“China needs the world and the world needs China,” Chinese Premier Wen Jiabao announced on the eve of the celebration the 60th anniversary of the founding of the People’s Republic of China on Sept 30 this year. From the guessing game on the revaluation of the Yuan to the “carry trade” antics of the US Dollar, the timely or late unrolling of fiscal stimulus worldwide, climate change policies, to whether jobs and loan growth will return strongly, about the only certainty next year is that China will overtake Japan as the second economic power.

The first decade is already a lost decade for developed equity markets. As the comparative chart by Bloomberg on asset class performances from 1999 to 2009 shows, it was a golden decade for, what else, but gold. From record lows of US$252 ($355) per ounce in 1999, it is now being pushed to US$1,500 for next year, if you follow the gold pundits. As someone said, “it is fear of inflation, and not inflation” that is giving it a safe haven credential beyond its demand.



Next came commodities that despite the 80% retreat from its high are still the second best performing asset class from 10 years ago. Worst off is the investor who puts a dollar in the S&P 10 years ago. He would get back about 78 cents.

The STI has fared better, but not as hot as BRIC (Brazil, Russia, India, China) markets because the world recession hit western export-oriented economies like Singapore, Korea, Taiwan and Japan hard as well.
The STI closed at 2,841.56 today, recovering a sizzling 61% for the
year. But the record is mediocre over 10 years, up only 12.7% from
its Dec 30, 1999 high of 2,479.58. It barely beat the decade’s
inflation rate. By comparison, investors who bought Singapore property
fared much better. Over the decade, the URA residential property index
adjusted for inflation is still up more than 50% as of Oct 2009,
even after correcting from its 80% high set in 2007 before the market
fell.

So where do you put your money next year? Which sectors will take off? What will be the impact of the opening of the Integrated Resorts? Which Singapore companies should you watch out for next year?

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