Wednesday, 22 January 2014

Reviews and all that

I've just completed 3 large posts reviewing the outcomes of my predictions for 2013.

This time, as the forecasts were formatted in a different way, it was much easier than before to review each statement individually, so that is what I have done.

Once again I'm pretty pleased with the results. Indeed I am happier than I expected to be. I had my doubts whether I had my "predictive zone cap" on enough this time but apparently I did. 

Of course, there were the usual batch of 'not a lot'  happened places. There isn't much that can be done about this except to stop bothering to look at these places and concentrate on smaller but more interesting ones. For the moment I plan to stick to the G20 + a few important outliers though.

Given the very precise presentation of the results, it is also worth reminding everyone that these forecasts cannot be perfect to the month as they are longer term forecasts - designed to see trends over 3 months and longer and won't necessarily pick up  short term issues, though if these have enough general significance they will probably show up.

So now it is back to 2014 and I will be looking again at the period March to May in particular as it should be quite interesting.........................

Asia review 2013


Asia review 2013

China

Ok – though there was insufficient   drama to test this one

Month
Prediction
Outcome
 
No drama expected
 
Feb
Surprises around leadership
Not a surprise but an event as Xi Xinping was confirmed as president
Mar
Nothing too dramatic
Nothing of note
Apr/aug
Uneventful. Possibly some image related events. Talk of slowdown not an actuality
Weak q1, less so in q2. Some worries about stats but not too negative. Short term liquidity crisis
Sep
Optimism
Growth picked up in 3rd quarter – first time for 3 quarters
Oct
Dynamism
Inflation might be rising as economy firming more than expected
Nov-Dec
Some darker elements and perhaps economic issues to confront
Late Nov – issues with Japan air
Govt revealed significant ( biggest fro 3 decades) economic and social reforms in Nov. Inflation better

 

Renminbi

There were few events to match but what I really identified was the creeping strength

Month
Prediction
Outcome
Pre mar
N/a gone
N/a
Mar-jun
More transactions, talk of what to do with peg. But only talk
Appreciated
Liquidity support on and off
July-Aug
Step forward re peg etc but inflationary concerns
Appreciated
Oct-Nov
Stalling of planning. More liquidity
Appreciated. PBOC admitted that liquidity growth in the banking system has accelerated in recent months as capital inflows had risen notably,
 Plans for more currency market liberalisation
Dec
Quiet but with expectations
Another liquidity boost. Ban on use of ‘cash crunch’
 Appreciated

 

 

 

Shanghai Comp

Not the best forecast. Though not terrible. Could do better 

Month
Prediction
Outcome
Pre Mar
n/a
n/a
Mar
Volatility but less negative so upwards
Volatile but down
April
Consolidation – new trend
consolidation
May/June
Mixed but very little pullback
Up in May , but big fall ( nearly 20%)June
July/aug
More consolidation into new trend
July consolidation – finding bottom, August rising again
Sep
Volatile – external effects
Big rise – peak and some fall back
Nov
Trade increases so more volatile
Bit more variation but not huge
Dec
No change to underlying. More interest from investors
Pull back nor rising above Sept peak

 

Japan

Ok – but again not enough to test in most cases

Month
Prediction
Outcome
Pre Mar
n/a gone
n/a
Mar
Quite stable
Nothing much
April-Jun
Focus back on international arena- effect of internal changes small as yet. More need for action in June
Agreement between Japan and NATO
Plan to introduce massive liquidity
July/Nov
Nothing significant in terms of obvious change
Growth more or less on track for Q2  Oct - government agreed use of part of the ( already planned-Jan) stimulus package,
Dec
Increased protectionism and nationalistic elements. Some lessening of long term inertia
Q3 weaker than expected. Abe’s visit to the war-related shrine  last month  revived international concerns that he might be a dangerous nationalist.
 China disagreement. Increased concerns over the damaged reactors

 

Yen

Quite good, except last month

Month
Prediction
Outcome
Pre Mar
Gone
N/a
Mar
Relaxation of recent trend
Quite stable vs. Sterling
April
Volatility
Liquidity Plan caused rapid weakening
May/june
Focus moves elsewhere – yen might even rise
Weakened after liquidity announcement , but then didn’t really do much till June’s slight rise vs sterling and bigger vs dollar.
Jul
More likely to see currency movements . Turning point
This then reversed as quickly
Jul-Nov
Gradual decline in Yen to end of year
It traded within range against the dollar for the whole period– though the trend was weakening
Dec
Trend slackens off
The Yen weakened again in the last month- did not slacken off until Jan 2014

 

Nikkei

Spotted the April event which was key. And got the turning points. Didn’t always get direction particularly at the end of the year again.

Month
Prediction
Outcome
Pre Feb
n/a
n/a
Feb/mar
Conditions continue, more caution and uncertainty though
Rises continued with some flattening off in late March
Apr/May
Complicated - return to weakness of earlier years. But boost due to monetary shifts
Big increase once BOj announced stimulus . Carried on into May, Huge gain
June
Turning point. May even have shocks
Reversed mid may to mid June. Then found bottom
Jul- Aug
Stability – surprising- flat
Quieter – some decline but not rapid in late Jul and Aug
sept
Reactivation of earlier conditions
Rose again
Oct-Dec
Fluctuations no trend
Fluctuations in oct and early Nov – no trend but last 6 weeks showed rise again  to long term peak

 

I’m not commenting on the rest as they were only 1-3 months forecasts and with a potential margin of error of 1 month either side ( as these are long term rolling predictions not short term ones) not much can be read into the results . Though the results were generally good.

 

Hong Kong $

See my comments on Reminmbi

Month
Prediction
Outcome
Pre Oct
N/A
N/A
Oct
Little change
Peg celebrated 30 years but not without detractors
Nov-Dec
Perhaps interesting stats and peak of bubble
Recent SWIFT data shows that RMB usage in traditional trade finance grew from an activity share of 1.89% in January 2012 to 8.66% in October 2013, propelling the RMB to the second most used currency in this market

 

 

 

 

Hang Seng

Month
Prediction
Outcome
Pre Oct
n/A
N/A
Oct-Dec
Mixed – struggle to find direction, maybe even decline in December
Index did struggle to find direction- rising a bit and falling in November but finally doing nothing in the quarter

India

Month
Prediction
Outcome
Pre Oct
N/a
N/a
Oct-Dec
Slight increase in hardship for people and opposition of govt. Maybe some protests
The $1.8-trillion Indian economy suffered its worst slowdown in over a decade with growth below 5 per cent for four straight quarters, amid threats of a ratings downgrade. The middle classes were feeling the pinch
 
Protests were against Us arrest of a diplomat

Rupee

Month
Prediction
Outcome
Pre Oct
N/a
N/a
Oct-Dec
Looks shaky in the final quarter, but more credibility for the bank, more caution in policy, and  change in foreign perspectives means Rupee looks more secure at this time
 
A couple of rate rises by the New Governor  that would help the financial stability and protect against Fed taper

Sensex

Month
Prediction
Outcome
Pre Oct
N/a
N/a
Oct
More uncertainty and negative sentiment than Sept
The index rose in Oct but less than Sept and was tailing off
Nov-Dec
less volatility but no direction, the upside is weak but the downside in wait and see mode.
 
Index was flat from Oct to December and volatility declined over the period too

 

Pakistan

Month
Prediction
Outcome
Pre Oct
N/a
N/a
Oct
continued on-going difficulties this may well be the pattern for some while. Still things seem to be kept in check
Level of violence lower than earlier in year but it was a bad year
Nov-Dec
restrictions that look like they might relate to border issues  - possibly indicating military presence.
In Nov A new hardline Taliban leader claimed it was time to be more aggressive

 

 

Indonesia

Month
Prediction
Outcome
Pre Sep
N/a
n/a
Sept –Oct
once again a noticeable weakness in economic statistics and social welfare matters are to the fore. Environmental issues are also likely to be highlighted
Worst growth in 4 years announced for 3rd quarter in early November
Nov
 better for those in power, with a  sense of calm control. But financing and investment issues are critical – perhaps caused by external events, and there may be earthquake or related activity.
Indonesia tough on Australia due to spy allegations
No earthquake – just a volcano Mount Sinabung
Dec
people become more nationalistic and less focused on trade.
Indonesia announced on Tuesday it will allow increased levels of foreign investment in the country's power plants, advertising, and pharmaceutical industries

 

Rupiah

Month
Prediction
Outcome
Pre Oct
N/a
N/a
Oct
Although the decline is likely to even off there is still a lot of pressure on the currency.
 
Better in October but
 
 
 
Nov-Dec
The picture is slightly better in the final two months of the year with the possibility of supporting measures being more successful
Currency fell in November though not in December . The Bank stated that it was undervalued and that they did not intend to change policy. But a swap arrangement with Japan was agreed

 

 

South korea

Month
Prediction
Outcome
Pre May
N/a - gone
n/a
May
No let- up but a lull in threat from NK
See below NK for the conflict and here for economy
June-Aug
A very powerfully positive time for the country economically but also could mean engagement in conflict. Good for leadership
July - beat expectations by posting its fastest growth rate in more than two years
Sep-Dec
some difficulty in creating a clear sense of  stability, confusion but  profile of country high. Economically very promising
gradual recovery path on the back of fiscal and monetary stimulus.The Korean economy grew 1.1 percent on-quarter in the third quarter, topping market expectations, but there was worry about global slowdowns affecting exports
signed the Korea-Australia Free Trade Agreement (KAFTA) on December 5, 2013

 

North Korea

Month
Prediction
Outcome
Pre Apr
N/a gone
n/a
Apr
will be more displays of power by the country. Missile tests will go ahead
Situation ongoing, still building
May- aug
Escalation esp 10th May and June and late June
May 18th-20th missile tests, plans for talks  with SK in june broke down, but eventually plans for 6 party talks
Sep-Oct
More muted - dissipating
Hotline restored, situation better  though October 8, 2013, North Korea prepared its army and warned the United States of a "horrible disaster
Nov- Dec
Prob leader more confident so calmer but could mean success in war
Nov- Dec Various other threats and propaganda against SK
Late Dec – purge against internal threats

 

Australia

Month
Prediction
Outcome
Dec
Some pressure on Govt – not too significant
Australia's budget deficit may last for a decade if urgent "remedial action" is not taken to improve the country's finances, its government has warned.
Heatwave