Investors hit 'pause' button amid volatility

Investors face uncertainty following last week's topsy-turvy market. More volatility is expected as investors await the US Fed's decision on interest rates.
Investors face uncertainty following last week's topsy-turvy market. More volatility is expected as investors await the US Fed's decision on interest rates.ST FILE PHOTO

Many waiting for prices to correct further after last week's steep plunge and rebound

Investors seem to be taking a breather from shares after the roller-coaster ride last week that saw a dizzying plunge on Monday and a rebound on Tuesday.

Businessman and remisier Charles Chua said he did not buy or sell stocks on those two days, while many added that they were waiting for prices to correct further.

The benchmark Straits Times Index (STI) plunged 4.3 per cent, or 127.62 points, to close at 2,843.39 on Monday.

There was some relief on Tuesday with shares gaining 1.5 per cent here, while Wall Street rallied strongly on Wednesday. The STI closed at 2,955.94 on Friday.

Mr Chua said that even before last week, he was gradually increasing his stake in Keppel Infrastructure Trust but has since held on.

STAYING PUT

As of now, the markets are running heavily on emotions and irrational decisions. Prices can soar drastically higher or plunge to new lows, so it is best to wait out these volatile times.

MR CHENG XIANG NIAN, an investor

He noted: "I personally believe the Chinese and US governments are all ready to act, and aggressively if necessary. The Chinese economy is slowing but still growing safely at above 5 per cent, and above 5 per cent is spectacular growth in most countries."

Fintech entrepreneur Daniel Chia, who used to be a GIC investment manager, said a large part of his firm's costs is in US dollars.

Mr Chia said: "It's been a challenge the last few weeks hedging against the depreciation of the Singapore dollar against the US dollar."

He added: "Fortunately, we were prepared for this, as we have been suggesting to users since April that there could be extreme volatility when the US dollar-Singdollar spiked above $1.40."

Mr Chia remarked: "I like tech stocks that I feel have been unfairly maligned, one of those being e-commerce player Alibaba."

He said that "the tech crown jewel of China... has been unfairly bashed by the negative news about China's economy" and that he is still looking for opportunities in the markets.

Despite the rebound on Tuesday, he said: "I feel that the risk-reward is not strong for selling on rebounds at this moment."

Businessman Jerry Lee said he is also still looking for opportunities to buy more stocks - and hoping for the market to correct further.

He added that he is reserving his cash for really strong companies.

Mr Lee, who is a value investor, said: "Even if I had bought something on Monday, I wouldn't want to sell so quickly on Tuesday.

"I buy to hold for the long term - 10 years. If the business is good, you've got to give it time to grow."

Investor Cheng Xiang Nian said most of his long positions suffered in Monday's crash, "but my short positions were an excellent hedge to my losses".

He is maintaining his current positions, and has stopped buying any stocks.

Mr Cheng said: "As of now, the markets are running heavily on emotions and irrational decisions. Prices can soar drastically higher or plunge to new lows, so it is best to wait out these volatile times and resume investing when the dust has settled."

But he added that if an investor possesses the stomach and acumen to trade in these volatile times, he can yield substantial opportunities.

Food and beverage business owner Traveen Gulrajani took advantage of the rebound on Tuesday to sell gold and the US dollar-Thai baht currency pair, "as these are more speculative trades and good for a quick entry and exit trade".

He had bought into US dollar- Thai baht on the day of the recent Bangkok blasts. He also bought some good quality stocks in the US markets, "purely because fundamentally they have a lot of potential going forward and are very strong companies".

Mr Gulrajani said: "In this current environment, I'm holding on to

75 per cent in cash to deploy when the markets are more sane to invest in for the long run; 25 per cent is for short-term investments - a week to a fortnight."

Mr Chua added that investors should make rational decisions and can consider buying dividend stocks like real estate investment trusts and blue chips such as the three local banks and the big four China banks, as well as growth stocks such as SingPost, Apple and Alibaba.

Mr Chia noted: "Expect further volatility as investors await the United States Federal Reserve's decision on US interest rates."

A version of this article appeared in the print edition of The Straits Times on August 31, 2015, with the headline 'Investors hit 'pause' button amid volatility'. Print Edition | Subscribe