My view of money in the market : burnt white paper cylinders, created by Chinese artist Qin Chong on display at Asia's art fair 'Art HK 12' in Hong Kong
After a positive year in 2012, with a solid increase in the
last half of the year – mirroring that in many other markets, the HSI started
the year not far off is 5 year highs.
January saw no change in the pattern but there was evidence
of some weakness in February.
However the second half of April saw a change in direction
and the index turned up for 4 weeks , although not quite reaching its January
peak.
But it was too much too quick and in late May a decline
started.
This decline became more pronounced in June and the index fell relatively rapidly to
levels not seen since quarter 3 2012.
But the period from late June into July saw a turnaround and
solid buying saw the index rise again into August.
August itself was a month of fluctuations as the market
failed o find direction due to a mix of positive and negative global
sentiments.
September was a different matter, with an increase in the
flow of funds to the market leading to a bit of a toppy bubble.
The next three months to the end of 2013 look more mixed, there
is likely to be no overall trend for a couple of months as the market seeks to
find direction.
Then December might bring a decline or at least inertia.
2014
The pattern for the first five months of 2014 is much the
same. There is not enough momentum to carry the market much higher and there is
a lot of confusing information that makes investors a little nervous.
May might see some uptick though as there is a burst of
enthusiasm.
June and early july are also positive times with increased
investment.
But the latter part of July is tricky, trade is reduced and
the index likely to fall.
But this is short lived as August looks to be an excellent
month with positive investor sentiment and a distinct preference for this
market.
It is back to a more mixed situation in September and
October as global events impinge again.
Over this period no trend is clear as positive factors are
damped out by caution.
There is a spurt at the beginning of November, even though
there is still pressure from global influences and more confusing statistics.
With opposing opinions December just sees switching of
preferred industries with no overall effect.
2015
The period March to May sees the index all over the place as
factors such as currency shifts, and technology issues offset an increase in
positive sentiment.
News and events come to a head around mid June and once
again we see shifts not in the index as a whole but in the value of the
constituents as a more cautious profile is assumed.
September, however, is a booming month. Unexpectedly
positive news causes short term speculative buying.
There is more of his initially in October but then some fear
sets in and the index reaches a peak. By the end of November negative news
causes falls.
December is this a mixed month as investors must take stock
of what has happened during the year and the index as a whole becomes less
attractive.
2016
The period February through to April is generally good. Most
of the time there is enthusiasm and a return to previous peaks. But there are
concerns in the background that mean
those peaks can’t be exceeded and might lead to problems later on.
May is a month of major funds flow. Structurally something
is occurring that will change the fundamentals of the index significantly going
forward. This might be a change in constituents or events that impact significantly
on those constituents.
June thus sees the end of a cycle dating back to 2004,
and there is a distinct feeling of
inertia – ‘where do we go from here’?
However the overwhelming influence is one of caution and
reluctant to take risks.
The balance in October and November is also negative, with
the biggest concern being the fundamental make-up of the market even with some positive PR.
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