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Archive for December, 2014

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Posted On 15  Dec  2014  

Crude realities of the energy markets

In order to perverse market share OPEC appears to be waging war against US shale oil producers. Sanctions and tumbling oil prices are having severe consequences on the Russian economy. Lower oil prices will have major impact for both oil importers as well as exporting economies. Algoam shares its views on the dynamics of energy markets. Please click here      

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Posted On 08  Dec  2014  

Closet trackers

According to the FT today, GBP 58bn is struck in UK closet trackers – fund managers who claim to be active managers but are in fact doing no more than tracking equity indices. The returns they deliver, after fees are then obviously less than passive investing. According to the Danish regulator, Finanstilsynet, almost 1/3 of the 188 domestic funds in Denmark could be classified as closet trackers. In the UK the estimate is that 46 per cent of fund managers are closet trackers. Market trackers such as the ones offered by Vanguard charge fees that are 80 per cent less compared with closet trackers. In Europe Eur 10tn is being managed by funds, the Brussels-based Financial Services User Group has found that, after fees that there is no asset class where active managers outperformed the index for the period 2003 to 2012. Only 20% of the asset managers who were

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Posted On 06  Dec  2014  

Bull or bear – should one care?

John Authers in the FT asks if we are still in a secular beat market. Most of us want to know if we are in a bull or bear market. Analysts use terms such as secular bull or bear markets and make it sound so profound. It is common to assess what it means by looking at the long term history and taking measures of P/E ratio or the labor market or look at inflation adjusted returns or comparisons of the stock market to the performance of Gold or Oil or Barbie dolls. What does it all mean? Let us look at the P/E ratio It is true that markets rally from distressed P/E’s in the single digits and correct from very high P/E’s when they are in the so called ‘bubble’ phase. But using P/E ratios to trade markets produces very poor results. Extreme P/E’s are only reached a

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Posted On 05  Dec  2014  

China Equity Markets

The fall in commodity prices in general and the price of oil in particular has significant positive consequences for the China growth story. Cornered with western sanctions, China has been able to strike a bargain long term deal on energy with Russia. Thus this is not a temporary stimulus. The slower growth and lower inflation has prompted easing of credit conditions with a first reduction in interest rates that is imminent. Lower inflation outlook will lead to lower rates. Tying the CNY to the dollar, however loosely, causes import of deflation into China. This can only prompt restructuring of the inefficient part of the economy and drive productivity growth. China isn’t going to give up its hard won market share of global trade, while it drives demand locally. The latest move to permit investors in Hong Kong to buy onshore stocks has fired up Chinese equities. This is only a

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Posted On 05  Dec  2014  

Distribution partners

Algoam is now offering its products via Banks and Interactive Brokers. We are looking to partner with individuals and organisation to distribute. If you like our product range and think that you have the scope to help in distribution, please contact us. We pay out a very significant percentage of the fees for distribution. For structured products there is scope to earn the fees upfront on completion of the transaction. Please contact us

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Posted On 01  Dec  2014  

Gold, commodity prices, emerging markets and the US dollar

Gold has been on a tear today! Lower oil prices are deflationary on the surface only. Lower oil prices are a big stimulus to the economy. People start to drive more and spend more when they save money at the gas pump. Air fares go down and one travels more. Food prices go down and one ends up buying the more expensive cuts of meat and perhaps a more expensive bottle of wine. Consumption is a much bigger driver of inflation compared with reduction in energy costs. Consumptions spread throughout the economic system. It  is the same amount of money that is being transmitted from energy savings to the rest of the economy, but its impact on markets and equity prices is disproportionate. Consumption turns companies that may be otherwise on the verge of bankruptcy into viable businesses. This is the basic principle of economics. A little stimulus can go