2014 likely to be a stock picker’s market with indices going up less

China has been the black sheep of the investment world in 2013.倉 The share market In Shanghai fell 6.7 percent, one of the worst performances of recognized markets, while developed Europe was up around 18 percent, the US up around 30 percent, and Japan a whopping 57 percent. Naturally if you factor in foreign exchange movements the last three were up between 20-30 percent in US dollar terms, but that still leaves the Chinese mainland languishing in negative territory and Hong Kong not many percent above that.The stock market is usually a good barometer, not about the health of the economy, but what investors think of the future health of the economy. In the last few days, the Chinese authorities have announced local government debt to be much higher than previously measured and the purchasing manager's index (an indicator of economic expansion) still positive — but less than before. Such candour on behalf of the authorities is to be welcomed as it lessens the chances of sudden unwelcome news, which nobody wants.However, China has a couple of cards up its sleeve including the recovery in foreign markets to which China exports. Europe may seem sluggish now, but the performance of stock markets there indicates that growth is likely to pick up in 2014 much as it did in the US 12 months ago. Global growth would lift the boat of the Chinese economy and underpin the coming year.The other key factor is that it is feasible that China could reflate its economy just as the US, Japan and Europe have done using low interest rates and quantitative easing — "creating liquidity" in central bank speak. So far the authorities have been dead against this, taking the path of austerity to restrict the bankers, who have lent too much and pushed up house prices, infl24小時迷你倉tion, and local government and shadow banking debt.Liquidity increases would avoid another year of stagflation by encouraging the economy although the government would have to use other means to control house price rises. If Chinese authorities were to increase liquidity, of course, the stock market would respond as enthusiastically as the Dow Jones Index has over the last two years.To get an insight on Chinese markets over the next 12 months, we must look at global markets. Most analysts are forecasting that 2014 is going to be a good one for investors. There is a genuine consensus that the "boiler rooms" of the US and Europe are building a head of steam. This is likely to drive the momentum of markets, creating an upward trend that I expect will last four to six months. Overall, I am expecting a single-digit percentage rise in Wall Street in 2014 — after a strong first half of the year. That means sometime in the year, there may be a notable fall and that will please the naysayers talking about a crash in 2014; though the 15 percent fall may come after a 20 percent rise, from now. So the secret of success in 2014 will be either in taking advantage of the momentum in the first half of the year and then spotting the fall — or in exercising patience over the long term.The year 2014 is likely to be a stock picker's market with market indices going up much less than in 2013, but with certain shares doing very well. Those shares are likely to follow the momentum of the last year with sectors such as banks and technology doing well. On the back of the global recovery, Hong Kong and the ASEAN economies might bear the first fruits for a while, as might industrial and soft commodities.The author is chief executive of Port Shelter Investment Management.迷你倉旺角