Markets dislike ambiguity and the current BOJ/government standoff has only exacerbated investor despair and frustration which has resulted in further selling by foreigners in search of supposed better pickings elsewhere in the region. Ongoing confusion over the scale of potential fund raising requirements in the banking sector coupled with a wave of secondary equity issues are but two further reasons to encourage further selling. In many respects the only surprise is that the market has not fallen further given the indiscriminate selling that usually accompanies foreigners exiting from Japan. We however see various reasons to be more optimistic over the coming months as the BOJ ultimately ease tight monetary policy after reviewing firm government budget proposals for next fiscal year and thereby reassuring themselves that the new government will not send JGB yields sharply higher on the strength of undisciplined budgetary approach. Recent press articles suggesting that the DPJ will have to water down main election promises such as child allowances point to a » Read more: Rupert Kimber – November 2009

The Terra Fund posted a gain of 0.x% for November. We have maintained a cautious approach towards markets in November, finishing with a net exposure of 11% and a gross exposure of 75%. The Fund has 34 positions with the top ten accounting for nearly 50% of NAV. Our greatest exposure remains in alternative energy, a net long of 18.5%. At the stock level, the biggest winners were positions in Detour Gold +22.7% (precious metals); Rio Tinto +14.7% (mining); and Yingli Green +22.6% (solar).

The alternative energy sector’s biggest event – the UN Climate Change Conference takes place in Copenhagen 7-18 December. The conference will attempt to lay the groundwork for a binding agreement to stabilise greenhouse gas emissions to less than 550ppm, the upper range considered necessary to limit temperature rises to a manageable level of 2-3 degrees.

Much has been written in the press about the Conference being a failure because » Read more: John Payne & Steven Miller – November 2009

Nearly everyone has worked out that China’s economy is just fine. Better than that, more than half of the investors who know anything about China think that we are just at the beginning of large liquidity and asset bubble that will drive the economy for at least several more quarters to come. Another large group of investors thinks the economy is in “Goldilocks” with a gentler and more extended bull market cycle ahead of us.

We too are positive on China’s economic growth for the coming few quarters – in fact to such an extent that we really have great difficulty seeing what could go wrong.

We’re not worried about exports. Exports’ contribution to China’s growth this year have been negative – even if they did not grow at all this year it would still represent » Read more: Jeff Coggshall – November 2009

Animal spirits are returning to Australia, with Transurban being bid for by Canadian pension funds, AXA by AMP and AXA’s French parent and Aurora Place – Sydney’s ‘best’ building – by a foreign consortium, at an aggressively low yield. Several other property deals have also been consummated recently, giving theoretical valuations a genuine underpinning. Despite the evidence of these transactions, large swathes of the Aussie market – utilities and property – remain unloved and clearly cheap, presenting a haven of high yield and predictable cash flow for the prudent investor. Commercial property is already ‘hot’ in the UK (we cannot understand why), and with the phoenix-like resurgence of General Growth Properties in the US – debt has gone from 10c in the dollar to near par value again – Australia presents a great opportunity for the specialist property investor to access a bargain. This is in stark contrast to Hong Kong and Singapore, where stocks are expensive and recent issuance has been opportunistic. In particular the float of Capital Mall Asia at a large premium to NAV when several of the constituents are already listed at lower valuations looks a great deal for the vendor and a spectacularly bad one for the buyers. Elsewhere in North Asia there seems no let-up in IPOs, despite an unhappy post-listing experience for the majority, with the Wynn and Sands listings proving poor investments due to excessive valuation expectations on the part of the vendor.

An exception to our dislike of Asian property stocks is in the arena of Chinese investment property, where the stocks are viewed as dull relative to their highly geared, development-oriented peers. As a result the valuations are attractive and » Read more: Mark Fleming – November 2009