Investment OpportunitiesIn A Growing Crisis

Nicholas Tan (CMT, CFTe)

Associate Director LFX and CFD

Alternative Products

UOB Kay Hian

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Current coronavirus crisis1

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Impact on the global financial market

Market outlook during this crisis

Trading strategies and ideas

4 Investment opportunities during this crisis

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Themes

Background On Coronavirus

Asia• China

• Japan

• South Korea

Europe• Italy

• France

• Germany

• Spain

USA

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About The Coronavirus

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Impact Of COVID-19

Asia• China

• Japan

• South Korea

Europe• Italy

• France

• Germany

• Spain

USA

Economic Impact

• Lockdown of towns

• Shutdown of factories

• Tourism

• Travel restriction

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Impact Of COVID-19

Top 10 Economies of the World1. USA

2. China

3. Japan

4. Germany

5. India

6. UK

7. France

8. Italy

12. South Korea

% Share of Global Economy

USA

China

Japan

Others

Source : Investopedia

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Impact Of COVID-19

• Drastic slowdown of China’s economy

- Caixin Services PMI 26.5 vs previous 51.1

• Lockdown of Europe

- Lockdown, travel ban, closures of border

• US economic slowdown

- Expectation of economic slowdown led to almost zero US

interest rate

• Japan economic slowdown

- Second stimulus package

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Impact Of COVID-19

Expectation of a global recession

• Massive responses from government and central banks

- Fed cut interest rate to almost zero

- Government stimulus to offset virus impact

• Economic fallout has outpaced responses

• Economic fallout to produce global recession that is worse

than 2008?

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Market Outlook During These Periods

Equity Market Decline

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Market Outlook During These Periods

• Equity market declines

• US dollar strengthens

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The Dollar Index

US dollar declines as US

equity market declines.

Dollar has strengthened

since 3rd March 2020

on funding pressure.

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Investment Opportunities During Crisis

Equity Market Decline

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CFD Indices

1. Dow Jones Index

• US30

2. S&P 500 Index

• US500

3. Nasdaq Index

• USTEC

1. Hang Seng Index

• HK50

2. Nikkei 225

• JP225

3. Australia Stock Index

• AUS200

Asian Stock IndicesUS Stock Indices

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1 point in DJIA = US$1 Opportunities exist in trading CFD Indices

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Investment Opportunities During Crisis

Investment Opportunities During Crisis

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Gold Product Specification

Standard Contract Size

• 100 oz per contract

• Gold price US$1,500/oz

• Contract size $1,500 x 100= US$150,000

• Every $1 movement = US$100

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Gold Trading Fee

Trading Fee

• No commission

• Typical US$0.30 - 0.33

• US$30 - $33 on 1 Standard contract

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Worries Over COVID-19

Gold rallied while Dow dropped 1800 points

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Correlation Gold And Equity

Inverse Relationship

• Dow Jones Index declines

• Gold tends to rally

Used as a hedge to reduce portfolio volatility by fund managers

Retail investors can switch from equity to Gold

Buy Gold ETF or Gold miners’ shares

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The Currency For China

• Renminbi or Yuan

• USD/CNY- Official exchange rate

- Fixed by PBOC

- Fluctuation within a band from fixing (mid-rate)

• USD/CNH- Since 2010

- Deliverable offshore Yuan

- Rate differs from CNY

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USD/CNH Trading Characteristics

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Trading With The Chart

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Analysis Steps

1. What is the trend?

2. Where is the support/resistance?

3. Momentum study

• Can price go to the next support/resistance?

4. Decision – Where to enter/exit?

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Questions & Answers

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Disclaimer

No part of this document may be reproduced or copied in any

form or by any means without prior written permission/consent

of UOB Kay Hian.

No warranty or representation, express or implied, is made

with respect to the information set out in this proposal, nor will

UOB Kay Hian be responsible for the consequence of reliance

on any opinion or statement set out herein.

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