Another Week of Crisis Trading

From the markets in Asia and Europe today we can clearly see this will be yet another crisis week of trading, but do not go short right now.

The level of volatility in the market is very high, markets are oversold already and a substantial rebound is likely to follow substantial falls.

The remaining safe haven markets (gold, Asian currencies, Asian fixed income) began to unravel 3 weeks ago and today we have seen more of that action.

These safe havens have been doing well for the past two years, their fall may be a sign of total capitulation, signaling that risky asset markets could find some near term support in coming weeks as the more speculative flows are flushed out.

If it happens it will lower the growth outlook for the Europe and the World.

But equally as relevant is the fact that the support level to huge rebounds are now lower given the amount of cash on the sidelines.

Emerging Asian equities have underperformed U.S. stocks since the August falls, with the MSCI Asia ex-Japan index now nearly 25 percent below its 2011 high in April and Wall Street's S&P 500 down 15 percent from its peak in May. These economies have a lot to gain from the short term rally in the USD and this is where investors should be looking to place some of their money.

If the massive public debt in Europe and the USA is not brought under control in the short term, taxes to fund bail-outs will rise to such a level that the western world will resemble the communist sates of the 1970's.

Like the USA, Europe in general is suffering from and over supply of politicians, and under supply of conviction to the chosen path to extract Europe from the debt crisis.

The paradox is, Corporations are producing solid earnings at the cheapest P/E level in decades.

So what do investors do?

Buy Emerging Markets

China's imports rose to a record and exports grew more than forecast last month, signaling resilience in the World's 2nd biggest economy as the US and European recoveries struggle.

China is the World's biggest exporter and the largest contributor to Global growth. HCM estimates that the Nation's expansion will stay just under 9% in Q-4 from 9.6% in 1-H.

They also forecast the economy will expand 9% for the full year, 5 times the pace of the US and EuroZone.

Find out more about trading stocks in Asia, Click Here

China's inbound shipments rose 30.2% from a year earlier to US$155.6-B, the Customs Bureau said on its website Friday.

That growth exceeded the estimates of all 29 economists surveyed. Exports also rose a more than expected by 24.5%, posting a trade surplus of US$17.76-B.

The data says that the World's biggest consumer of energy and metals is weathering the sovereign debt crisis in Europe and weakening consumer sentiment in the US.

ASEAN is one of the best places in the world to be invested given the sovereign debt issues and political crisis in the Western World. Heffernan Capital Management, established experts in the field of ASEAN Equities, has suggested gaining defensive exposure in Asia is important for all portfolio's.

While ETF's are an attractive and easy way to gain some exposure they do tend to trade at a discount to the underlying assets during market sell offs on Wall St.

Heffernan Capital Management recommend that investors look at the following sectors, (a selection from the HCM wider portfolio) to contact Heffcap, Click Here


Coal and Metal Miners.


Thailand is facing some specific political risks, however, Agricultural exporters and Insurance companies are viable investments.


Palm Oil Stocks


Banks and Oil Rigg Builders


Investment Houses





Asia's economic growth will likely be hurt by the slowdown in the United States and Europe, but the impact should be minimal, the Asian Development Bank said on Tuesday.

ADB chief economist Changyong Rhee said the development institution is expected to slash its economic growth forecast for Asia's developing economies this year and next.

"Definitely, it's going to slow down and we have already started to see some slowdown in exports from Asia," he told journalists in Singapore.

"But having said that, I believe that the current situation at this moment is not like the crisis in 2008. We believe that Asian economic growth at this moment is robust and resilient enough to cope with a slowdown in the advanced economies."

The Manila-based ADB in March forecast developing Asia would grow 7.8 percent this year and 7.7 percent next year.

Rhee said however the ADB may have to revise its projections "slightly downwards" when it releases its latest outlook in September.

"As long as [the economic slowdown] is not like 2008, Asia has more resilience to continue its growth momentum and still remain as an engine of growth for the global economy," he said.

Rhee added that another "full-blown" global recession such as the one that happened in 2008 was "very unlikely."

Asia rebounded faster than the rest of the world after the 2008 recession which was sparked by problems in the US housing market and lasted well into 2009.

Rhee also said that the ADB will raise its inflation target this year above its earlier forecast of 5.4 percent after consumer prices rose higher than expected in the first six months.

Many have turned to Gold

The Gold price last Friday marked its largest weekly rise since November 2009, made after a weak US labor market report renewed fears about the health of the World's biggest economy, fueling safe-haven buying.

Other Metals are also a bargain

Copper declined for a second day to the lowest level in almost three weeks as Europe's debt crisis reduced demand prospects for industrial metals. Three-month delivery copper on the London Metal Exchange traded at $8,716 a metric ton, after falling as much as 1.4 percent.

Metals fell even as data showed China's imports surged to a record and lending rebounded, signaling strength in demand by the world's fastest-growing major economy. Shipments from abroad jumped 30 percent and new local-currency loans were a more than forecast 548.5 billion yuan ($86 billion), government reports in the past two days showed.

US payrolls growth has slowed to a trickle, as employers hired the fewest workers in 9 months, frustrating hopes that economic growth would pick up pace in 2-H of the year.

Instead, some analysts and investors, we here at HCM among them, began speculating in earnest about how soon the next US government stimulus plan might be put up in the United States, triggering more safe-haven purchases.

Warren Buffett Buys Equities

Warren Buffett said his Berkshire Hathaway Inc. spent about $10 billion acquiring stocks since February including $5b in Bank of America.

"We bought some equities that we probably spent $4 billion on," Buffett told Bloomberg Television's Betty Liu on the "In the Loop" program today, in an interview from Sun Valley, Idaho. "They're in the space of common stocks."

Buffett, 80, is overseeing changes in Omaha, Nebraska-based Berkshire's portfolio after a switch in investment managers last year. He's also wagering on continued economic expansion, even as the U.S. unemployment rate climbs. Buffett said he doesn't expect a second recession.

"I would bet very heavily against that," Buffett. "How fast the recovery will come, I don't know. I see nothing that indicates any kind of a double dip."

Most Importantly be well hedged.

The Paris-based international economic organisation of 34 advanced nations OECD warns that disruptive shocks are likely to occur with increasing frequency and cause greater "economic and societal hardship" to the international community.

These types of reports serve as a reminder that investors must be vigilant as to their exposure, diversity and hedge positions, for those who need help contact

Pandemics, cyber attacks, financial crises, civil unrest and geomagnetic storms are the top 5 in what the OECD paint as a reason for government and people to be prepared.

The new OECD report, entitled "Future Global Shocks", says the potential for wide-ranging and destructive consequences transcend national boundaries, given the increased inter-connectivity and the speed with which people, goods and data travel between various countries.

Shayne Heffernan

Shayne Heffernan oversees the management of funds for institutions and high net worth individuals.

Shayne Heffernan holds a Ph.D. in Economics and brings with him over 25 years of trading experience in Asia and hands on experience in Venture Capital, he has been involved in several start ups that have seen market capitalization over $500m and 1 that reach a peak market cap of $15b. He has managed and overseen start ups in Mining, Shipping, Technology and Financial Services.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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