The following stock markets have a good chance of being the best and worst performing markets (with a twist) in 2013. The 16th Credit Suisse (CS) Asian Investor Conference (AIC) was held in Hong Kong last week. This year CS also had what they believe was their “largest and arguably most impressive repertoire of keynote speakers, who shared their wisdom from stock markets, politics and e-commerce to the origins of the cosmos”. Link to the conference is here.
The speakers gave their ideas for what they think will be the best and worst performers for 2013. These guys are incredibly smart, so they have a good chance of being correct in their predictions, right? Wrong. That is the twist. As we showed from Credit Suisse’s AIC last year, the results were almost the exact opposite of what the investors at the conference had predicted (make sure to check out our earlier article on this topic here). As is the case in a good percentage of the time it pays to be a contrarian. So here are some of the key stats from AIC and then we will summarize:
At this year's Sohn Investment Conference, Dan Sundheim, the founder and CIO of D1 Capital Partners, spoke with John Collison, the co-founder of Stripe. Q1 2021 hedge fund letters, conferences and more D1 manages $20 billion. Of this, $10 billion is invested in fast-growing private businesses such as Stripe. Stripe is currently valued at around Read More
- Japan was one of the most talked-about topics at the AIC this year. One of the most interesting results of the AIC Survey was the divided opinion on Japan. Investors are either very bullish or very bearish on the market.
- Long-only and hedge funds seem to be universally long China. It is the biggest overweight position for about 20% of long funds and for nearly 40% of hedge funds. India, on the other hand, is the biggest underweight for 40% of the hedge funds and 10% of the long funds.
- 37% of the investors predict the US will outperform other global markets. Although everyone is in consensus over the US, hedge funds are more bullish on Japan while long-only funds are bullish on Non-Asia Japan as the second best region.
- Long vs. hedge funds in ASEAN The longer-term money is still bullish on Thailand and Indonesia but hedge funds are less so. Indonesia and Malaysia are among the biggest under weight.
- Over 75% of the investors expect markets to be flat to up from here to the year end. More than 50% of the investors believe markets will be up 20% or more.
- Among sectors, the opinion is most divided on property, where nearly half the funds are overweight and the other half underweight. It seems to be setting up for a binary outcome in 2013. Overall, consumer, financials and tech are still overweight.
- Sectors: Consumer discretionary stays the preferred sector. This year energy was the least-favored of stocks among both long only and long short, while utilities have moved to the three least-favored stocks. Consumer discretionary continues to be the consensus favorite for hedge funds and long only.
There is a big divergence between long only and long short funds (note Credit Suisse does not subdivide these categories nor explain why the long only investors have a longer term time horizon). However, based on a contrarian view; China, the US, should be among the worst performers, India and Europe among the best. For other countries, the data is conflicting or incomplete (i.e. most overweight measured but not underweight), however, countries like Vietnam and Malaysia seem poised to have a good year based on the large negative sentiment.
For sectors, real estate is unknown energy and utilities should outperform, while financials, consumer discretionary and tech underperform. Finally, with 50% of investors expecting the market to be up by more than 20%, caution may be a good thing.