A two-month global equity rally that has added US$8.8 trillion to stocks may continue in the short term as risk aversion declines and investors overreact to improving economic data, CLSA Ltd’s Christopher Wood said.
In the longer term, buyers of US shares are likely to suffer as the prospects of a swift recovery dim, Institutional Investor’s No. 1-ranked strategist wrote in a report. Asian and emerging market stocks, especially Taiwan, have the potential to become the next asset bubble, he said.
“The risk will continue to be that investors will interpret improving month-on-month data more bullishly than is really justified,” Wood wrote.
The “fundamental view remains that growth will disappoint in the US,” he wrote.
Taiwan, which is opening up to investment from China, has the “greatest potential” for an asset bubble with “seemingly stupid equity valuations,” Wood said.
Taiwan’s TAIEX index is the second-best performer in Asia this year behind China.
Japan, with national debt more than double the size of its economy, could be the first country to experience hyperinflation as a result of ballooning deficits, he said. Thus, investors should hold property that will benefit from such inflation.
Wood predicted in 2003 the explosion of mortgage securitization in the US would lead to a boom and bust for the housing market. In September 2007, he began recommending investors sell banks in the US and Europe.
The MSCI World Index of equities in 23 developed nations has soared 34 percent since March 9. The MSCI Emerging Markets Index has rallied 46 percent in the same period.
Wood’s stance echoes that of investor Marc Faber, publisher of The Gloom, Boom & Doom Report. Faber said in an interview with reporters on Wednesday that the deficit and monetization policies of governments and central banks around the world will lead to inflation, making equities and hard assets such as gold and agriculture more attractive than bonds.
The US Federal Reserve has doubled the size of its balance sheet in the last year to US$2.2 trillion as it prints money to purchase assets such as mortgage backed securities and government bonds. Government and central bank spending and guarantee pledges in the US soared to US$12.8 trillion as of the end of March, a level nearing the nation’s annual economic output.
These actions should benefit risk appetite in the near term, though they may eventually lead to the collapse of the dollar, Wood said.
“The inevitable long-term consequence of this reluctance to allow failure will be the discrediting of the fiat paper currency system as public sector balance sheets are finally totally discredited along with so called government guarantees,” Wood said.
SEMICONDUCTORS: The German laser and plasma generator company will expand its local services as its specialized offerings support Taiwan’s semiconductor industries Trumpf SE + Co KG, a global leader in supplying laser technology and plasma generators used in chip production, is expanding its investments in Taiwan in an effort to deeply integrate into the global semiconductor supply chain in the pursuit of growth. The company, headquartered in Ditzingen, Germany, has invested significantly in a newly inaugurated regional technical center for plasma generators in Taoyuan, its latest expansion in Taiwan after being engaged in various industries for more than 25 years. The center, the first of its kind Trumpf built outside Germany, aims to serve customers from Taiwan, Japan, Southeast Asia and South Korea,
Nvidia Corp chief executive officer Jensen Huang (黃仁勳) on Monday introduced the company’s latest supercomputer platform, featuring six new chips made by Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), saying that it is now “in full production.” “If Vera Rubin is going to be in time for this year, it must be in production by now, and so, today I can tell you that Vera Rubin is in full production,” Huang said during his keynote speech at CES in Las Vegas. The rollout of six concurrent chips for Vera Rubin — the company’s next-generation artificial intelligence (AI) computing platform — marks a strategic
Gasoline and diesel prices at domestic fuel stations are to fall NT$0.2 per liter this week, down for a second consecutive week, CPC Corp, Taiwan (台灣中油) and Formosa Petrochemical Corp (台塑石化) announced yesterday. Effective today, gasoline prices at CPC and Formosa stations are to drop to NT$26.4, NT$27.9 and NT$29.9 per liter for 92, 95 and 98-octane unleaded gasoline respectively, the companies said in separate statements. The price of premium diesel is to fall to NT$24.8 per liter at CPC stations and NT$24.6 at Formosa pumps, they said. The price adjustments came even as international crude oil prices rose last week, as traders
Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), which supplies advanced chips to Nvidia Corp and Apple Inc, yesterday reported NT$1.046 trillion (US$33.1 billion) in revenue for last quarter, driven by constantly strong demand for artificial intelligence (AI) chips, falling in the upper end of its forecast. Based on TSMC’s financial guidance, revenue would expand about 22 percent sequentially to the range from US$32.2 billion to US$33.4 billion during the final quarter of 2024, it told investors in October last year. Last year in total, revenue jumped 31.61 percent to NT$3.81 trillion, compared with NT$2.89 trillion generated in the year before, according to
RSS