Thoughts on the stock market

World Cup fever
Its post world cup. Germany is cheering while Argentina licks its wounds as the world best player (Leo Messi) missed out on his crowning glory as the legend.

The german team is an amazing one. The destructive force that swept aside semi-finalist Brazil 7-1 was by no means a fluke. It was a careful planning of over 10 years of german youth academy. How the Bundesliga paired up with a long term government plan of training up world class youth talent that resulted in players such as Mesut Oezil, Sami Kheidra, Thomas Mueller and Toni Kroos.

Now you may ask me, what has soccer or Germany winning the world cup has to do with the stock market?

One word: Foresight 
Germany has long been at the forefront of engineering. When you think German, you think quality, you think goods that last perpetually forever. When you think of their companies - Siemens, Bosch, Volkswagon, Mercedes Benz, Audi etc. You find a very high quality product at a reasonable cost.

The German economy remains a testament to what makes a good company - strong balance sheet, a good product that people want, good quality, good management, prudent policies etc.

Now for the equity markets.

Here's what I believe is going to happen in the next 6-12 month horizon. The Fed tapering is in October. Singapore property market is going to remain a tad bit bearish (between 15-25% correction is still on the cards). It pays to note that the USA equity market is rather frothy at the moment with values at an all time high with volume falling in addition to tech IPOs like Alibaba about to wipe out a lot of liquidity from the market.

On the Asian markets, we see unclear direction as to what will happen. While the markets look slightly undervalued, there is looming macroeconomic risk with a possible Russian war and the very fact that this bull run is approaching a long period of little or no correction.... That being said, I believe a reasonable equity allocation of 30-50% for the next 3 months would be prudent. Notable stocks that I owe/looking at include:

1. Gallant Venture - Likely to benefit from the increased attention on Bintan, Batam assets paired together with a new indonesian president (Jokowi would be very good for business) - Current Price 0.33
2. OUE C Reit - Likely to benefit from the recent run up in commercial office rental revisions and other REITs movement. Trading below book value and at reasonable dividend yield of 7%. Current Price 0.80
3. Yanlord Land - China has undergone significant correction in the property market. Seemingly this developer still has a strong sales record within the past 2 years. In addition to Peter Lim and Kuok Khoon Hong's stake in the company. This company has a strong branding and strategic location placing that makes its company well valued. Also notable is that Capitaland and CDL (through First Sponsor Group Limited) are seeing the potential in china. Think theme - mass urbanization and affluence growth. Current Price: 1.13