STI is poised to run towards 3900 in 2nd half of this year! Here are the reasons why?

By Daniel Loh

Recently a lot of investors are worried about stocks. Market News like trade war fear, interest rates rise fear or even Syria political fear have caused Global Stock Market to be highly volatile.

As an investor, you must be wondering, "Has Bear Market Arrived?"

Afterall, it has been 10 years since the last one…

Our opinion is NOT YET! In fact we do think STI is poised to make a Bullish Run towards 3900 historical high in the 2nd half of the year.

3 reasons why we think so:

1) Trade War will end in PEACE!

Trade War actually started with "MAD" president Donald Trump slapping tariffs on steel, aluminium and China goods.

China retaliate with the US$50B tariffs on US goods.

We need to understand that this Trade Tariffs thing is just a negotiation tactic employed by Donald Trump to scare its US trading partners to go to the negotiation table to re-negotiate a better US trade deal.

In fact, Donald Trump even slammed past US government as DUMB for the trade war that happened in the past.

Over the months, I seem to have seen and trust Donald Trump in getting deals done!

Like getting US companies like FORD to bring factories back to US, or getting Kim Jong Un to Denuclearise, or getting Tax cut Bill approved.

This guy is a negotiation expert! Trump knows that China will relent for a fact that China won't win in a Trade War as US buys more goods from them than they buy from US. China will be the country that suffers more if US slap tariffs from all its goods. That is why President Xi Jin Ping keep on saying he don't want to go into a trade war with US.

And with these 2 presidents both promising they won't, there won't be one.

And with all trade war worries already priced in, I believe the worst is over!

If US and China is able to come to a trade agreement in 2nd half of this year, then the market is poised to make back everything it lost in the trade war fear!

Stock TIP #1:

Look for opportunities to buy into stocks and sectors that have dropped because of trade war fear before any trade agreement is announced in the next few months.

Look at China internet companies, Agricultural commodities indices or even manufacturing companies that need steel. These stocks and indices are cheap now!

2) Interest Rate Rise does not mean Bear Market!

Over the last few months, there has been fear that interest rate rise will put a stop on the economy. And that is why when 10 year treasury yield reached 3%, Wallstreet panicked. Afterall 3% seems a scary number unseen in the last few years!

But hang on, investors are misunderstanding something here. If you go to Basics, interest rate rise is always a result of GOOD Economy, not a Bad one. To fight against inflation, US government needs to increase interest rates.

In fact, after doing much research on Bear Market, we always found Bear Market comes after interest rates suddenly drops, not when it is rising!

What investors should worry is When will interest rate drop? Don't worry when it is rising!

Stock Tip #2:

Interest Rates rise is a reflection of good economical projection by government.

You should buy into stocks or sectors that benefit from the rise! Banks and insurance companies are beneficiaries of rising interest rates!

And STI is poised to benefit from further rise in rates as local banks will make more money.

3) Saudi Arabia wants Crude to be at US$80-US$100!

Admit it! Saudi Arabia is still the country that determines crude oil price.

When Saudi Arabia want to get rid of Shale Oil competitors in US, they pushed oil from US$115 to US$26 three years back. But when it reached its aim in getting the US Shale oil rigs to stop production, they agree to cut production with Russia, propelling crude oil to rise to US$69 today!

Saudi latest agenda is that they want crude to go back to US$80-US$100. And they seem adamant to see this happen by announcing it in public recently.

Saudi Arabia is planning to list its biggest oil company Aramco in US next year. Surely they would want a Big listing by holding oil at a high price.

That means oil this year can't drop much.

Stock Tip #3:

You should buy into Oil and Gas Sector Stocks that will benefit from the rise of Oil Price!

However, oil companies that are still suffering from bond or debt defaults should be avoided. Invest in those that have strong balance sheet.

STI will definitely benefit from the recovery of some oil and gas stocks or stocks that are indirectly related to crude oil.

In Summary, I expect 2H2018 to be a better half than 1H2018 as lingering problems like Trade War fear expected to be over. Large sectors like Technology, Finance and Oil & Gas is expected to be strong and recover.

STI might give 3900 a Try this year…

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Daniel Loh

Daniel is an established investment coach with more than 17 years of trading experience acclaimed for his remarkable techniques at predicting market movements as seen on various financial portals, columns and live interviews across national television and radio stations. He founded DL Investment - a trading group dedicated to the success of both retail and professional traders. He has personally trained thousands of students across 6 major cities in South East Asia.

Daniel also trains for Securities Investors Association Singapore (SIAS) and regularly features as a keynote speaker at major financial talks held by investment banks and brokers.

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