About

Ahead of the Curve provides you with analysis and insight into today's global financial markets. The latest news and views from global stock, bond, commodity and FOREX markets are discussed. Rajveer Rawlin is a PhD and received his MBA in finance from the Cardiff Metropolitan University, Wales, UK. He is an avid market watcher having followed capital markets in the US and India since 1993. His research interests includes areas of Capital Markets, Banking, Investment Analysis and Portfolio Management and has over 20 years of experience in the above areas covering the US and Indian Markets. He has several publications in the above areas. The views expressed here are his own and should not be construed as advice to buy or sell securities.

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Showing posts with label yuan. Show all posts
Showing posts with label yuan. Show all posts

Monday 20 May 2019

Chinese Yuan Warning Major Correction Ahead?

The Chinese Yuan is well correlated to risk assets. A sudden depreciation in the Yuan has often lead to major sell offs in risk assets. With the Yuan depreciating appreciably in the last few weeks a major sell off in risk assets maybe just around the corner:

Yuan
spx


Wednesday 27 March 2019

Indicators that Matter

There is a plethora of indicators to track while evaluating financial markets. Here are some important ones:

1) The Chinese Yuan:

The Chinese Yuan is often a proxy for the risk on trade. Periods of strength in the Chinese Yuan as seen in the last 3 months, have often been accompanied by up moves  in risk assets such as stocks, commodities and emerging market currencies:

source:investing.com

chinese yuan
2) The S and P 500 Price to Sales Ratio:

This is a key valuation measure and price to sales ratios greater than 2 have often symbolized over valuation while ratios lower than 1 have produced undervalued buy opportunities:

source: multpl.com

valuation

3) The Yield Curve:

The yield curve is a very reliable economic indicator and an inverted yield curve like we have now has often been followed by recessions or periods of rapidly slowing growth, while an upward sloping yield curve is often indicative of an expanding economy:

source: ETF Trends
yield curve

4) CNN Money's Fear and Greed Indicator:

This is a sentiment indicator which is a combination of several sentiment indicators and indicates whether market participants are fearful or greedy:

source: CNN Money

fear and greed

5) The Skew Vix Ratio:

This indicator is another sentiment indicator and values below 5 tend to mark panic bottoms while values above 15 tend to mark complacent tops. This ratio has been making lower highs and lower tops of late suggesting that there may be one more panic bottom in the not too distant future:

source: Stock Charts

skew vix ratio


Monday 9 January 2017

Daily Forex Insight

Here are some insights from the currency strategists at dailyfx. They cover the fundamentals and technicals of key Forex pairs and other key markets along with some of the key economic news of the day. Today's commentary looks at two currencies that could be the subject of trade wars this year, the Chinese Yuan and the Mexican Peso:

Friday 25 December 2015

Interesting Market News and Views from Global Financial Markets-12

1) The Rate Hike Stock Market Crash Has Thrown Gasoline Onto An Already Raging Global Financial Inferno

If the stock market crash of last Thursday and Friday had all happened on one day, it would have been the 7th largest single day decline in U.S. history.

2) Portugal's anti-austerity Left take power in watershed moment for the euro

AEP: The president threatened to sack the new government if it
challenges the EU's Fiscal Compact, deemed a formula for economic depression
by Keynesians

3) India pips US, China as No. 1 foreign direct investment destination - Times of India

India rises 16 places in Ranking Of Competitiveness

4) Buy the ETF, Not the Mutual Fund

On Dec. 10, Third Avenue Focused Credit Fund suspended its investors’ right to ask for their money back whenever they wish. That drastic step wasn’t unprecedented, however.

5) 2016: Why the bull market in stocks isn't dead yet

The U.S. stock market faces lots of threats in 2016. But market pros polled by CNNMoney think Wall Street will claw its way past these obstacles to reach new heights.

6) China to Extend Yuan’s Trading Hours, Widening Currency’s Appeal

China’s central bank, the PBOC, said it would increase the yuan’s trading day by seven hours, opening the currency to more foreign investors and narrowing the gap between the onshore and offshore foreign-exchange markets.

Thursday 13 August 2015

Interesting Perspective on the Chinese Yuan Devaluation

While the Chinese Yuan devaluation has taken the global markets by storm this week, it certainly is not the first of its kind and pales in comparison to the 50% devaluation in the Yuan in 1994. A very interesting chart from dailyfx below provides insight into the fluctuations in the Yuan.
DEVALUING THE YUAN ISN'T UNCHARTED TERRITORY
It also appears that the #Yuan is yet to catch up with the deteriorating macro economic back drop in China as per the next chart from dailyfx and the current devaluation may not help matters in the long term.
nyse What Does Yuan's Devaluation Mean for Chinese and Global Markets?

Regardless the contagion effect on the  #BRIC and other emerging economies can't be ignored as the threat of cheap Chinese exports flooding the market place is alive and well in the near term. The mere prospect of this has sent some BRIC currencies and stock markets sharply lower and this is likely to continue in the short term:
CNX NIFTY (^NSEI)
iShares, Inc. - iShares MSCI Brazil Capped ETF (EWZ)

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My Asset Allocation Strategy (Indian Market)

Cash - 40%
Bonds - 20%
Fixed deposit - 20%
Gold - 5%
Stocks - 10% ( Majority of this in dividend funds)
Other Asset Classes - 5%

My belief is that stocks are relatively overvalued compared to bonds and attractive buying opportunities can come along after 1-2 years. In a deflationary scenario no asset class does well other than U.S bonds, the U.S dollar and the Japanese yen, so better to be safe than sorry with high quality government bonds and fixed deposits. Cash is the king always. Of course this varies with the person's age.