The re-emergence of inflation expectations
THE risk of inflation has been ignored by investors in the last few years, but that risk is returning and investors should adopt an inflation-beating strategy in the positioning of their portfolios, said Yu-Ming Wang, Nikko Asset Management's international chief investment officer.
In his presentation titled "The re-emergence of inflation expectations", Mr Wang said that one of the big issues the world is facing now is capacity. The process of rapid capacity expansion in the past decade or so is in reverse.
China, the factory of the world, is running out of cheap labour. And the country is grappling with massive environmental problems, from smog-choked cities to filthy rivers, as a result of the pursuit of economic growth at any cost. Pressures are now mounting from the ordinary Chinese people for the government to clean up the environment. This will mean a cutback of some production capacity.
"Asia's production capacity can't continue to go up, and so it won't continue to drive down inflation," said Mr Wang at a media conference held in conjunction with Nikko AM's inaugural investment forum. Strategists from the firm's different offices had gathered in Singapore to share their insights with local product distributors and customers.
=> Inflation there may be, STI is very weak relative to Dow... not a good sign for Singapore economy
Ride at your own risk !!!