Monday Newsline:Analysing Asia's Prospects;British Cycling Double Win

Asian stocks fell Monday on a decline in China's GDP and in its housing price growth.The GDP fell from 2.9% in Q4 to 2.5% in Q1.Housing prices rose in only 44 of 70 cities.There were no cities in China where real estate outperformed the money market.Gary Evans,head of equity strategy at HSBC,said that's pretty negative for Chinese growth.Real estate is the single biggest driver of domestic demand.*
Thailand's GDP declined on political unrest,dropping 2.1% on the quarter and 0.6% on the year.These factors,plus a fall in iron ore prices hurting Australian miners,sent the MSCI Asia Pacific index down 0.26%.*
I think the Thai problem is gonna rumble on for a long time,Mr.Evans continued.The appetite of many investors is for restructuring-as in Mexico.China is getting a little nervous about how fast home prices are coming down.We like Indonesia and China's state-owned enterprises.The thing is,whether a market is moving in the right direction.It doesn't take much to move Indonesia in the right direction.*
I'm underweight on Japan.Everyone is sitting on a loss-making position,thinking it will get better,but it isn't going to happen.In every country there are vested interests resisting change,and Japan is such a place.*
India's Nifty Fifty Index rose 0.88% on Monday becuase of euphoria over their new prime minister,Narendra Modi,who was first minister of Gujarat state.India is the most over-owned market globally,Mr.Evans pointed out.There will be a shift to Indian energy,utilities and infrastructure stocks.I think the selloff starts maybe today.Then people will buy back in because India is still a good story.The rupee is probably getting close to an equilibrium.
How Mr.Modi will react to Pakistan is uncertain so far.He gets things done:that's what people have bought into,because we don't know what his policy is gonna be.To me,India is like the EU with its many states.Running the central government is different from running just one state as Mr.Modi did.I think inflation is gonna be the key issue,HSBC's Gary Evans noted.*
In sport,Great Britain scored a cycling double victory in the Amgen Tour of California Sunday.The Tour's Stage 8 ended in Thousand Oaks and was won by the current British Champion,and former World Champion,Mark Cavendish from the Isle of Man.To be fair really,I'm in the form of my life,Cavendish said.I just had some French toast for breakfast-I wasn't expecting a tour.Im super happy about that.*
Britain's Bradley Wiggins won the overall yellow jersey for the Amgen Tour,and had previously won both the Tour de France and London Olympics gold medal in 2012.It's right up there as a satisfaction,Sir Bradley said.It's nice to still be winning at this age,34.
His wife and two children were on hand in Thousand Oaks to help him celebrate.*
Amgen(AMGN),HSBC Holdings(HBC)

Asia This Day:Indian Prime Minister Departs for Russia,China

Indian Prime Minister Manmohan Singh has embarked on a five day journey to Russia and China.While in China,he will be discussing the Border Defence Cooperation Agreement the two countries have been negotiating to avoid clashes over extensive sections of their 4,000 kilometer border.Mr.Singh will also attempt to improve trade with both Russia and China,including energy and defence projects.*
The scope of our relationship with Russia is unique,the Prime Minister said,encompassing strong and growing cooperation in areas such as defence,nuclear energy,science and technology,hydrocarbons,trade and investment.*
India and China have historical issues and there are areas of concern,Mr.Singh continued.The two governments are addressing them with sincerity and maturity,without letting them affect the overall atmosphere of friendship and cooperation.I will be discussing some of these issues as part of strategic communication between leaders with a forward-looking and problem-solving approach.*
Besides arms purchases from Russia,while in Moscow he will also discuss completion of a nuclear reactor Russia has been building on India's southern coast that has caused safety concerns.*
In April,Indian and Chinese troops faced off for three weeks in a remote Himalayan desert region,when India accused Chinese soldiers of intruding 20 kilometers/12 miles into Indian territory.Another standoff occurred in August.*
China's Fosun International is buying 1 Chase Manhattan Plaza in New York City for 725 million dollars.It is the largest ever NYC purchase by a Chinese buyer.JP Morgan Chase will relocate most of its employees from the iconic 60 storey tower,which has 2.2 million square feet of office space,to other sites in the city.The US is China's number one choice for real estate investing;Canada is second.*
In golf,South Korean Jin Jeong won the European Tour's ISPS Handa Perth International in Australia Sunday,defeating England's Ross Fisher in a playoff.Australians Brody Ninyette and Dimitrios Papadatos,along with Englishman Danny Willett,tied for fifth place.*
JP Morgan Chase(JPM)

Meeting Your Goal:Real Estate Funds

Income investors are taking a look at real estate funds such as Invesco's.Half the fund is in equities,said Joe V. Rodriguez,Jr.,Head of Global Real Estate Securities and Portfolio Manager of Invesco Real Estate Fund.Our goal is to produce equity-like returns.It's been paying  a 4.5-5% dividend yield.
On the equity side,we really like Kilroy Realty Corp.It's on the West Coast office side.In fixed income,we like shorter duration higher quality bonds.We're also focused on things like commercial mortgage-backed securities,or CMBS.UK CMBS are yielding 2.5-4%.We're getting high yields.
In Japan,seismic-proof buildings with backup power are doing quite well.They're up over 20% in the past year.
In the US,we're gonna build a million units of single family this year.Both single family and apartments are doing well.We like Essex Property Trust,which is concentrated on the West Coast.It's well-positioned to grow rents.
Invesco Real Estate Fund(IARAX),Kilroy Realty Corp.(KRC),Essex Property Trust(ESS)

Asia This Day:China Reins In Property Market;National Party Congress Convenes

The Shanghai property index was down 8.53% in early Monday trading,with some shares dropping as much as 10% on news of new government restrictions on the sector.It was the worst decline in five years.
The property market has really taken off,according to Jing Ullrich,Chairman of JP Morgan Global Markets China,triggering government concern about social inequality and the middle class.I think buyers may slink to the sidelines again.
Property is the one area the middle class can stash their wealth.The rising income of the middle class has stoked prices.
Property prices are hardly affordable for newcomers.There may be declines for the next three months,but in the long term,urbanisation and income growth are still very positive for the property sector.There may be a great deal of volatility in the next month or two as the new measures are applied.
This year should be a better year for the stock market than 2012.In the near term,Hong Kong shares should hold up better than the mainland,being supported by international investors,but the mainland shares are cheaper.People need to think about China concept stocks such as those of  multinational firms doing business in China.They could make double digit gains.
The National Party Congress in Beijing will be attended by 3,000 delegates over the next 10 days.Xi Jinping will be formally named President.There should be social services and urbanisation developments.Big ministries may be reshuffled.There may be financial services reform to create more of a level playing field between State-Owned Enterprises and Small and Medium-sized Enterprises,and to make the financial services industry globally competitive.
About 280 million migrant workers live in Chinese cities without social benefits.Only those born in cities have medical care.Migrant workers do not have benefits.They are second class citizens.
The Indian Nifty Fifty and Sensex indexes were both down in early Monday trading.There was a lot of pressure on auto stocks from poor February sales.Asia shares generally were down on the new Chinese property market restricitons.
Australian company profits declined,led by mining and manufacturing,as commodity prices fell.
iShares FTSE China 25 Index Fund(FXI)

Should You Buy Homes Now

Now is the time to buy homes,said Mark Kiesel,manager of a PIMCO Investment Grade Corporate Bond Fund.There's a lot of pent-up demand for housing because rental prices are going up.A lot of the inventories are older.
Invest in building materials companies as well as construction.Timberland owner Weyerhaeuser gets 75% of its income from housing.Consider USG Corp. and Masco Corp.USG provides construction materials such as Sheetrock and Durock,while Masco offers building supplies,construction materials and contractor services.
Whirlpool gets 62% of its income from replacement,so remodeling benefits them.
Get into the emerging markets.We like to invest in 2-3 times the overall growth rate in fields such as gaming;gas distribution in China;and emerging markets banks.Brazil and Peru will see a lot of emerging markets growth.
Mr.Kiesel has an MBA from the University of Chicago Graduate School of Business.He is Morningstar's 2012 Fixed Income Manager of the Year.
Weyerhaeuser(WY),USG Corp.(USG),Masco Corp.(MAS),Whirlpool(WHR),PIMCO Investment Grade Corporate Bond Fund Instl(PIGIX)

Investment Trends:Homebuilding On The Mend

We're a little more than halfway back in homebuilding,according to Joseph McAlinden,Chief Investment Officer at Catalpa Capital Advisors.We've been under-building.The data that we see show that the shadow inventory calculations are actually coming down.The inventory will come to market,but we're gonna have a shortage,and prices will continue going up.
The play could very well be financials and companies such as Home Depot that support homebuilding.For the year as a whole,several million people who are now underwater on their mortgages will actually come back above water.
The National Association of Homebuilders says buyer traffic is rocketing.That means construction workers will buy big pickup trucks and other products,helping the economy as a whole,Mr.McAlinden pointed out.
Joseph McAlinden,CFA,has more than 40 years experience in the investment industry.He has a BA  in Economics from Rutgers University.A frequent guest on business television,Mr.McAlinden previously worked at Morgan Stanley,Dillon Read and Argus Research.
Home Depot(HD),Lowes(LOW)

Asia This Day:Chinese Economy Still Under Pressure,Premier Says

Japan's machinery orders dropped 14.8%,which is seven times worse than estimates.As well,the current account balance fell about 63%,reflecting a drop in chemical and aerospace orders,and increased imports of liquefied natural gas.The Kansai Electric Ohi nuclear reactor number 3 is now running at full capacity,having been restarted last week,but it only supplies 2% of the country's electricity.A lot of LNG imports will still be needed until other reactors come back into service.
Chinese Premier Wen Jiabao said China will continue to intensify pre-emptive fine-tuning of policy.There are still relatively large downward pressures on the economy.Real estate market controls will continue,as speculation must be stopped.Don't expect such controls to be eased anytime soon.China's inflation declined for the fifth consecutive month below Mr.Wen's 4% target rate,settling at 2.2 %,below the 2.3% estimate.
Shares of Australian miners Iluka Resources and BHP Billiton dropped on fears of a Chinese hard landing and worsening global demand generally.The MSCI Asia Pacific Index was down 0.82% in early Monday trading,while India's Nifty Fifty futures index declined on the Chinese inflation numbers and U.S. jobs stagnation.The Chinese low inflation figures are being seen by analysts as a confirmation of continued weakness.
On a lighter note,South Korean golfer Na Yeon Choi,24,won the Women's U.S. Open at Black Wolf Run in Wisconsin.She survived some harrowing mistakes on the back nine with cool-headed recovery shots,earning her first major victory and her sixth total win on the LPGA Tour.Her countrywoman Amy Yang was second on the leaderboard.
BHP Billiton,Ltd.(BHP),Iluka Resources,Ltd.(ASE:ILU)

Elephant Shifts Its Weight

Like everything else in California,its pension fund,the California Public Employees' Retirement System,or CalPERS,is gigantic.CalPERS manages about 261 billion dollars U.S. for around 1.5 million employees and retirees.This massive fund is in the midst of a 2-3 year transition to a new asset allocation.Russell Read,chief investment officer of CalPERS,is directing a cutback in stocks and bonds in favor of investments such as private equity,real estate,commodities,infrastructure projects and timber.As well, the equities portion of the portfolio will be moved to a greater proportion of foreign stocks.All of this is needed to ensure a larger return for the workers CalPERS serves.The stocks allotment will go down to 56% from 60%.Indeed,stocks have already been trimmed to about 58%.The current allocation of 36% U.S. stocks will decrease to 28%,while foreign stocks will go from 21.6% of the portfolio to 28%.Bonds will be reduced from 26% to 19%.Mr.Read is fundamentally optimistic about the global economy,although there will be continued softness in financials and a trading range of 13-14,000 in the Standard and Poor's 500 index.Energy and materials are favored.He also likes real estate,including global real estate,for the long term.Private equity investments such as Silver Lake Partners,which buys technology firms,don't necessarily follow the stock market.About 5% of CalPERS' portfolio will go into inflation-linked investments,which tend to do well when inflation ticks up.These include timber,infrastructure and commodities.The real estate portion will rise from 8% to 10%.Alternative investments,including private equity and venture capital,which invests in start-up companies,will go from 6% to 10% of CalPERS' holdings.In its last fiscal year,CalPERS earned a total return of 19.1%.Fiscal 2008,which began last July,will be very challenging,given current market conditions.The new strategy will give CalPERS a better chance of sustaining its great success.