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The Hang Seng Leader

25 March 2020 By PDSNET

If you currently own a portfolio of shares, and did not have or implement a stop-loss strategy, then our advice, at this point, is to wait and see how this market unfolds - especially if you have high-quality rand-hedge shares. We do not see this "quarantine recession" and its concomitant bear trend lasting very long. Our view is that markets, world-wide, will begin to discount a recovery before the end of this year, probably beginning with markets in the far east.

For example, consider the comparative relative strength of the Hang Seng index against the S&P500 since 19^th February 2020 when the S&P made its last all-time record high at 3386:

This chart shows the Hang Seng in the top half of the chart and a relative strength of the Hang Seng against the S&P500 in the bottom half. The vertical line is drawn in on 19^th February 2020 - which is the date from which the corona bear trend began.

You can immediately see that the Hang Seng peaked almost a month before the S&P probably because the seriousness of the outbreak was more apparent to Chinese investors at an earlier stage than the rest of the world.

But what is more interesting is that the Hang Seng has significantly and consistently out-performed the S&P in the month which followed - showing that the Chinese are far less concerned about this virus than American investors. The same pattern is apparent, although less dramatic, in the Japanese Nikkei index from Tokyo:

We believe that the markets of the far east will be the first to recover - as will their economies. Already, most of the new confirmed cases in China are people arriving there from Europe. There are now almost no new Chinese cases and their death rate is close to zero.

So, if you are looking for an early indication that this corona bear trend is coming to an end - we suggest that you watch the Hang Seng index (I-Hangsng).

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PDSNET ARTICLES - MARCH 2020

The Hang Seng Leader

If you currently own a portfolio of shares, and did not have or implement a stop-loss strategy, then our advice, at this point, is to wait and see how this market unfolds - especially if you have high-quality rand-hedge shares. We do not see this "quarantine recession" and its concomitant bear trend lasting very long. Our view is that markets, world-wide, will begin to discount a recovery

Green Shoots

Amidst the bloodbath on the JSE, there have been some winners among the losers. Consider this market carpet of the JSE sectors for the week ending 20^th March 2020:

Amazingly, five sectors showed positive growth during that most horrendous of weeks – and they can give us some pointers as to where we should be looking in the crisis for potential investment

Bear Trend?

I saw my first bear trend in 1969 – I was 16 years old and still at school. I did not really understand what was happening – but it made a deep impression on me. Since then I have studied all the major bear trends going back to the 1907 bear market.
I did this because I believe that the only intelligent way to predict the future is to study the past. Consider: the only reason you know that the sun is going

Standard Bank

Buying shares in Standard Bank has always been a long term investment in South Africa and Africa in general.
The company is enormously profitable producing over R28bn in headline earnings in the year to 31^st December 2019 – and it is the ultimate service business which receives its income from a spread of millions of individuals and companies. Banks are the only organisations in the