Posted on January 5, 2010 - by kevinscully

2010 – expect a year of more modest gains compared to 2009….the easy money is over so stock selection and valuations become more important

Photo by John Althouse Cohen

Asia was more resilient in this crisis with many countries having strengthened their national balance sheets post the Asian financial crisis. Asia also benefitted from the commodity boom and had very few bank failures with exposure to toxic sub-prime assets kept to a minimum. Asia however did suffer from a contraction in global demand from the US and EU as their economies contracted with many Asian economies recording declines in exports of 20-30%. There was a strong recovery in Q3-2009 as inventories which had been drawn down were replenished. Growth moderated into Q4-2009. A main feature in corporate performance of manufacturers in 2009 was that revenue was down 20-30% but profits were higher from cost cutting. Asia and in particular China and India are now poised to be the main engines of global growth as their domestic consumption demand starts to expand.

Much of the next move in 2010 will depend on the Q4-2009 and 2009 full year reporting season. Investors should pay special attention on corporate forward guidance. If the 48.6% earnings growth for the STI Index is achieved with further positive guidance for 2010….the Singapore market is likely to move further ahead with gains probably keeping pace with corporate earnings growth. Read more…

Related posts:

1. Jaya Holdings Limited – stock is undervalued compared to its historic valuations and its peer group
2. The Year Ahead in 2010
3. Vix index is on the rise and has exceeded 30 in recent weeks on growing uncertainty…..expect more volatility ahead?!