This bull’s got some life in it yet

With equity mar­kets reach­ing all-time highs re­cently, the USA’s pro­posed in­fras­truc­ture pro­gramme in the off­ing and a hous­ing bub­ble in China un­likely, it ap­pears the bear is not due for quite some time.

Finweek English Edition - - THE OPTIMIST’S GUIDE: MARKETS - By Petri Redel­inghuys

2016 has been a rough year for most traders and in­vestors, with a fair num­ber of unexpected and un­prece­dented events tak­ing place. So far the mar­ket has laughed off the ex­pec­ta­tions of the bears that the worst would hap­pen. The year started on the back foot with US in­ter­est rate hike shocks, fol­lowed by Brexit, fol­lowed by Trump, and each time it started to look like the equity mar­kets were fi­nally go­ing to throw in the towel, they ral­lied some­thing fu­ri­ous and in some cases, went on to sprint to new record highs. The mar­ket has been re­silient in 2016 and based on that re­silience we could ex­pect it to re­main so dur­ing 2017.

As a tes­ta­ment to the positive sen­ti­ment that is preva­lent in equity mar­kets around the world, stands what Bank of Amer­ica’s Michael Hart­nett called a “wa­ter­shed” month for as­set ro­ta­tion and fund flows. Dur­ing Novem­ber, the largest five-week streak of out­flows from global bond funds in three­and-a-half years took place as well as the largest three-week streak of out­flows in global pre­cious met­als funds. These out­flows from “de­fen­sive” and “safe haven” as­sets were ac­com­pa­nied by the largest in­flows into equity funds all year.

This goes to show that those with mas­sive amounts of capital, who had been sit­ting on the side­lines just watch­ing events un­fold in the mar­ket, have de­cided to fi­nally come to the party and start buy­ing stock. So, from one an­gle it looks like there is a lot of de­mand for eq­ui­ties out there, and a lot of capital with which it can be bought.

What about China, though? Well, it seems that the world is largely ig­nor­ing the Chi­nese econ­omy’s el­e­vated debtto-GDP ra­tio and fo­cus­ing more on the

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