HK Equity Fund analysts believe the shaky start to 2014 for global stock markets stem from an apparent lack of direction given the huge run in equities during 2013.
A HK Equity Fund stock analyst said, “The Fed’s announced QE, treasury yields are rising and investors are asking themselves if there’s actually any room left to run in equities given how expensive some stocks are beginning to look. There’s got to be some investors looking at yields on the US 10 year and thinking ‘3% isn’t that bad, maybe I should take risk off the table and park it in bonds for a while.”
The firm suggests that the US Labor Department’s non-farm payrolls data, due on the first Friday of every month, could provide the direction investors seem to be lacking. A strong number over 200,000 could prompt market participants to bet that the pace of Fed tapering will quicken leading to a sharp fall in stock values.
Conversely, a weak number could raise expectations that the Fed may hold pat until a run of consistently strong numbers emerges later on in the year and that could drive equities higher.
“Our view is that equities are way ahead of themselves at these levels” said the HK Equity Fund analyst. “We would like to see a pullback which could take some of the heat of the market and enable investors to plan longer term rather than just dipping in and out to scalp profits”.
The firm says it does not expect any surprises in the data but maintains its view that quantitative easing is most likely set to continue until the end of 2014.
About HK Equity Fund
HK Equity Fund established a presence in Hong Kong in 1995. Today their Hong Kong office is their main hub in the Asia-Pacific region. All of HK Equity Fund’s business groups have operations in the city, making this their largest office in the region outside Australia. From Hong Kong they offer corporate finance and advisory, institutional cash equities and research, equity derivatives and structured products, debt financing and funds management, and environmental financial products, futures, metals OTC hedging and fixed income trading services.
HK Equity Fund Limited
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