Published: Friday, 11 Jan 2013 | 2:08 AM ET

Investors sifting through analysts' new year predictions for stock market movements may want to press "delete" and look instead for sound companies, as history shows equity index forecasts are usually wrong.

In good years and bad, according to Reuters polls, most fund managers and analysts have struggled to predict annual moves in the main European stock markets, underestimating rallies and missing crashes.

According to data from Lipper, a Thomson Reuters company, the 11 best-performing European equity funds over the past 15 years all employed so-called bottom-up strategies, investing in individual companies with strong fundamentals rather than betting the whole market will rise or fall.

These top funds saw their value grow between 150 percent and 500 percent over the period, compared to 53 percent growth on average for the 290 funds polled.

"Looking at the macro economic environment helps you understand where better to allocate your time and shine your torch, but I don't spend much time looking at forecasts for indices," said Feras Al-Chalabi, whose continental European equity fund at Odey Asset Management came second in Lipper's ranking since 1997.

The problem is that fund managers, even at brainy hedge funds, seem to miss the unexpected political or economic upheavals that cause wrenching rises or falls in markets.

Some of these might be regarded as events that no one could reasonably have predicted but missing them plays havoc with forecasts. Instead, forecasters appear to base their predictions on equities' long-term average performance and the belief that stocks generally will tend to rise over time.

"When you ask people for their predictions, that's driving them towards the most likely outcome and that's removing them from the ability to think about extreme scenarios," said Greg Davies, head of behavioral and quantitative finance at Barclays Wealth.

The median year-end forecast for Britain's FTSE and Germany's Dax indexes has been on average 8.7 percent and 14.4 percent too high, respectively, since 1997, historical Reuters survey data showed.

The overshooting was largely due to a failure to predict the sell-offs after the dotcom bubble burst in the early 2000s and during the current financial crisis.

The consensus was for the Dax and the FTSE to record hefty rises in 2001, 2002, 2008 and 2011, only for the indexes to suffer double-digit percentage dips.

Flawed Estimates

"When experts watch what the others are doing there can be some sort of herd effect," said Arnaud de Servigny, global head of Deutsche Bank Private Wealth's discretionary portfolio management and investment strategy.

"It is very difficult in the industry to have good experts, independent in the way they form their view. It's a form of bias and there's not much you can do about that."

Even when the four crash years are taken out, the mean estimate for the FTSE lagged market gains by 1.2 percent and the one for the Dax undershot the index by as much as 10.5 percent.

Analysts' average prediction over the 15 years was for gains of between 8 and 12 percent a year, in line with equities' long-term average.

"Analysts' forecasts are based on the idea that, in the long run, stocks are going up anyhow," William de Vijlder, chief investment officer for Strategy and Partners at BNP Paribas Investment Partners, said.

This year is a case in point. Britain's FTSE 100 and Germany's Dax are forecast to rise around 8 percent on expectations the global growth outlook will improve, according to recent Reuters polls.

In only one year between 1997 and 2012 was the consensus forecast for the Dax to fall and never for a drop in the FTSE.

Both indices recorded annual losses in five of those years.

Sentiment Gauge

But forecasts are a key element of financial markets, valued by many as a gauge of what others are thinking. For some of the most successful stock pickers, consensus estimates are a guide to what will not happen.

"Being a stock picker, you can be quite dispassionate and ignore the headlines," said Sam Morse, whose European equity fund ranks third in Lipper's report. "As a sentiment indicator, I view (consensus estimates) in quite a contrarian way."

He added to his positions in Belgian bank KBC in late 2011, when share prices were battered and the outlook grim. The stock rose 168 percent in 2012.

Last year, global hedge funds that base their investments on macroeconomic views delivered negative returns and those that try to predict the market's direction underperformed the global MSCI World index by nearly three times.

"What the industry should be doing, rather than more accurate forecasting, is constantly trying to make the point that the world is uncertain and the right way to think about it is over a five to 10 years' horizon," Barclays' Davies said.

"You should not be trying to pretend that you a have a crystal ball in the short term."

http://www.cnbc.com/id/100371857

Another article demonstrating frothiness?

The Straits Times
www.straitstimes.com
Published on Jan 11, 2013
COMPANIES
Stocks will be year's top performers, says DBS
Central banks have helped allay fears; some market correction likely

By Alvin Foo

STOCKS will be the top-performing asset class in 2013, said DBS Bank yesterday.

DBS Private Bank chief investment officer Lim Say Boon told a media briefing that a concerted wave of central bank intervention has kept the fear of extreme market risk at bay. But he warned that a temporary equities correction could be round the corner after the recent exuberance.

Mr Lim said: "There's been so much fear in the market over the last four years that the market's suffering from tail-risk exhaustion." Such worries include a break-up of the euro zone and the United States fiscal cliff.

He added: "As long as central bankers say we'll give unlimited support, then tail risk is likely to be managed and the market returns to normal risk."

The improved investor risk appetite is reflected in the Vix Index - the best gauge of investors' fear on Wall Street - which tumbled to a 5½-year low recently.

Key Asian markets have mostly seen a sterling start to 2013, with Hong Kong's Hang Seng Index 3 per cent higher and Singapore's Straits Times Index up 2 per cent.

But Mr Lim warned: "There will be volatility. A correction is probably due now, as we've seen quite a run-up. But I think prices will grind higher in the course of the year."

He has a "moderately positive" outlook on the global economy as the US housing market has bottomed out and the economy is on the mend, and China is re-focusing on stimulating its economy.

Mr Lim believes that Asian equities excluding Japan will outperform US ones. A Citigroup funds flow report showed a 17th straight week of inflows into Asia.

DBS Group Research noted: "A more stable investment environment, sustained low interest rate environment and the strong Singdollar will continue to attract capital inflows into Singapore."

Mr Lim is more upbeat about the Hang Seng than the STI, citing cheaper valuations. He also prefers the HSCEI, the main index tracking China firms listed in Hong Kong, over the Hang Seng, and A-shares over H-shares.

HSBC Global Asset Management is also upbeat on Asian equities this year. Its Asia-Pacific chief investment officer, Mr Bill Maldonado, said: "In Asia, valuations have collapsed but profitability has not, which suggests a fundamental opportunity... in equities, especially China and Korea."

alfoo@sph.com.sg

By Yvonne Chan | Posted: 09 January 2013 2041 hrs

SINGAPORE: Singapore retail investors are optimistic about their investment outlook for the next six months, according to a survey released on Wednesday by J P Morgan Asset Management.

According to the report, the J P Morgan Investor Confidence Index increased by 5 points to 106 in the latest survey, conducted between November 21 to December 7 2012.

This is a marked increase from one year ago, where the index was 86.

The increased confidence was boosted by expectations of an improved global economic environment, with 42 per cent of respondents indicating that they are likely to increase their investments in the next six months.

"The latest results demonstrate that Singapore investor confidence continues to improve," said Mr Andrew Creber, Head of Singapore Business, J P Morgan Asset Management.

"This is no doubt influenced by the progress we have seen over the past six months, where the risk of a financial meltdown in Europe was largely reduced. The Chinese economy is steadily recovering. In the US, despite the ongoing political tug-of-war over public finance, the restoration of household balance sheets and an improvement in the housing market is taking place," he added.

Confidence is also returning to affluent investors.

Investors with investable assets of S$500,000 and above were markedly more optimistic than investors with less investable assets, hitting a confidence level of 119, an increase of 17 points from June 2012.

Meanwhile, mutual fund investors have shown an increasing preference for multi asset/balanced funds, with those surveyed increasing their weighted allocation up by 7 per cent to 47 per cent for their mutual fund portfolio.

"It is important for investors to remain diversified to maintain stability in their portfolios," said Mr Creber.

The J P Morgan Investor Confidence Index is derived from a scoring of investor responses to a series of questions on their outlook for the Straits Times Index (STI), local and global economic and investment environments, and appreciation in their investment portfolio.

An index level of 100 is neutral, while 200 is extremely optimistic while zero is extremely pessimistic.

- CNA/xq

http://www.channelnewsasia.com/stories/s...44/1/.html

https://www.jpmorganam.com.sg/wps/portal...0123112/-/

By Wong Siew Ying | Posted: 09 January 2013 2135 hrs

SINGAPORE: The Monetary Authority of Singapore (MAS) has issued new guidelines on short-selling disclosure on Wednesday.

This follows an earlier announcement from the Singapore Exchange (SGX) on January 8 that it will enable tagging of securities orders which involve short selling from March 2013.

SGX will also be publishing daily reports on the total value and volume of short sales for each counter.

MAS said its guidelines clarify market participants' obligations to accurately disclose their short selling activities.

The central bank said information on short sale transactions help to deter market abuse by alerting authorities to activities that may potentially disrupt the orderly functioning of markets, and aids in investigation and enforcement.

However, it added that market participants should exercise care when interpreting information on short selling.

MAS said as information on short selling may be taken into account by other market participants when making trading decisions, all market participants are expected to accurately disclose the nature of their sell orders in compliance with SGX's rules on short selling disclosure.

It added that Singapore Exchange Securities Trading Limited (SGX-XT) will provide its Trading Members with a facility to correct erroneously marked sell orders.

MAS said under the Securities and Futures Act, it is an offence to make false or misleading statement to a securities exchange, futures exchange or designated clearing house.

If convicted, the offender could be dined up to S$50,000 or jailed for up to two years or both.

The central bank added that it will also consider whether there was intent to deceive in respect of sell orders that had been inaccurately marked by SGX-ST Trading Members or inaccurately disclosed by market participants.

Short selling is the sale of securities that the seller does not own at the time of the sale.

It can either be 'covered' or 'uncovered' or sometimes known as 'naked' short selling.

In 'covered' short selling, at the time of the sale, the seller has borrowed the securities or has made arrangements to fulfil his obligation to deliver the securities.

In 'uncovered' short selling, at the time of the sale, the seller is not in possession of securities or has not made arrangements to meet his delivery obligation.

- CNA/fa

Any merits of moving to Spain for just a small lump sum of euro160,000?

November 23, 2012 | Filed under: Spain | Posted by: Jessica

Spain is contemplating a new immigration program which would allow foreigners to become eligible for Spanish permanent residency just by investing a minimum amount of money in the country. Earlier this week, the Spanish government announced that it is currently considering a proposal to create a special foreign investors visa program allowing foreigners investing particularly in ‘Spanish Property Markets’ to be granted a permanent residency status in the country. Immigration experts have appreciated the Spanish immigration authorities’ program claiming that obtaining a Spanish passport will enable its holders to travel without a visa not only throughout the European continent, but also to other countries which have such arrangements with Spain. The experts also said that the initiative will allow the Spanish government to get the country out of the economic crisis from which it has been suffering for a long time now. They said that, although the prescribed investment amount is quite low as compared to other countries in the region with similar policies, it is enough to put Spain in the competitive list of these countries.

Spain is currently considering a proposal to grant permanent residency to foreign investors in local property market. The officials have said that the program will allow all those foreign investors who have invested in the country a sum of at least 160,000 Euros to become eligible for Spanish residency. The Spanish officials also said that, unlike other countries having similar investment programs, this scheme will be targeting everyone without any restrictions.

Immigration consultants in Middle Eastern and South Asian countries are claiming that the program will benefit the nationals of their countries the most. The consultants said that having a Spanish passport in the hand will allow its holders to travel all the European Union countries having visa free travel arrangements with Spain. Apart from this, the Spanish passport holders will also be able to travel to more than a hundred other countries in the world, with which it has such visa agreements.

Immigration experts are claiming that such programs will put Spain into the list of countries which allow foreigners such opportunities and attract them to their markets. Experts also said that the most important parts in the whole situation would be two of the programs main features. Firstly, unlike other countries whose foreign investor programs only target specific class of wealthy individuals, the program will aim for mass investments without narrowing down the eligible investors’ list. Secondly, the low amount of investment that the program requires is sure to catch the attention of nationals of several countries of the world, like Pakistan, India, the Middle East, etc.

Foreigners, who mostly go for such programs offered by countries like Canada and the United States, will mostly prefer Spain over other countries while investing abroad. This might also put Spain in competition with the United Kingdom, which enjoys a great status in such programs, but has restrictive immigration policies.

However, due to the fact that the program was announced informally by the officials, several important and technical details are still uncertain. The Spanish authorities have said that, once the program is approved for creation and implementation, they will announce all the relevant details of it.

i didn't realise our public schools hire as young as 22yo teachers for our students.

By Claire Huang | Posted: 07 January 2013 1207 hrs

SINGAPORE: A teacher has been fined S$6,000 for theft. 22-year-old Feng Tian Tian, who is from China, admitted that she had stolen S$719 in cash and an iPhone 4S from seven people at the teachers' lounge in Woodgrove Secondary School.

She committed the offences between March and August 2012.

The prosecution proceeded with three of eight theft charges.

Feng, who had been teaching Mandarin in the school, would pretend to be unwell and skip the morning assembly. She would then go to the teachers' lounge to steal.

In mitigation, Feng's lawyer said his client was selected to take part in a teachers' award scheme organised by China and Singapore's education ministry. Under the programme, talented young teachers from China are posted to secondary schools here on a one-year stint.

Feng's lawyer said she was initially very enthusiastic, but found it hard to adjust to life here. He added that Feng's mother faced financial woes in China and this created added pressure on his client, who was said to be suffering from depression.

At the same time, her relationship with her boyfriend was on the rocks.

The lawyer added that the amount stolen was "very small" and that Feng has been very cooperative with the authorities. Full restitution was also made to the victims.

However, the prosecution said the psychiatric report did not state the presence of a causal link between Feng's depression and her actions.

The district judge said that no matter how difficult it was for Feng to adjust to life here, there was no excuse to steal. He noted the calculated manner in which she committed the offences and highlighted the fact that she was a teacher.

Given the full compensation she had made and the fact that she pleaded guilty early, the judge said a jail term was not required.

-CNA/ac

We should learn that we do not have to respond instantly to emails, text messages and status updates, says Tom Chatfield.

http://www.bbc.com/future/story/20130104...ttention/1

by Elizabeth Soh | Singapore Showbiz – Wed, Jan 2, 2013 11:54 AM

Janice's bridal veil, set of keys to her new home, and lucky hairpins she will never use. (Yahoo! Photo / Elizabeth …

(Correction made 3 Jan 2013 to Ken's age - he is 25. There was a typo error in Janice's text responses to Y! SG when we asked for their ages. )

Amid falling birth rates and higher rates of divorce in Singapore comes another worrying new trend – that of young engaged couples calling off their big day right at the final moment. Marriage counsellors Yahoo! Singapore spoke to have seen more and more of such cases of young “runaway brides”. Is it the fear of missing out on that choice HDB unit or simply the immaturity of youth? Yahoo! digs deeper to find out the startling truth.



To everyone else outside of their relationship, Janice, 23, and Ken, 25, appeared to be the perfect fairytale couple. Secondary school sweethearts, their relationship outlasted the trials and tribulations of National Service and getting their degrees. They were an item for a whopping nine years before Ken proposed in early 2012 after they found out that their BTO flat would be ready soon, and Janice accepted.

So it came as a huge shock to all their friends and family when five days before their wedding at a five-star local hotel in September 2012, Janice called it all off and took a flight to Thailand to “escape” her fiancé and disappointed guests.

“The pressure had been building since the day he proposed, but I didn’t realise that I was truly not ready until about a week before, and I panicked. Everything had been planned, paid for, the invitations and guestlist confirmed. It was a nightmare, but once I knew I couldn’t do it, there was no point going ahead,” said a still-emotional Janice during a two-hour long interview at her home in the East with Y! Singapore last December.

“Yes, I was a coward. I couldn’t bear to tell Ken to his face that I wanted to call off our wedding, so I booked a flight and called him just before boarding then I switched off my phone and didn’t talk to anyone for days.”

“But why?” was the question on everyone’s lips when she finally returned four days later, ashamed and terrified. Was there a third party, everyone wanted to know?

Yes -- in a way.

“You could put it like this – the third party was HDB. I feel like I was forced to decide to get married early because if I waited until I was, say, 30 and ready to settle down, to wait another three to four years to get a BTO flat would leave me no time to start a family. Everyone told me that Ken and I had to hurry up and apply for a flat together and then quickly get married once the flat application was successful,” said Janice, who just started work as an accountant last year.

“It wasn’t important to them that I still don’t know what I want with life, and I don’t know yet whether I want to spend the rest of it with Ken. It seems selfish, but it’s my life, and it’s more selfish to get married to Ken and later change my mind – divorce would be ten times more painful.”

As it turned out, their BTO development took just over two and half years to complete and not three to four as they had initially expected, leading to a rush proposal.

In January 2011, The Straits Times reported that flats under the BTO scheme in 2009 and 2010 were completed in 32 months on average.

In September last year, HDB announced that to meet demand, a total of 7,055 flats would be launched under the joint BTO and Sale of Balance Flats exercises in 2012, on top of another 6,400 flats which were launched in November 2012.

Trend on the rise

According to marriage counselors here, Janice is not alone. All three marriage counselors Yahoo! Singapore spoke to said that cases of young women and men backing out of marriages at the last minute are on the rise by as much as two times in the past two years – and most cases were because they were not ready but forced to commit in order to secure a home in advance.

“These girls, mostly aged between 21 to 26, come to me as late as three days before their wedding and tell me they are terrified and want to call it off,” said counselor A. De Souza, 42, who counsels couples through a religious organization.

“When I ask them why, the answer is almost always the same – ‘I said yes because we needed to hurry up and get a flat first, and I thought we could work things out in between and I’d be ready later’,” said De Souza, who along with her husband, has been helping young couples for about 10 years.

“I would say that I am now seeing at least double the number of such troubled brides. It used to be that most of them split up just before because of third party issues or quarrels over financial matters, but now it’s always “I wasn’t ready” and “I felt forced because of my flat”,” said De Souza.

“It’s a serious problem – these young people are so worried about practical concerns like getting a home that they neglect the most important question – are they emotionally prepared?”

Marketing executive Marianne Wong, 24, counts herself lucky to have “realised” earlier on in her engagement that she was not prepared to settle down yet.

'Suddenly overwhelmed’

In 2011, Wong and her 33-year-old bank officer ex fiancé had already successfully balloted for a five-room flat which was expected to be completed by 2013. They had paid deposits totaling about $20,000 to a contractor and interior designer but had not booked their wedding banquet or photographers yet.

“About one year before our wedding, we went for a marriage preparation course. There, we had to discuss issues like financial planning, future children and so on, and I was suddenly so overwhelmed. I looked at my ex and I realised that I could not really see him as the father of my children and a life partner,” said Marianne, who cried many times during the hour-long interview with Yahoo!.

“I was so scared I couldn’t breathe, but I knew I had to do us both a favour and call it off. Before the course, I was so caught up in his “idea” of getting a flat – everyone was saying how difficult it was to get a good unit, horror stories about a five year wait stuck in bad rentals, I just got carried away, I guess.”

“I told my mother, and she was 100 per cent supportive that I should not get married unless I was completely sure – that helped a lot.”

Janice, however, who called her family “very strict and traditional”, did not dare to tell them about her misgivings about getting married.

Instead, she summed up the courage to call it off after going online to forums like Flowerpod and SingaporeBrides and finding out that she was not alone in her turmoil. Entire threads devoted to "pre-wedding jitters" and "brides with cold feet" are active and full of young women confiding in each other.

I'm so excited. Pop the Champagne.

The Straits Times
www.straitstimes.com
Published on Jan 01, 2013
STI records best annual gain since 2009
Bourse up 19.7%, but volumes reflect lack of broad market participation

By jonathan kwok

THE "fiscal cliff" jitters meant local shares ended 2012 on a sour note but the dip failed to take the gloss off what has been a fairly remarkable year for the market.

Despite yesterday's 24.72- point decline, the benchmark Straits Times Index (STI) still added 520.73 points for the year to close at 3,167.08 - up 19.7 per cent.

That is the STI's best annual gain since 2009, when it rebounded almost 65 per cent after a sharp recovery from the global financial crisis.

Go a bit further back and it looks an even more impressive performance: In the past 10 years, shares have bettered that 19.7 per cent gain only in 2003, 2006 and 2009.

Tokyo and Hong Kong did even better with both bourses up 22.9 per cent in 2012.

It was all the more remarkable as analysts and brokers were tipping a tough 2012 this time last year amid the long-drawn crisis over European debt and the weak United States economy.

"The August 2011 sell-down was quite a large one," said Singapore remisier Desmond Leong.

"Everyone thought: Could this be the next bear market? (Hence) December that year was a lot more choppy."

There has been some progress towards fixing global problems over the past 12 months, particularly in the US where economic data improved markedly towards the end of the year.

But market watchers say that the flood of liquidity unleashed by major central banks has played a larger role in the market's climb.

The European Central Bank, US Federal Reserve and Bank of Japan all expanded their various money-printing programmes last year.

China's government helped in its own way, by announcing one trillion yuan (S$196 billion) of new infrastructure spending.

Trading volumes here also indicate that the rally lacks broad market participation.

The year's average daily turnover was only $1.28 billion, down from 2011's $1.46 billion, although the average number of units traded daily was larger - 2.09 billion, as opposed to 1.41 billion the previous year.

This showed that remisiers were increasingly focusing on low-cost punts as they trade on their own accounts in the hope of earning some money.

They can trade in millions of shares each time but the combined value will be low if they are dealing in penny stocks.

"Ever since the casinos were set up, we've seen a steady decline of business (from retail clients)," said Mr Leong. "2012's business was not as good as 2011's, and 2011's was not as good as the year before."

Nomura Equity Research is tipping "single-digit returns" for the local market this year.

It said the ongoing economic restructuring could hit company earnings.

It even flagged the possibility of a market fall if the local economy turns out worse than expected.

jonkwok@sph.com.sg

Just for the fun of it, why don't we all put down some predictions for 2013? Then we can revisit again at end-2013 to see how many of us managed to get it right, haha!

Let me start first.

2013 Predictions
STI +10%
Residential Property Market +5%
Industrial Property Market +10%
Inflation +4.5%
GDP Growth +3%