be a sweet spot - high enough for oil producers but low enough for oil consumers.
3. North Korea Nuclear Weapons
Despite being slapped with tougher international sanctions, North Korea continues to march towards their vision to be a fully nuclear-armed country. They are determined to pursue their nuclear programmes to 'defend' themselves against external threats. Tensions are likely to escalate in 2018 should Kim Jong Un continues testing missiles after missiles. It will be a new test of relationship between superpowers such as US, China and Russia. This is worrying as it could depress investors' confidence in the market and results in the stock market to plunge. My view is all countries will still practice some form of restrain as waging a full-fledged war is certainly not win-win for everyone globally.
4. Rising Interest Rate Environment
This year, we are going to experience a rising interest rate climate as a result of global monetary tightening. The US Federal signals three hikes in 2018. This will impact individuals who own homes and companies who borrow funds from banks to fuel their growth. In addition, we are approaching the tenth year since the last global financial crisis in 2008-2009 coupled with the fact that stock market is trending on the high side. It becomes harder to find stocks to invest at low valuations. As monetary policies continues to tighten further, the fear is that it may lead to economic corrections, risk appetite changes and turbulent capital flows ahead.
What other events might cause market turbulent? Feel free to share your views.
Nevertheless, we hope 2018 brings more opportunities to all Triplehuat readers! Wishing all a bountiful year ahead. Huat ah!
With New Year greetings,
Triplehuat
