Interest Rates Trend

VALUEPICK · 1 Interest Rates Trend Thu Jun 04, 2015 1:26 pm

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Just like other developed countries South Asian countries such as Sri-Lanka and India are keeping their interest rate low.

http://www.france24.com/en/20150602-indias-central-bank-cuts-key-interest-rate-725

India's central bank cuts key interest rate to 7.25%

VALUEPICK · 2 Re: Interest Rates Trend Fri Jun 05, 2015 11:33 am

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Bangladesh is also the same.

http://www.observerbd.com/2015/04/24/85214.php

Move to reduce interest rate to single digit

Announcement in next budget proposal likely

VALUEPICK · 3 Re: Interest Rates Trend Thu Jun 11, 2015 10:36 am

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http://www.businessinsider.com.au/new-zealand-cuts-rates-june-10-2015-6

New Zealand just cut rates and now the kiwi is getting crushed

VALUEPICK · 4 Re: Interest Rates Trend Fri Jun 12, 2015 3:59 pm

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After IMF, World Bank is the latest to urge Fed to hold rates until 2016. Even if fed increase interest rates most probably in 2016 or 2017 it will be only at a gradual pace after an initial increase. In other worlds it will be cautious approach. The Fed has stated that the benchmark interest rate will remain low for a considerable time after the central bank ends the bond-purchase programme. Those days there were panic in global stocks markets due to this end of bond purchase programme. Nothing happened to global bull markets.

investcsesl · 5 Re: Interest Rates Trend Fri Jun 12, 2015 5:14 pm

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VALUEPICK wrote:After IMF, World Bank is the latest to urge Fed to hold rates until 2016. Even if fed increase interest rates most probably in 2016 or 2017 it will be only at a gradual pace after an initial increase. In other worlds it will be cautious approach. The Fed has stated that the benchmark interest rate will remain low for a considerable time after the central bank ends the bond-purchase programme. Those days there were panic in global stocks markets due to this end of bond purchase programme. Nothing happened to global bull markets.

VALUEPICK, this is very interesting. If the FED rates remain unchanged during 2015 we can see a bull market at the latter part of this year.

But I think already pressure has been built up with FED in lifting the rates as per below article.

http://www.marketwatch.com/story/the-fed-fears-lifting-interest-rates-ex-insider-says-2015-06-11

'An expert who’s been involved in internal debates at both the Federal Reserve and the European Central Bank says the U.S. central bank is already behind the curve in lifting interest rates.''

VALUEPICK · 6 Re: Interest Rates Trend Sat Jun 13, 2015 10:08 am

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investcsesl wrote:

VALUEPICK wrote:After IMF, World Bank is the latest to urge Fed to hold rates until 2016. Even if fed increase interest rates most probably in 2016 or 2017 it will be only at a gradual pace after an initial increase. In other worlds it will be cautious approach. The Fed has stated that the benchmark interest rate will remain low for a considerable time after the central bank ends the bond-purchase programme. Those days there were panic in global stocks markets due to this end of bond purchase programme. Nothing happened to global bull markets.

VALUEPICK, this is very interesting. If the FED rates remain unchanged during 2015 we can see a bull market at the latter part of this year.

But I think already pressure has been built up with FED in lifting the rates as per below article.

http://www.marketwatch.com/story/the-fed-fears-lifting-interest-rates-ex-insider-says-2015-06-11

'An expert who’s been involved in internal debates at both the Federal Reserve and the European Central Bank says the U.S. central bank is already behind the curve in lifting interest rates.''

investscsesl

We have to wait and see.

Interest rate alone will not change the direction of bull market. There are other factors as well. Main reason for the recession and bear market were the result of higher energy prices, a worldwide credit crisis and a general crisis of investor confidence, not the result of higher interest rates. Therefore, global policy makers took lot of measures such as quantitative easing, supporting financial institutions, and loosening credit market etc to lift the global economy and stock markets globally. In some point USA will start to lift their interest rate most probably in 2016. When fed start to raise interest rates, prices of commodities such as gold and grain will go down further. I am bearish on gold and bullish on emerging commodities mainly commodities not link to derivatives like tea.

If we analyse global markets during last six years, at different situation there were different types of opportunities. It will be same in the future. Media made noises on end of bond purchase programme, political crisis in Pakistan, Greek crisis, slow growth in China, Euro crisis etc. So there were volatility and stocks sell off during last couple of months and years. Those types of things created opportunity for intelligent investors in those markets. Still stock investors are enjoying their return in global markets. Their stock market didn’t die.

When Fed starts to raise their interest rates in a slow phase, there will be another opportunity for intelligent investors in other areas from 2016 onwards. Market and industry cycle will continue. I believe in a higher fed interest rate environment some export sectors like tea sector in Asia also should benefit.

It was the USA and Europe which kept record low interest rates during last couple of years. As a result of this and few other factors currencies such as AUD and NZD went up to the roof and became two of the extremely overpriced currencies in the world. They are depreciating against other currencies now. If I am correct one positive factor for Sri-Lankan rupee is: it already devaluated when US dollar was trading around Rs.113/115 levels. After devaluation it shot up to Rs.137. Now it is trading around Rs.134 levels against one US dollar. Actually rupee value has gone down. Now Asia pacific region are maintaining lower interest rate environment. So their asset prices including stocks prices will go up further. We can see reverse of interest rate trend most probably in 2018 onwards in Asia pacific region if situation improve in some developed countries in this region. On the other hand USA could raise their interest rate before others most probably in 2016. Sometimes they may start to raise interest rates toward end of this year. That also may be gradual step by step process as still global economies are trying to come out of their economic woes.

According to stages of bull market there will be demand for different types of stocks globally. For example some intelligent investors prefer food and beverages stocks in China now. Even in the USA there are great demands for some food related stocks. Netherland is one of the winners in the poultry world due to new development in the global poultry market. Even in 2016 and 2017 poultry companies in some countries will benefit lot over others. Poultry output should go down in some countries. In any sector there could be winners and losers.

I believe there will be demand for frontier market stocks and bonds in 2015 due to valuation and attractive yields respectively. In Asia, Sri- Lankan market could have strong rally as this market is one of the late entrants to the current global bull market and middle stage of their bull market. Currently market has very attractive valuation due to available of many value stocks. We hardly find value stocks in some other markets now. Countries such India and Pakistan also have some value opportunities. As a region south Asia has more opportunities now. It is wise to pay attention to stocks in the accumulation stage. They can jump to the next level suddenly. We are seeing accumulation of attractive stocks in the market now. They will break their 52 high again and again due to strong outlook in their industry and due to individual performance and strong fundamentals.

Some intelligent investors take current Greek drama as a market opportunity. There could be some volatility in global markets in the short run due to Greek factor. However some global stock markets will have bullish trend. Frontier markets have more opportunities now.

Good luck!

investcsesl · 7 Re: Interest Rates Trend Wed Jun 17, 2015 10:24 pm

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Valuepick, your above reply was well beyond my expectation. + Rep from me.

I agree with your comments and also I have seen below interesting post of yours regarding Frontier markets which I believe Sri Lanka to be in the top of the list of Asia Region by end of 2015.

http://forum.srilankaequity.com/t44006-emerging-and-frontier-markets-are-attractive-it-is-time-to-become-bullish?highlight=Frontier+markets

VALUEPICK · 8 Re: Interest Rates Trend Thu Jun 18, 2015 10:58 am

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investcsesl wrote:Valuepick, your above reply was well beyond my expectation. + Rep from me.

I agree with your comments and also I have seen below interesting post of yours regarding Frontier markets which I believe Sri Lanka to be in the top of the list of Asia Region by end of 2015.

http://forum.srilankaequity.com/t44006-emerging-and-frontier-markets-are-attractive-it-is-time-to-become-bullish?highlight=Frontier+markets

Thanks.

http://www.latimes.com/business/la-fi-federal-reserve-interest-rate-20150617-story.html

Fed holds off on interest rate hike, downgrades economic forecast.

ADP · 9 Re: Interest Rates Trend Fri Jun 19, 2015 8:44 am

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Dear VP,

Pls share your thoughts on how a local export oriented company would be effected by the strengthening US dollar.

Thanks in advance.

VALUEPICK · 10 Re: Interest Rates Trend Fri Jun 19, 2015 11:25 am

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USD already appreciated against Rupee due to devaluation. It was trading around Rs.113 against USD and after rupee devaluation it shot up to around Rs.137/138. Now it is trading around Rs.134. So, already export companies are benefitting from that. Rupee will have minor volatility against USD. On the other hand rupee and USD will appreciate against two of the over valued currencies NZD and AUD.However there were sell off in USD after Fed Meeting.

When there is a bull market don’t think too much about short term issues such as interest rates, inflation, currency volatility and other short term issues. It is better to spend some time to identify supper winners in the market.

Good luck!

ADP · 11 Re: Interest Rates Trend Tue Jun 23, 2015 2:07 pm

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VALUEPICK wrote:
USD already appreciated against Rupee due to devaluation. It was trading around Rs.113 against USD and after rupee devaluation it shot up to around Rs.137/138. Now it is trading around Rs.134. So, already export companies are benefitting from that. Rupee will have minor volatility against USD. On the other hand rupee and USD will appreciate against two of the over valued currencies NZD and AUD.However there were sell off in USD after Fed Meeting.

When there is a bull market don’t think too much about short term issues such as interest rates, inflation, currency volatility and other short term issues. It is better to spend some time to identify supper winners in the market.

Good luck!

Thanks for the feedback VP!

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Interest Rates Trend

1 Interest Rates Trend Thu Jun 04, 2015 1:26 pm

VALUEPICK

2 Re: Interest Rates Trend Fri Jun 05, 2015 11:33 am

VALUEPICK

3 Re: Interest Rates Trend Thu Jun 11, 2015 10:36 am

VALUEPICK

4 Re: Interest Rates Trend Fri Jun 12, 2015 3:59 pm

VALUEPICK

5 Re: Interest Rates Trend Fri Jun 12, 2015 5:14 pm

investcsesl

6 Re: Interest Rates Trend Sat Jun 13, 2015 10:08 am

VALUEPICK

7 Re: Interest Rates Trend Wed Jun 17, 2015 10:24 pm

investcsesl

8 Re: Interest Rates Trend Thu Jun 18, 2015 10:58 am

VALUEPICK

9 Re: Interest Rates Trend Fri Jun 19, 2015 8:44 am

ADP

10 Re: Interest Rates Trend Fri Jun 19, 2015 11:25 am

VALUEPICK

11 Re: Interest Rates Trend Tue Jun 23, 2015 2:07 pm

ADP

12 Re: Interest Rates Trend

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