Analysts from ELANA Trading and Saxo Bank presented
“Myth & Reality About Trading on International Financial Markets”
On 26th January 2010 analysts from ELANA Trading and Saxo Bank presented “Myth & Reality About Trading on International Financial Markets” featuring predictions about the most popular assets in 2010 and specific trading ideas to help investors benefit from the markets status this year. Market predictions were commented by Tsvetoslav Tsachev, Head of Research at ELANA Trading, and Didier Abbato, Senior Manager on the Trading Advisory Desk at Saxo Bank. This is a joint initiative of one of the oldest brokerage in Bulgaria and the leading European investment bank featuring the partnership concluded for introduction of a new trading platform on the market, ELANA Global Trader, which gives easier access to Bulgarian customers to trade on the global markets through desktop, laptop and mobile phone.
Expectations for a V-shaped recovery of the economy bringing countries back to the “old good times” represent a myth, according to analysts. ELANA Trading predicts a deleveraging period in the next 5 to 7 years where economy will be mostly focused on reducing debt and consumers as well as business will be rather savings-minded. A balanced economic growth is expected excluding opportunities for fast growth of lending and consumption. A typical example of similar periods is the years after the Great Depression in USA when debt was reduced by 34%, or the period after the Russian crisis in 1997 when the debt was two-fold decreased within 4 years.
Another myth is US dollar is in trouble and will not cease weakening. In 2010 US currency will strengthen: ELANA Trading posted a prediction of 1.30 EUR/USD by the end of the year, while Saxo Bank analyst specified 1.42 EUR/USD by the end of January, 1.37 EUR/USD by the end of Q1 as well as 1.22 EUR/USD for H1. „Higher interest rates, and even only the expectations for that will be enough for growing USD demand and increase of capital flow to US. We do not expect it to be the sole reason for strengthened dollar this year but it is possible to happen resulting into USD gaining even bigger strength than we predict”, argued Tsvetoslav Tsachev from ELANA Trading. Investors can benefit from those trends by trading EUR/USD and USD/JPY or buying ETFs on USD indices.
In 2010 Gold will disprove the belief that it is a safe-haven and will go low by the end of the year. ELANA Trading expects USD 950 per troy ounce by the end of 2010. Saxo Bank analyst calls for the price of USD 870. „We believe that the price of gold has been driven mainly by reserve diversification from emerging markets central banks. A stronger USD means less urge to diversify away from the currency. Also the price of gold has been driven by long term inflation expectations but our expectations are for low inflation going forward”, explained Didier Abbato, Senior Manager on the Trading Advisory Desk at Saxo Bank. Proper trading ideas will be to sell spot gold/ major Forex crosses or buy ETFs-shares of metal industry when metals' price go down.
Expectations of ever-increasing oil prices will not meet reality in 2010. Dynamic oil price will be witnessed in 2010, claim the analysts, but rocketing prices are not to be seen by the end of the year. ELANA Trading target is USD 80 per barrel. Saxo Bank expert expects USD 70-80. „Lingering political risk in the Middle East and depletion of oil reserves will continue to cap oil prices in the long-term. Oil going down below USD 50 per barrel in 2009, led to a drop in investing in exploration of current and new oil fields. That poses a risk of a new sharp price increase of oil if supply shrinks”, claimed Tsvetoslav Tsachev. Useful trading ideas for 2010 will be buying ETFs related to petrol industry in H1 /Long IXC (Energy ETF)/ or oil CFD trading within USD 65 – 85.
More myths to be dismissed in 2010 come with the US stock market and the cheap US stocks. According to analysts, US stocks come close to overvaluation – in 2010 US stock market will register moderate growth of 5-10%. ELANA Trading calls for S&P 500 - 1200 points by the end of 2010. Saxo Bank expert sees S&P 500 in the range of 950-1250 points. Didier Abbato commented: „We also agree that sentiment indicators have overshot. Most price ratios for the S&P500 index show an index that is fairly valued to expensive.” Tsvetoslav Tsachev added that similar periods of slow US stocks price growth happened in 2004-2005 following the rally in 2003. Investors can benefit from the US stock market trends by trading ETFs on US companies or CFD futures on S&P 500 within 1000/1250 points as well as Buy ETF GWX/sell NASDAQ.
Emerging markets in 2010 will not sustain the notion that China will buy commodities at any price forever. Analysts expect that recent growth rates will be hard to preserve. However, emerging markets will perform better than Europe and USA as long as governmental stimuli and low interest rates continue. „Although we see correction in US and EU stock markets leading to correction in emerging markets, they will continue outperforming them in 2010”, pointed out Didier Abbato. Useful trading ideas are buying futures and commodities’ CFD as well as buy ETF EEM/sell NASDAQ.