Market Insights & Seminars

Investment Alerts

Enjoy direct access to a wealth of insights and knowledge that will give you an edge in managing your financial matters. As part of our commitment to bring more value to your investments, here are some exclusive reports and market updates that may be of interest to you.

Greek drama unfolds

Greece has been in the news a lot of late. Right now, all eyes are on next month’s election, called after political parties failed to form a coalition government following botched elections earlier in May.

Voters were clearly unhappy with austerity measures insisted upon by the European Union (EU) and the International Monetary Fund (IMF) in return for funding provided to Greece previously, and their unhappiness resulted in no one party garnering the necessary majority to rule the country.

To top it all, now there is even talk of a possible “Grexit”, ie, Greece exiting the Eurozone following the next round of elections on June 17 2012.

What's happening in Greece?

Greece has already been in recession for four years. Greece’s spiralling budget deficit left it in a poor position to cope with the global financial downturn when it happened.

In May 2010, the EU and IMF provided 110bn euros of bailout loans to Greece to help the government pay its creditors. A second bailout of 130bn-euro was agreed earlier this year, with the condition that Greece agrees to implement austerity measures on the terms stated for the bailout deal.

As well as these two loans, which are made in stages, the vast majority of Greece's private creditors agreed to write off more than half of the debts owed to them by Athens. They also agreed to replace existing loans with new loans at a lower rate of interest.

However, the recent inconclusive Greek election had put these agreements back on the brink of collpase. Greek political parties are divided into two camps - one for the bailout and another against - which has made it difficult to form a coalition government. If the new leaders after the poll in mid-June reject the austerity measures, bailout packages may be withdrawn, and cause Greece to be the first country to exit from the 17-country currency union.

Another financial crisis?

The possibility of a disorderly dismantling of the Eurozone caused by Greece’s exit has caused investors to be concerned about a correction in markets. Investors are worried that the recent rush to withdraw cash from Greek banks may be seen in other countries. Globally, momentum appears to be moderating. Recent economic data from the U.S. indicate growth will not be robust but will continue at a moderate pace. In Asia, the bottoming of the Chinese economy might take longer than previously expected.

Although Greece’s exit would cause the market to be more risk averse, the impact will still be manageable as bond investors have already marked down the value of their Greek holdings. Greek debt is largely contained within the hands of the European Central Bank, Greek domestic banks and speculative investors such as hedge funds.

Thus, if the exposure could be ring-fenced, the damage of a default could be manageable. What matters most is whether or not Greece’s exit will be in an orderly manner.

Figure 1: Implication of June 17th election

For the Investor

The problems in Europe are unlikely to go away within a short period of time. It could be months or even years before Europe recovers. However, economies in other parts of the world are still seeing growth. In fact, spending by the emerging middle class is likely to continue to drive consumption with most of the spending likely to be driven out of Asia Pacific by 2030. This strong domestic consumption will also translate into faster growth rate in the region.

Asian corporations are also having stronger balance sheets with undemanding valuations. With more room to loosen monetary policies, central banks in Asia can stimulate the economy and drive the market should there be a need to. Indeed, investors should consider having exposure into Asia to take advantage of the faster growth momentum.

To benefit from the upside potential in Asia, investors can consider investing into both Asian equities and Asian bonds. One way is to invest is through Schroder Asian Income fund for the following reasons:

  • Reap potentially attractive payouts of 6%p.a., paid monthly
  • Capture the strong growth potential of Asia through both equities and bonds
  • Gain from an active asset allocation strategy which aims to maximize yield and total return in different market environments

For more information, please contact your Premier Relationship Managers on investment suitability and investment risk.

Important Information

Any opinions or views of third parties expressed in this material are those of the third parties identified, and not those of OCBC Bank.

The information provided herein is intended for general circulation and/or discussion purposes only. It does not take into account the specific investment objectives, financial situation or particular needs of any particular person.

Without prejudice to the generality of the foregoing, please seek advice from a financial adviser regarding the suitability of any investment product taking into account your specific investment objectives, financial situation or particular needs before you make a commitment to purchase the investment product. In the event that you choose not to seek advice from a financial adviser, you should consider whether the product in question is suitable for you.

A copy of the prospectus of the Schroder Asian Income (the “Fund”) is available and may be obtained from the fund manager or any of its approved distributors. Potential investors should read the prospectus for details on the Fund before deciding whether to subscribe for or purchase units in the Fund. The value of the units in the Fund and the income accruing to the units, if any, may fall or rise.

The investment objective of the Schroder Asian Income seeks to provide income and capital growth over the medium to longer term by investing primarily in Asian equities and Asian fixed income securities. The Fund may use or invest in derivatives.

No representation or warranty whatsoever (including without limitation any representation or warranty as to accuracy, usefulness, adequacy, timeliness or completeness) in respect of any information (including without limitation any statement, figures, opinion, view or estimate) provided herein is given by OCBC Bank and it should not be relied upon as such. OCBC Bank does not undertake an obligation to update the information or to correct any inaccuracy that may become apparent at a later time. All information presented is subject to change without notice. OCBC Bank shall not be responsible or liable for any loss or damage whatsoever arising directly or indirectly howsoever in connection with or as a result of any person acting on any information provided herein.

The information provided herein may contain projections or other forward looking statement regarding future events or future performance of countries, assets, markets or companies. Actual events or results may differ materially. Past performance figures are not necessarily indicative of future or likely performance. Any reference to any specific company, financial product or asset class in whatever way is used for illustrative purposes only and does not constitute a recommendation on the same.

OCBC Bank, its related companies, their respective directors and/or employees (collectively 'Related Persons') may have positions in, and may effect transactions in the products mentioned herein. OCBC Bank may have alliances with the product providers, for which OCBC Bank may receive a fee. Product providers may also be Related Persons, who may be receiving fees from investors. OCBC Bank and the Related Persons may also perform or seek to perform broking and other financial services for the product providers.

This does not constitute an offer or solicitation to buy or sell or subscribe for any security or financial instrument or to enter into a transaction or to participate in any particular trading or investment strategy. The proposed transaction(s) herein (if any) is/are subject to the final expression of the terms set forth in the definitive agreement(s) and/or confirmation(s).

The contents hereof may not be reproduced or disseminated in whole or in part without OCBC Bank's written consent.


Asset Allocation is Key in 2012

While Europe remains in the doldrums, things are looking up in the United States as economic data improve towards end-2011, boosting sentiments on Wall Street. However, the better-than-expected economic data may not be enough to offset concerns about Europe, which remains a key worry among global investors.

Given the continued uncertainty in the horizon, it is important for investors to reduce downside risks through prudent asset allocation. This means investing in a portfolio comprising asset classes with different correlations that could do relatively well, even in difficult market conditions. Allocating funds into different asset classes could also introduce inverse correlation into the portfolio that helps balance risk and return.

In view of the current investment climate, where market changes direction frequently, investors may reap more benefits when they diversify their investments through asset allocation by spreading their risks into a wide range of asset classes.

Why Asset Allocate?

Asset allocation is the process of placing your investment monies into different asset classes by balancing risk and return to create the optimal asset mix. The three broad asset classes are mainly equities, bonds and cash.

Allocation into each asset class generally depends on three major factors- an individual’s risk tolerance, investment objective and time horizon. The age of an individual may also affect his ability to take risk.

Asset allocation is important and may provide long-term benefits as there is no one single asset class that will remain the top performer for an extended period of time. It is also difficult to always accurately forecast the market direction, enter and exit the market, or pick winners consistently. Thus, over the long run, by having a range of asset classes, you can potentially get higher risk-adjusted returns.

For the Investor

To form the optimal asset mix, the characteristic of each asset class, such as their volatilities and correlations, must be determined. Changes to the allocation may also be required at times to reap higher returns. Thus, it may not be easy for an investor to create the asset allocation mix that would deliver the best risk-adjusted return and manage it over a long term period.

Therefore, one of the ways investors can achieve asset allocation is by investing in a multi-asset fund, where the portfolio manager has the expertise and ability to vary the asset allocation depending on market condition.

Investors can consider funds like Schroder Multi-Asset Revolution Fund, Blackrock Global Allocation Fund or LionGlobal New Target Return Fund for exposure into a wide range of asset classes and achieve potentially better risk-adjusted returns in the long-term.

For more information, please contact your Premier Relationship Manager on investment suitability and investment risk.

Important Information

The information provided herein is intended for general circulation and/or discussion purposes only. It does not take into account the specific investment objectives, financial situation or particular needs of any particular person.

Without prejudice to the generality of the foregoing, please seek advice from a financial adviser regarding the suitability of any investment product taking into account your specific investment objectives, financial situation or particular needs before you make a commitment to purchase the investment product. In the event that you choose not to seek advice from a financial adviser, you should consider whether the product in question is suitable for you.

Copies of the prospectuses of the Funds are available and may be obtained from the Fund Managers, or any of its approved distributors. Potential investors should read the prospectus for details on the Funds before deciding whether to subscribe for or purchase units in the Funds. The value of the units in the Funds and the income accruing to the units, if any, may fall or rise.

The investment objective of the Schroder Multi-Asset Revolution Fund is to achieve long term capital appreciation through investment directly or indirectly in quoted equities, bonds and other fixed income securities in global markets. The Fund will invest in multiple asset classes and will be comprised of an actively managed basket of equities, fixed income, property and commodities related securities.

The investment objective of the Blackrock Global Allocation Fund is to invest globally in equity, debt and short term securities, of both corporate and governmental issuers, with no prescribed limits. In normal market conditions, the Fund will invest at least 70% of its total assets in the securities of corporate and governmental issuers. The Fund may use financial derivative instruments for efficient portfolio management or to hedge market and currency risk.

The investment objective of the LionGlobal New Target Return Fund is to invest in an actively managed portfolio of debt securities and equity securities. This may be done through direct investment or through investment in other collective investment schemes managed by the Managers, as well as exchange traded fund. As the Fund aims to provide investors with capital preservation, the Managers may allocate a significant portion of the Fund in cash or cash equivalents during or in anticipation of adverse market conditions.

No representation or warranty whatsoever (including without limitation any representation or warranty as to accuracy, usefulness, adequacy, timeliness or completeness) in respect of any information (including without limitation any statement, figures, opinion, view or estimate) provided herein is given by OCBC Bank and it should not be relied upon as such.

OCBC Bank does not undertake an obligation to update the information or to correct any inaccuracy that may become apparent at a later time. All information presented is subject to change without notice. OCBC Bank shall not be responsible or liable for any loss or damage whatsoever arising directly or indirectly howsoever in connection with or as a result of any person acting on any information provided herein.

The information provided herein may contain projections or other forward looking statement regarding future events or future performance of countries, assets, markets or companies. Actual events or results may differ materially. Past performance figures are not necessarily indicative of future or likely performance. Any reference to any specific company, financial product or asset class in whatever way is used for illustrative purposes only and does not constitute a recommendation on the same.

OCBC Bank, Singapore Island Bank Limited, OCBC Investment Research Private Limited, OCBC Securities Private Limited and its respective associated and connected corporations together with their respective directors and officers may have or take positions in any securities mentioned in this report and may also perform or seek to perform broking and other investment or securities related services for the corporations whose securities are mentioned in this report as well as other parties generally.

This does not constitute an offer or solicitation to buy or sell or subscribe for any security or financial instrument or to enter into a transaction or to participate in any particular trading or investment strategy. The proposed transaction(s) herein (if any) is/are subject to the final expression of the terms set forth in the definitive agreement(s) and/or confirmation(s).

The contents hereof may not be reproduced or disseminated in whole or in part without OCBC Bank's written consent.


Battling Greece in order to save Europe

On 27thOctober 2011, European officials sent markets into a state of euphoria momentarily when they finally provided a more credible resolution to the region’s debt problems. It was slated to be the beginning to an end, but truth behold, more obstacles have been thrown up with Italian 10-year bond yields reaching a euro-era high. When will this niggling problem ever end? Will Europe eventually fall like a house of cards?

In the face of a constant barrage of problems, European officials have been hard at work in controlling the damage. Over the short term, the proposed measures of Greek debt write-down, bank recapitalization and increased firepower of Europe’s bailout fund were aimed at nipping the problem in the bud. However, longer term solutions such as greater fiscal responsibility and reduced debt-to-GDP ratios are still fundamental in resolving this problem.

How did the Europe debt problems come about?

In late 2009, sovereign debt concerns began growing on some nations with weakened economies after the global financial crisis. This had a crippling effect on countries which have been running on borrowed money.

Greece was thrown in the limelight when its credit ratings were downgraded, driving up their costs of borrowing. Despite attempts to remain solvent, the country had to request for a bailout eventually when it could no longer finance its debts.

Thereafter, worries surfaced over whether other nations may face similar fates, including contagion effects resulting from a Greek default.

For the Investor

In the past few years, we have seen the sub-prime crisis bringing markets to its knees. Subsequent to that, global economic recovery was hampered by the European sovereign debt crisis which has dragged on until today. In times of increasing market volatility where timing is of the essence, what should investors do? Diversification is even more crucial now in reducing investors’ risk exposure by having exposure to different asset classes.

Balanced funds that invest in both bonds and equities are suitable for investors to do just that. The bond investments in such funds reduce the downside risks, appealing to those who are wary of market bear runs. In a low interest rate environment, bonds generate regular income stream through the coupon payments. However, the flexibility to allocate funds into equities when markets go on a bull run allows investors to enjoy some potential upside as well.

Investors who wish to benefit from a blend in growth and safety, with exposure to investment grade bonds may wish to consider an Asian balanced fund like the newLionGlobal New Target Return Fund.

Investors can also consider using alternative investment strategies like Man AHL Trend. The fund can hold both long and short positions and has exposure to a wide array of asset classes, thus portfolio diversification may be achieved.

Please contact your Premier Relationship Managers for more information on investment suitability and risk of the funds.

Important Information

The information provided herein is intended for general circulation and/or discussion purposes only. It does not take into account the specific investment objectives, financial situation or particular needs of any particular person.

Without prejudice to the generality of the foregoing, please seek advice from a financial adviser regarding the suitability of any investment product taking into account your specific investment objectives, financial situation or particular needs before you make a commitment to purchase the investment product. In the event that you choose not to seek advice from a financial adviser, you should consider whether the product in question is suitable for you.

The investment objective of the LionGlobal New Target Return Fund aims to provide investors with capital preservation and a positive return over a five year investment horizon. The fund will invest in bonds and other debt securities, and stock and other equity securities, of companies primarily in the Asian region.

The investment objective of the MAN AHL Trend Fund aims to seek to achieve medium-term capital growth targeting double digit annualized returns for a target annualized volatility of around 15% over the medium term.

Copies of the prospectuses of the Funds are available and may be obtained from the Fund Managers, or any of its approved distributors. Potential investors should read the prospectus for details on the Funds before deciding whether to subscribe for or purchase units in the Funds. The value of the units in the Funds and the income accruing to the units, if any, may fall or rise.

No representation or warranty whatsoever (including without limitation any representation or warranty as to accuracy, usefulness, adequacy, timeliness or completeness) in respect of any information (including without limitation any statement, figures, opinion, view or estimate) provided herein is given by OCBC Bank and it should not be relied upon as such. OCBC Bank does not undertake an obligation to update the information or to correct any inaccuracy that may become apparent at a later time. All information presented is subject to change without notice. OCBC Bank shall not be responsible or liable for any loss or damage whatsoever arising directly or indirectly howsoever in connection with or as a result of any person acting on any information provided herein.

The information provided herein may contain projections or other forward looking statement regarding future events or future performance of countries, assets, markets or companies. Actual events or results may differ materially. Past performance figures are not necessarily indicative of future or likely performance. Any reference to any specific company, financial product or asset class in whatever way is used for illustrative purposes only and does not constitute a recommendation on the same.

OCBC Bank, Singapore Island Bank Limited, OCBC Investment Research Private Limited, OCBC Securities Private Limited and its respective associated and connected corporations together with their respective directors and officers may have or take positions in any securities mentioned in this report and may also perform or seek to perform broking and other investment or securities related services for the corporations whose securities are mentioned in this report as well as other parties generally.

This does not constitute an offer or solicitation to buy or sell or subscribe for any security or financial instrument or to enter into a transaction or to participate in any particular trading or investment strategy. The proposed transaction(s) herein (if any) is/are subject to the final expression of the terms set forth in the definitive agreement(s) and/or confirmation(s).

The contents hereof may not be reproduced or disseminated in whole or in part without OCBC Bank's written consent.



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