Mr Nicolas Wang Zilong, Strategist at Phillip Futures, has 12 years of experience in the securities and futures industry, both as a trader and a hedge-fund manager.
Has the gold bubble peaked?
Yes, I think it has peaked. The United States has indicated it will constrain its printing of money.
Normally, when the real economy is good, people tend to prefer investments that give them better returns, rather than to invest in gold. Therefore, the gold price has plunged this year.
Should one buy gold now?
The answer depends on what investment tools you use.
To invest in global products such as gold and currencies, you should use different tools, depending on the environment.
When the price is lower like it is for gold presently, you would want to choose an investment tool that is less subject to short-term fluctuations and gold exchange-traded fund (ETF) is one of your choices.
More savvy traders can benefit from the volatility by trading gold futures.
What do you make of the negative economic news on China recently?
During the past 30 years, the story has been "made in China", but as the government shifts its economic policy the story of the future will be "consumption in China".
The GDP growth for China this year is estimated to be 7.5 per cent.
Investors are so used to 10 per cent GDP growth in China that we think that 7.5 per cent is low, but compared to the rest of the world it is high.
So the China growth story is still there.
So China is still a good investment?
Because of the misunderstanding of the China growth story, the Chinese stock market is at a 10-year low. The price/earnings ratio is around 10 times, and for some blue chips the cash dividends are 5 to 6 per cent.
For long-term investors it is a very good opportunity.
What's the outlook for the China market for the rest of the year?
I see no improvements for the China market in the next half year. It's quite difficult to see A-shares, which are stocks trading in both Shanghai and Shenzhen denominated in China's yuan, go up in the short term.
If your investment horizon is five years or longer, it is a valuable opportunity. Also take into account that you will be investing in yuan, which is likely to appreciate in the long term.
But for short- or middle-term investors, I don't think the biggest opportunity is there.
How can Singapore investors invest in China?
China's growth story is about the whole country, rather than an individual company, so it would be better to follow a stock index.
The SGX FTSE China A50 Index Futures, which comprises the 50 largest A-share companies in China, is an option for investors in Singapore.
As it correlates closely with the performance of A-share companies, the SGX FTSE China A50 Index futures contract is a good way for investors to gain access to China's booming markets. But as it is a futures product, leverage applies.
What are the pitfalls of investing in China?
Avoid small companies if you are not familiar with the industry as their management usually is quite poor and you never know when there may be a scandal.
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