Key themes for February

The correction we’ve seen since the start of the year has been compared to when tapering was first mentioned back in May last year.

The key difference is that the US markets were mostly unchanged last year, compared to this time round. The correction is affecting the US bourses.

The Fed’s gradual exit from the accommodative stance seems to be the macro theme that most investors have been focusing on. Another major theme has been the growth story.

Coming into 2014, global growth has been projected by researchers to be a lot better than 2013.The first crack appeared when China’s manufacturing showed that things were slower than what investors were ready for. 

The sell-off from EM currencies was the eye of the storm that resonated globally. Further pressure came from mixed US data, when the ISM dropped 5 points and job creation from corporates was less than forecast. 

It is clear that both the markets and investors are rebalancing from an exuberant end of 2013, to the reality of 2014 where growth in developed countries might not be as strong as expected. Thus, the key theme for this year is a shift towards quality assets from the perspective of stock and asset class selection.


The precious metal has enjoyed a strong start to the year. It had found a bottom in December 2013 and the $1200 level saw buyers coming in from both the ETF and physical front. Gold is currently consolidating and there is a need for it to break the $1280 resistance level to get to the next level.


The dollar-yen pair is the key currency that traders are watching. It is an indicator for two opposing central banking policies – the Fed’s removal of stimulus and BOJ’s accommodative stance remaining in place. Their efforts to stoke inflation and weaken the yen would make this currency an interest for investors.


Singapore’s economy showed a contraction in GDP in Q4 last year and retail sales have been on a decline. Comparing Singapore  with the rest of the region, it is a marked slowdown from a fundamental aspect. This is reflected in the weakness of the SGD, which is in line with it testing a key 1.28 level. This is a movement worth watching as an indication of the underlying economy.

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