Every market is hot these days, so where investors are going to put their moneys ! Everyone does not have the luxury to put their moneys on savings bank account to get higher interest rate. As you can get higher interest rate generally in the those developing countries where inflation rate is on the higher side.
I want to compare different investment opportunities with their march, 2009 value. Now why march, 2009? That is because during this time stock indexes were in lower points after corrections, as such from here they have started a new bull run.
We can see that Shanghai Composite is the leading cheapest index at this moment, if we compare today with march 2009 level. Some of you may ask me, are you blind, do not you see the Nikkei figure?
Sorry, I will not consider Nikkei unless it comes out all of this problems which it is facing now days, as we cannot forget that Nikkei has not faced general corrections in the stock market but it was a panic selling due to natural disaster. So the issue is different. But it is sure that Nikkei is cheaper now.
Now markets such as FTSE, CAC, Australian index and BOVESPA are also among the cheaper indexes right now. On the other hand some indexes like German DAX, Indian SENSEX , KOSPI are among those indexes which faced some corrections in the beginning of this year but now in middle position. Where as
and Thai index are still costly. As far as countries which are suffering from inflation fever like Indian SENSEX, for them if we deduct the inflation figures then that rise % figure of indexes will reduce. We definitely can consider this, as % of inflation varies between different countries. Indonesia
In spite of corrections, Silver and Copper are still costly, comparing to 2009 figure. We also keep in mind that when there is feeling good factor works in economical environment of a country, better to say industrial boom is going on then we can expect good run from base metals like copper. I do not think that is working now. Because we have already heard that countries like
is ready to sacrifice their growth to control inflation. China
Here the cheapest one is Natural Gas comparing to others. I do not think lot of people are there to take the risk with Japanese YEN, Euro and even USD, as they have their own limitations. Swiss Franc is in declining mood, though in recent days it is going up.
Nymex Oil is little cheap comparing to the Brent Crude . But I will not be so interested in Oil right now because of Gulf tension and the chart pattern, which are saying that more drops are due. Natural Gas is obviously cheapest compare to others and in coming days we may see some activities there.
So what remains? Treasuries and Gold, two non-risky assets. Whenever there is some uncertainty investors take shelter under these. Let first consider the Treasuries, as we can see from yield figures, that people who bought Treasuries in march, 2009 and if they want to sell it now, they will make loss as yields have increased during this period. Now if we consider Gold then I think though Gold has increased more than 60% during this period, but Gold is not something which is connected to any country’s financial ability. In fact investors use Gold as inflationary hedge, so there will be demand for Gold even in these high price, as Gold is not something that can suddenly evaporate.
If someone does not like to go with risky assets then where he should perk his money? Because recent corrections in Silver makes it attractive for some investors? As I told in my previous postings that
and many other countries are buying Gold, so, we can get an idea which class of asset investors can look for if they want to follow the trend. China
Suppose a big Tsunami comes, which effects most of the countries of the world, in every places people are effected, currencies have no value, then what ?
I do not know about the other classes of assets but it is sure that Gold will shine all the time as it did in past.
In case of risky assets, I will be going for Shanghai Composite and other above mentioned indexes. Though some of the Emerging markets are suffering from inflation and are little over-bought, but they have the growth and stability and most of their currencies are not backed by debt.
NOTE : Please see the disclaimer below this blog.