Data on Chinese property prices showed another record rise today, with prices over the 70 cities up 9.6% in October. In the big cities the price increases were well ahead of the average—as usual. Beijing rose 16.4%, Shanghai 17.8% and Shenzen and Guangzhou were both up around 20%. The knock on effect for the equity market was positive with Shanghai Composite Index rallying almost 3%. This should feed through to our resource sector as we move into the last 6 weeks of trade for 2013, which has been sold off in the past 2 weeks. The longer term PII Resi is our strategy of choice for gaining exposure to the resource sector.
With the rise in bond yields in the past week, we are seeing an increase in caps across the board, with this in mind, investors should be looking to a more longer term investment strategy to enhance potential returns, the Strategic Wealth Solutions Accelerator and Lighthouse offers good value for capital growth, while the 60 months Standard Bank Capital Accumulator also remains an attractive investment with a return of 46% if the market remains flat or higher.
Some overnight developments, data from the UK was less encouraging with the Markit household finance index falling to 38.8 in November from 41 in the previous month. A number below 50 shows poor finances and expectations for the future were also poor, not helped by recently-announced increases in utility bills. The index relating to major purchases was the lowest so far in 2013. In other news the Right move house price index fell 2.4% in November after climbing 2.8% in October.
It’s a relatively quiet start to the week but there’s plenty of important data to come this week from both the US and Europe. Our bias is to expect data to be soft in Europe but perhaps a bit firmer in the US. With this in mind, we continue to look for spread widening between treasuries and core euro zone bonds, such as German bunds. The same factors could also weaken the euro against the dollar although we suspect that the euro will stay pretty range-bound with any bias slightly to the upside.
Internationally, In the US, on Wednesday come’s the release of CPI, Retail Sales and Existing homes sales figures. On Thursday we see the release of Initial Jobless Claims. Just to recap, this week sees the release of local CPI data on Wednesday and the repo rate on Thursday, rates expected to remain unchanged.
Strategic Wealth Solutions is the official distributor of Standard Bank CIB Investment Products to Independent Financial Advisors.
*Article compliments of Standard Bank CIB