Invest Positively

Just a day after Olam’s stock was sharply sold down following a critical report from CLSA, at least two investment houses have come out to say that the stock of the commodity trader was dumped by a market which did not understand its business.

Setbacks are the rule rather than the exception when it comes to trading.

However, Citi Asia Pacific’s head of markets Rodrigo Zorrilla believes that the recent outflows from emerging market funds to the developed world to be a temporary ‘rebalancing of risk and portfolio’, rather than a long-term trend.

The recent outflow of funds from Asia and back into developed markets is just an underperformance cycle that is unlikely to signify the end of the bull run for funds focused on the emerging region, said Todd Martin, Societe Generale Corporate and Investment Banking’s Asia equity strategist.

As more Chinese companies trade on U.S. stock exchanges, investors are increasingly suing them for securities fraud in U.S. courts -- and slamming into a host of legal and bureaucratic barriers.

An investment theme that is getting aired more frequently this year is to favour developed markets over emerging markets. Did BRICs really fall out of favour so quickly?

Lenders under pressure from savers, central-bank regulators

It is a fact of life that when momentum shifts and liquidity drains from a market, no amount of talk about valuations still being cheap or earnings still being compelling, or fundamentals being unchanged, will get people to buy. Ah, for the good old days of 2009 and 2010 when such talk did in fact have its intended effect.

A Deutsche Bank-led consortium has acquired a majority stake in Singapore offshore chartering and shipbuilding company Jaya Holdings from a private equity firm for $202.6 million.

Suddenly the battle to bring inflation under control is looking a lot more urgent. On Tuesday, the People’s Bank of China announced an increase in interest rates. The latest rise was the third since October last year, and came just weeks after the mainland authorities instructed banks to lock away a greater proportion of their deposits as reserves.

It is curious that mainland companies listing in Hong Kong enjoy more latitude in making board appointments here than at home. If the stock exchange has its way, that will change by the end of next year, when at least one third of a firm’s directors will be independent, bringing the city into line with the mainland, though still not with Singapore, the United States and Britain. The exchange also wants companies to ensure that all directors, including the city’s best-known tycoons, have eight hours of training every year, and to limit the number of boards a person can serve on to avoid them spreading themselves too thin.

‘Very overvalued’ over the next 18 months: RBS

Nouriel Roubini, the New York University professor who predicted the credit crisis, said China and other emerging markets risk a ‘hard landing’ as they start raising interest rates to fight inflation.

The Year of the Rabbit looks set to follow in the footsteps of the tiger, bringing some good moves for the economy but danger, too, as the dragon gets closer.

Intuitively, most investors would know that an illiquid stock is riskier than a liquid one and, all other things being equal, should therefore command a lower price.