us equity market emerging market - stocksbnb...2016/09/05 · us equity market emerging market...

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1

5 Sept 16, 8.15am/11.15am Morning Call/Webinar

Topics

US Equity Market

Emerging Market



2

Disclaimer

The information contained in this presentation has been obtained from public sources which Phillip Securities Pte Ltd (“PSPL”) has no reason to

believe are unreliable and any analysis, forecasts, projections, expectations and opinions (collectively the “Research”) contained in this

presentation are based on such information and are expressions of belief only. PSPL has not verified this information and no representation or

warranty, express or implied, is made that such information or Research is accurate, complete or verified or should be relied upon as such. Any

such information or Research contained in this presentation is subject to change, and PSPL shall not have any responsibility to maintain the

information or Research made available or to supply any corrections, updates or releases in connection therewith. In no event will PSPL be

liable for any special, indirect, incidental or consequential damages which may be incurred from the use of the information or Research made

available, even if it has been advised of the possibility of such damages.

This presentation is intended for general circulation only and does not take into account the specific investment objectives, financial situation or

particular needs of any particular person.

You should seek advice from a financial adviser regarding the suitability of the investment product, taking into account your specific investment

objectives, financial situation or particular needs, before making a commitment to invest in such products.



US Equity Market

Fundamentally Flawed

Jeremy Ng

Phillip Securities Research Pte Ltd

05 September 2016



Update on the US Market

4

GDP YoY

Source: Bloomberg




5

S&P 500 vs GDP Investment QoQ

Source: Bloomberg




6

Industrial Production YoY

Source: Bloomberg




7

S&P 500 vs Industrial Production

Source: Bloomberg




8

S&P 500 vs ISM Manufacturing PMI

Source: Bloomberg




9

S&P 500 vs Retail Sales YoY

Source: Bloomberg




10

S&P 500 vs NYSE Margin Debt

Source: Bloomberg




11

S&P 500 vs Adjusted EPS

Source: Bloomberg




12

S&P 500 vs Household networth as a percentage of disposable income

Source: Bloomberg




13

S&P 500 vs Non-Farm Payroll

Source: Bloomberg




14

US unemployment Rate

Source: Bloomberg




15

S&P 500 vs Philly Fed survey diffusion index # of employees

Source: Bloomberg




16

S&P 500 vs LMCI

Source: Bloomberg




17

Home Ownership Rate and Labor Force Participation Rate

Source: Bloomberg



Summary

18

Source: Bloomberg

Macro Indicator Critical Number Last Bearish Signal

GDP YoY 1.0 1.2 Unconfirmed

GDP Investment QoQ 153.46 147.48 Confirmed

Industrial Production YoY

0.0 -0.5 Confirmed

ISM Manufacturing PMI 50.0 49.4 Confirmed

Retail Sales YoY 1.6 2.3 Unconfirmed

NYSE Margin Debt 0.507M 0.745M Confirmed/Peaked

Adjusted EPS 30.54 26.80 Confirmed/Peaked

Unemployment rate 5.0 4.9 Unconfirmed

Non-Farm Payroll -15,000 151,000 Unconfirmed

Philly Fed # of Employees

-5.1 -20 Confirmed

LMCI -2.2 1.0 Unconfirmed



19

Summary

Remain bearish on the US Equity markets

Tradable Instrument :

ETF CFDShort Dow30 Proshares – (AMEX : DOG) Wall Street Index USD1 CFD – YMU16

Proshares Short QQQ – (AMEX : PSQ) US Tech 100 Index USD5 CFD – NQU16

Proshares Short S&P 500 – (AMEX : SH) US SP 500 Index USD5 CFD – ESU16



Emerging Markets & its opportunities

Taiwan – A catalyst for growth

Pei Sai Teng

Phillip Securities Research Pte Ltd

05 September 2016



21

Asset Class Performances (YTD)

Source: Bloomberg, Phillip Securities Research (Singapore)



-12.69

-2.96

6.14

7.22

10.24

11.54

33.32

Japan Equities

Europe Equities

Global Equities

US Equities

Asia Pacific ex Japan Equities

EEMEA Equities

LatAm Equities

Global Equity Markets Performance

22

Source: Bloomberg, Phillip Securities Research (Singapore), As at 2 Sept 2016




23

Developed Markets1-week 1-month 3-month 1-year YTD

Equity Indices Close Change (%) Change (%) Change (%) Change (%) Change (%)

North America

US Dow Jones Industrial Average 18,419.30 -0.2 0.6 3.3 12.6 5.7

US S&P 500 Index 2,170.86 -0.1 0.6 3.1 11.4 6.2

US NASDAQ Composite Index 5,227.21 0.3 1.7 5.1 10.0 4.4

Canada S&P/TSX Composite Index 14,683.91 0.4 1.4 3.9 8.4 12.9

Europe

MSCI AC Europe (USD) 115.90 -0.1 2.4 0.1 -3.0 -5.9

Euro STOXX 50 Index 327.16 0.5 4.3 0.6 -1.8 -5.2

UK FTSE 100 Index 6,787.41 -0.4 2.1 9.7 11.6 8.7

Germany DAX Index 10,556.21 -0.3 4.1 3.4 5.1 -1.7

France CAC-40 Index 4,471.89 0.7 3.3 0.1 -1.8 -3.6

Spain IBEX 35 Index 8,781.80 1.4 6.1 -2.0 -11.6 -8.0

Asia Pacific

Japan Nikkei-225 Stock Average 16,925.68 3.5 3.3 2.2 -6.5 -11.1





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Emerging Markets




Equity Markets Valuation (TTM PE)

25




Global Equity Markets Valuations

26

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e: B

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berg

, P

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ip S

ecurities R

esearc

h (

Sin

gapore

)

Equity IndicesMkt cap /

GDP EV/Asset EV/Sales EV/EBITDAPrice-to-

Book FCF Yield TTM PE Ranking

Russia MICEX Index 0.37 1.01 1.09 3.98 0.77 9.87 7.43 1

Turkey ISE 100 Index 0.26 1.65 1.32 7.83 1.06 1.54 9.42 2

Korea KOSPI Index 0.95 1.57 0.89 7.63 0.98 5.90 18.69 3

Hang Seng China Enterprise Index 0.59 2.23 2.04 10.90 0.92 31.40 8.19 4

Germany DAX Index 0.55 2.12 1.01 7.38 1.57 17.78 23.98 5

Spain IBEX 35 Index 0.54 2.08 1.90 10.90 1.24 27.77 21.80 6

Colombia IGBC Index 0.35 2.46 1.97 8.65 1.33 18.04 21.97 6

France CAC-40 Index 0.79 1.73 1.23 9.88 1.34 11.47 23.01 8

Hong Kong Hang Seng Index 13.16 1.46 2.30 9.39 1.17 19.83 12.66 9

Japan Nikkei-225 Stock Average 1.23 2.11 1.14 8.96 1.49 6.31 21.08 10

Taiwan TAIEX Index 2.69 1.98 1.14 10.31 1.62 7.50 16.81 11

Shanghai Stock Exchange Composite Index 0.59 2.47 1.95 15.25 1.49 13.71 17.77 12

Brazil Bovespa Index 0.40 2.30 1.65 14.76 1.47 10.18 159.00 13

Argentina Merval Index 0.11 3.03 1.24 10.78 1.12 -4.12 37.66 14

Chile IPSA Index 0.89 2.69 2.04 9.97 1.45 3.81 20.58 15

Shanghai Shen Zhen CSI 300 0.59 2.78 2.18 15.27 1.67 9.27 15.27 16

Malaysia Kuala Lumpur Composite Index 1.33 2.21 3.35 10.45 1.64 9.01 18.10 17

Singapore FTSE Straits Times Index 1.65 1.60 3.15 13.66 1.08 -1.47 12.05 18

Thailand SET Index 1.06 2.73 2.00 11.02 1.87 6.21 20.27 19

UK FTSE 100 Index 1.15 2.26 1.61 13.81 1.80 8.61 56.47 20

Mexico Index 0.30 4.05 2.32 10.21 2.62 3.43 25.23 21

Australian Stock Exchange 200 0.85 2.54 2.68 17.42 1.85 9.48 24.25 22

Indonesia Jakarta Stock Price Index 0.50 3.08 2.51 12.26 2.52 2.85 26.68 23

US S&P 500 Index 1.36 3.34 2.26 13.14 2.74 5.20 20.37 24

South Africa JSE Index 1.28 2.61 1.98 20.11 2.03 5.68 27.88 25

India SENSEX 30 index 0.80 3.74 3.13 12.54 2.90 2.11 21.11 26

Canada S&P/TSX Composite Index 1.25 3.04 2.77 18.49 1.80 4.82 23.28 27

Philippines Stock Exchange PSE Index 0.94 3.55 3.76 13.61 2.53 2.44 22.06 28



Currencies Performance

27




Taiwan – Summary

1. Tsai Ing-wen made history as the first elected female president when she won

the general election for presidency with 56.12% of the votes. She assumed

office in 20 May 2016, succeeding Ma Ying-jeou from Kuomintang (KMT).

2. Democratic Progressive Party won 68 seats in the 113 legislature thus

displacing the incumbent KMT, which ruled Taiwan for a period of 8 years since

2008.

3. Sovereignty identity is much stronger with the pro-democracy DPP and this

will definitely affect the relationship with China.

4. GDP growth in Q2 2016 brings Taiwan out of a technical recession. Export,

Industrial production and manufacturing PMI seems to be indicating a turning

point.

5. Taiwan saw a pick-up in foreign direct Investment as investors turn to

emerging markets in search of growth.

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Taiwan – Investment Merits

29

1. With DPP as the majority of the Legislative Yuan, the new

Government will pursue a vastly different economic growth model

from its predecessor.

2. The underlying economic has already shown signs of recovery.

3. Investment in Emerging markets have been on the rise.

Source: Directorate-General of Budget, Accounting and Statistics, CEIC, PSR



Taiwan – Investment Merits

30

-30%

-20%

-10%

0%

10%

20%

30%Industrial Production Growth

Industrial production YoY % growth35

40

45

50

55

60

65

Ma

y-1

2

Au

g-1

2

Nov-1

2

Fe

b-1

3

Ma

y-1

3

Au

g-1

3

Nov-1

3

Fe

b-1

4

Ma

y-1

4

Au

g-1

4

Nov-1

4

Fe

b-1

5

Ma

y-1

5

Au

g-1

5

Nov-1

5

Fe

b-1

6

Ma

y-1

6

Manufacturing PMI

0

10

20

30

40

50

60

70

0

2

4

6

8

10

12

14

16

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

20

14

20

15

Direct & Portfolio Investment (US$'Bn)

Direct Investment (LHS)

Portfolio Investment (RHS)

Source: Ministry of Finance, Central Bank of China, CEIC, PSR



Taiwan – Investment Risks

31

1. There is a strong sense of sovereign identity with the pro-democracy

DPP. This might cause unnecessary cross-strait politic tension,

with China.

2. China’s “Red Supply China” looks to upend Taiwan main pillar of

economic growth, export of electronic goods.

Source: Directorate-General of Budget, Accounting and Statistics, Ministry of Finance, CEIC, PSR

0

500

1,000

1,500

2,000

2,500

2015 2010 2005 2000

Tho

usa

nd

s

Mainland China ASEAN 6

Hong Kong United States

Europe Japan

Singapore



Taiwan – still exporting growth

32

-40%

-20%

0%

20%

40%

60%

80%

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

20

14

20

15

20

16

Export of Machinery and Electrical Equipment YoY (%)

0

50

100

150

200

250

0

20

40

60

80

100

120

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

20

14

20

15

20

16

Tho

usa

nd

s

Industrial Production vs Export to China

Industrial Production Index

Export to China

-0.1

0.0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

Mar

-00

Mar

-01

Mar

-02

Mar

-03

Mar

-04

Mar

-05

Mar

-06

Mar

-07

Mar

-08

Mar

-09

Mar

-10

Mar

-11

Mar

-12

Mar

-13

Mar

-14

Mar

-15

Mar

-16

Bill

ion

s

Bill

ion

s

Trade Balance, RHS Export, LHS Import, LHS

Source: Ministry of Finance, CEIC, PSR



Taiwan Taiex Index (Weekly)

33

Source: Bloomberg



34

Summary

We are bullish on the Taiwan market

Tradable Instrument :

ETF CFDDBXT MSTaiwan US$ - HD7 Taiwan Index USD20 CFD – TIU16

Lyxor Taiwan US$X@ - A9A



35

Disclaimer

The information contained in this presentation has been obtained from public sources which Phillip Securities Pte Ltd (“PSPL”) has no reason to

believe are unreliable and any analysis, forecasts, projections, expectations and opinions (collectively the “Research”) contained in this

presentation are based on such information and are expressions of belief only. PSPL has not verified this information and no representation or

warranty, express or implied, is made that such information or Research is accurate, complete or verified or should be relied upon as such. Any

such information or Research contained in this presentation is subject to change, and PSPL shall not have any responsibility to maintain the

information or Research made available or to supply any corrections, updates or releases in connection therewith. In no event will PSPL be

liable for any special, indirect, incidental or consequential damages which may be incurred from the use of the information or Research made

available, even if it has been advised of the possibility of such damages.

This presentation is intended for general circulation only and does not take into account the specific investment objectives, financial situation or

particular needs of any particular person.

You should seek advice from a financial adviser regarding the suitability of the investment product, taking into account your specific investment

objectives, financial situation or particular needs, before making a commitment to invest in such products.



36

Analysts Pei Sai Teng, Macro

Jeremy Ng, Technical Analysis

Jeremy Teong, Banking & Finance

Soh Lin Sin, Consumer | Healthcare

Richard Leow, Transport | REITs (Industrial)

Dehong Tan, REITs (Commercial, Retail, Healthcare) | Property

Peter Ng, Property | Infrastructure

Ho Kang Wei, US Equity

Chen Guangzhi, Oil and Gas | Energy

By Phillip Securities ResearchMohamed Amiruddin, Operations Exec

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us equity market emerging market - stocksbnb...2016/09/05 · us equity market emerging market...

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