SG economic speculation: recession in 2011?

[ag88]

using TA techniques, it is quite visible that a large expanding triangle formation is quite visible on STI, in addition to that a visible 'parabolic' run up to a peak around 3200 recently
http://sg.finance.yahoo.com/q/bc?s=^STI&...&z=m&q=l&c=
such formations also resembles a large head and shoulders formation commonly touted by technical analysts as good indicators of market reversals
http://thepatternsite.com/hst.html

such speculations looks like they are without 'scientific' basis till recently local banks cuts deposit rates to almost zero caught my attention, this is also reflected in the daily domestic interbank rates
http://www.sgs.gov.sg/sgs_data/daily_dom...rates.html

it brings me to this post from paul krugman
http://krugman.blogs.nytimes.com/2010/09...m-wonkish/
"First, real appreciation leads (stronger exchange rates), other things equal, to a larger current account deficit, which has a contractionary effect on demand (exports & locally). Up to a point, this can be offset by cutting domestic interest rates. But if it is big enough, it can push the emerging markets into their own liquidity traps. In effect, the OECD can export its liquidity trap to the developing world via capital flows.This doesn't seem to be happening now, but it is something to watch for"

A liquidity trap in singapore?

then there is this article on the yen
http://krugman.blogs.nytimes.com/2010/09...t-the-yen/
which sells the notion that a higher exchange rates reduces trade flows and that there are lags in the effect of exchange rates on trade flows

and this is the chart for USD-SGD
http://sg.finance.yahoo.com/q/bc?s=USDSG...&z=l&q=l&c=
note that SGD trades against a weighted basket of currencies and it is unlikely that economy is affected by USD-SGD alone

these are pure personal speculations (2 cents) and not 'analyst' opinions. things may turn out very different from what is speculated here. caveat emptor

[brattzz]

don't think tat sg or asia will be in recession, as majority of US funds and europe funds has ran over to asia to ride the next 5 golden years in asia..

unless US and China go head to head, of cos! different stories!

[arthur]

I still recall a very visible head and shoulders pattern appeared in SPX not long ago. What happens was another charge upwards.

Frankly, I am taking these chart patterns with a pinch of salt nowadays.

Recession in SG? Not placing my bet on it. Couldn't really see another double dip coming though the Europe scare was pretty strong in May. However, sovereign defaults threats are still lingering out there, but governments seem to fully understand the seriousness of it this time round. Thus QE US and Euro occurred.

Short of a major war or another terrorist attack, think the double dip scenario wouldn't happen.

One very strong opinion I would like to share. The talk about emerging economies decoupling from developed countries is a total hogwash.
Every single time this is mentioned, the markets will prove wrong. As happened in 2007, in early 2010 and even now.
See the latest fashion of the month, the "currencies war" will again provide reasoning for a 2nd Great Depression, a double dip and the end of the capitalists.

[mrEngineer]

Short of a major war or another terrorist attack, think the double dip scenario wouldn't happen.

I have another opinion of the double dip and I think its coming soon. (Although I am always wrong.. lol)

First of all, the asset prices in asia are largely driven by ang moh's hot money and they are not stupid. They will have to withdraw one day to realise their profits. As to when they will withdraw, it will all corresponds to when USD will recover. I believe the current USD is in the process of pricing in QE2. After it is actually implemented, we should see USD recovering and stock markets will have another correction. Whether to the extent of double dip, I have no idea.

Secondly, any defaults by european countries or US states could signal a major loss of confidence and depression to set in.

In summary, I believe that entrepreneurship and business confidence drives gradual and long lasting uptrend in markets. Without these, markets are dog-leashed by the govt and it will take some time before we get out of this DEPRESSION.

Btw, I don't really believe in wars and terrorist attacks causing the market to plunge into deep recession. It would probably be a sharp drop and quick recovery thereafter when business resumes and damages are estimated.

[ag88]

2011 economic speculation continued:
(caveat emptor, this is pure speculation again, these are pure 2 cents comments and should not be deemed fit for any purpose, they could be deemed as noise if u like)

There is some similarity between the between the YEN-SGD movements between feb 1996 - may 1997 (may 1997 crash is remembered as the SEA asian financial crisis)

http://moneycentral.msn.com/investor/cha...kie=1&SZ=0

http://sg.finance.yahoo.com/q/bc?s=^STI&...&z=m&q=l&c=

SGD reached a high point against yen and continued strengthening against yen between feb 1996 - may 1997. In the mean time if you were to co-relate the strengthening of SGD against yen to STI behavior for the same period it is quite visible that STI trends gradually downwards while SGD gains strength (some what STI going into a weak bear market). The tipping point came in may 1997 when yen did a large reversal against SGD, the market crash that followed has been well remembered as the 1997 asian financial crisis). The crash at may 1997 is thus at least partially attributed to the yen carry trade reversal.

now fast forward to today 2010,
http://moneycentral.msn.com/investor/cha...CP=0&PT=11

USD reached an all time low against SGD and SGD apparently seem to continue strengthening against USD. This would create conditions for carry trade while perhaps the economic (in particular export) competitiveness of SG gets eroded gradually as SGD strengthen. If we deemed that USD-SGD may repeat the history between feb 1996 - may 1997, STI / SGX market may continue to trend sideways / or even gradual downwards, forming a weak bear market for a long time, say 1-2 years?

the danger would be that sometime in the future say 1-2 years away, USD made a large reversal against most non-US currencies including SGD. that may result in this prophecy coming true:
Mother of all Carry Trades Faces an Inevitable Bust
http://www.roubini.com/roubini-monitor/2...table_bust

[ag88]

the other piece which merits attention is this:
Chinese Real-Estate Bust Is Morphing Into a Slow Leak: Andy Xie
http://www.bloomberg.com/news/2010-09-26...y-xie.html

Andy Xie on China's Empty Apartments
http://www.roubini.com/emergingmarkets-m...apartments

I'll Tell You When Chinese Bubble Is About to Burst: Andy Xie
http://www.businessweek.com/news/2010-04...y-xie.html

if china govt overdo property cooling measures it may cause economic demand to fall reflexively that china goes into recession. This has a non zero impact around the region
http://en.wikipedia.org/wiki/George_Soros
Reflexivity, financial markets, and economic theory

Soros' writings focus heavily on the concept of reflexivity, where the biases of individuals enter into market transactions, potentially changing the perception of fundamentals of the economy. Soros argues that such transitions in the perceptions of fundamentals of the economy are typically marked by disequilibrium rather than equilibrium, and that the conventional economic theory of the market (the 'efficient market hypothesis') does not apply in these situations. Soros has popularized the concepts of dynamic disequilibrium, static disequilibrium, and near-equilibrium conditions.

Reflexivity is based on three main ideas:

1. Reflexivity is best observed under special conditions where investor bias grows and spreads throughout the investment arena. Examples of factors that may give rise to this bias include (a) equity leveraging or (b) the trend-following habits of speculators.
2. Reflexivity appears intermittently since it is most likely to be revealed under certain conditions; i.e., the equilibrium process's character is best considered in terms of probabilities.
3. Investors' observation of and participation in the capital markets may at times influence valuations AND fundamental conditions or outcomes.

"If men define situations as real, they are real in their consequences." - Thomas theorem

"Eventually, the US government will have to use taxpayers' money to arrest the decline in house prices. Until it does, the decline will be self-reinforcing, with people walking away from homes in which they have negative equity and more and more financial institutions becoming insolvent, thus reinforcing both the recession and the flight from the dollar. The Bush administration and most economic forecasters do not understand that markets can be self-reinforcing on the downside as well as the upside. They are waiting for the housing market to find a bottom on its own, but it is further away than they think."
http://www.investmentmoats.com/stock-mar...l-markets/

[Mister]

Technically, some of the counters are waiting for the last shoulder to form. In addition, there is no sign of a strong consolidation instead it seems like a short term rebound personally. I wouldn't dare to invest in any yet.