These currencies will fare worst vs the dollar in 2014

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Expectations that the Federal Reserve would taper its asset-purchase program sent many currencies on a rollercoaster ride this year, and according to analysts, the pain isn’t over yet.

Mitul Kotecha, head of global markets research Asia at Credit Agricole bank, says higher US yields, relative growth outperformance and higher capital flows back into the world’s largest economy will all help boost the greenback in 2014.

“We believe the currency [dollar] will strengthen broadly against a lot of major currencies and a lot of emerging market currencies. The key is which currencies will suffer the most in 2014 on the back of a stronger US dollar,” he told CNBC Asia’s Cash Flow on Monday.

Read more: Ding ding: Taper tantrum round two?

Kotecha singled out the Japanese yen, which has lost nearly 20 percent against the dollar this year and the euro, which has strengthened 3.7 percent against the dollar over the same period, as the major currencies likely to fare worst amid dollar strength.

“It will be a difficult year for the yen. Dollar-yen will get to 115 by the end of 2014,” he said. “We also think the underlying support for the euro will begin to fade next year, potentially getting down to 1.28 (euro-dollar) by the end of 2014,” he added.

Yen weakness has been a key theme of 2013 as policy makers have embarked on an easing-heavy reform plan designed to overhaul the economy.

The euro, meanwhile, has risen in recent months on the back of expectations of a pickup in growth after the region emerged from recession earlier in the year.

The euro-dollar traded at 1.3694 in early trade in Asia on Tuesday, while the dollar-yen traded at 104.20.

Read more: More pain for the Australian dollar

Other currency analysts also suggested the euro is set for pain next year.

According to Westpac bank analysts, euro zone growth momentum is set to slip against the US’s in the first quarter, which will increase the likelihood of the European central bank being forced to loosen monetary policy at the same time as Fed tapers its quantitative easing program.

“This should see the euro-dollar fall substantially,” said Sean Callow, senior currency strategist at Westpac Global Markets Strategy Group.

Meanwhile Chris Weston, chief market strategist at IG Markets also said he saw the euro-dollar weakening to 1.28 by the end of 2014.

“The biggest thing for me is the political issues. In May, there will be the European parliament elections coming through… I think political uprisings in favor of more anti-EU parties are gaining more traction, especially with unemployment at 12 percent. They [the euro zone] need a weaker currency for competitive reasons and that’s why I’m more negative on the euro than the US dollar,” he added.

Meanwhile, the currencies set for the worst declines against the dollar would be the same ones that suffered sharp selloffs earlier in the year, according to Credit Agricole’s Kotecha, when tapering panic spurred a mass exodus from riskier assets.

Read more: Goldman Sachs: Cut your emerging markets exposure

“I think the currencies we will see suffer, because of capital outflows and external vulnerabilities, are the Indian rupee, the Indonesian rupiah, the Turkish lira, the South African rand and the Brazilian real. These are all in the categories that we will see the worst performance next year,” he said.

Westpac also said it forecast North East Asian currencies, like the Taiwan dollar and the Chinese yuan, to outperform South East Asian currencies.

“North East Asia economies have strong current account positions and large FX reserves, which should present a strong firewall against the tapering theme and potential capital outflows,” said Jonathan Cavenagh, Westpac’s senior currency strategist analyst.

But IG Markets’ Weston said he did not see emerging market currency pain being as extreme next year.

“There still will be weakness coming through for countries running sizable deficits that haven’t addressed them enough. But I think the liquidation issue has been abated and I don’t expect to see the same kind of volatility as we saw earlier this year,” he added.

— By CNBC’s Katie Holliday: Follow her on Twitter @hollidaykatie

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The emerging market to watch in 2014

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Vietnam equities have outperformed their emerging market peers by a wide margin this year, and with the nation getting its economic house in order, this trend is expected to continue into 2014.

“At a time when the fundamentals in Indonesia and Thailand are deteriorating, Vietnam’s are turning brighter. We expect the market to outperform its regional peers in 2014,” Sean Darby, chief global equity strategist at Jeffries wrote in a recent report.

The benchmark VN Index, Southeast Asia’s best performer this year, has risen 23 percent year-to-date, compared with a 6 percent decline in the MSCI Emerging Markets Index over the same period.

 Darby notes that the economy’s “Achilles heel”, its trade deficit, is improving, while foreign direct investment (FDI) remains healthy.

Read more: Tapering a ‘watershed moment’ for Southeast Asia: HSBC

FDI reached USD 9.6 billion for the first ten months of the year, with 70 percent of investment going into the manufacturing sector. A stable local currency combined with competitive labor costs are set to help further boost investment into the country, say experts.

“Vietnam is enjoying stable growth with lower inflation helped by an increase in manufacturing contribution from foreign owned firms,” Darby said, highlighting the contrast with India and Indonesia which are seeing slower growth and rising inflation.

Vietnam’s economy is forecast to grow at around 5.5 percent in 2014 with inflation running a little higher at over 6 percent. The country’s gross domestic product grew 5.42 percent this year, compared with 5.25 percent in 2012.

Read more: Is it time to scoop up Vietnam properties?

“This is probably ‘the optimum’ speed for economic growth and if the inflation rate cools further there may be some room for rates to fall,” he said.

On top of an improving economic outlook, the government is also taking action to clean up bad loans in the banking system.

 In October, state-owned asset management company Vietnam Asset Management Company (VAMC) announced it would be acquiring USD 118 million of bad debt from Vietnam Bank for Agriculture & Rural Development, the country’s largest lender by assets.

Agribank had a bad-debt ratio of 6.1 percent as of June 2012, according to the State Bank of Vietnam – the country’s central bank. Lenders with bad debt ratios of 3 percent or more will be required to sell non-performing loans to VAMC, according to a government statement in May.

Read more: Vietnam pushes for easing of trade rules

Andreas Karall, chief investment officer of Asia Frontier Capital (Vietnam) – an investment management firm that runs a fund focusing on small to medium high growth companies in Vietnam – says he sees “enormous upside potential” in the new business cycle that has started in the country and is expected to last up to seven years.

In addition, he notes that the market offers attractive value with around one third of the over 700 listed Vietnamese stocks trading at a price to earnings ratio of between 6 and 7.

“Many of them have a dividend yield of more than 9 percent, and there are even some companies whose net cash position is almost as high as their market [capitalization],” Karall said in a press release announcing the launch of AFC Vietnam Fund earlier this month.

—By CNBC’s Ansuya Harjani; Follow her on Twitter: @Ansuya_H

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I wouldn’t buy gold with my worst enemy’s cash: Strategist

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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As the Federal Reserve’s tapering announcement pushes gold close to its 2013 low, one strategist told CNBC he wouldn’t even buy the precious metal with his worst enemy’s money.

The Federal Reserve’s decision last week to trim its USD 85-billion-per-month asset-purchase program by USD 10 billion knocked gold prices down to USD 1,185.10 per ounce on Friday, close to its 2013 low of USD 1.180.71 seen in late June. On Monday, gold had recovered a little to trade at USD 1,203.35 per ounce in early trade in Asia.

(Read More: Gold settles up after taper)

But despite the slight recovery in prices, Scott Nations, the president and chief investment officer of NationsShares, told CNBC on Monday that the value of gold has been completely distorted by the Fed’s quantitative easing program and its true value is closer to USD 1,000 per ounce.

“I wouldn’t buy gold with my worst enemy’s money. And why is that? It’s because gold got further from home (fair value) because of all of the iterations of quantitative easing – than anything else out there,” said Nations.

“Gold should not be at USD 1,200, it probably shouldn’t have been at USD 1,500. Where should it go? I think it should go below USD 1,000 dollars in 2014,” he added, suggesting a near 17 percent drop from Monday’s levels.

(Read More: Will Asia’s gold bugs come to the metal’s rescue?)

Gold prices have hugely benefited from the Fed’s quantitative easing (QE) program, rising 70 percent from December 2008 to June 2011 as the U.S. Federal Reserve pumped more than $2 trillion into the financial system, as investors snapped up the precious metal in the hope the asset would protect against inflation.

But gold’s fortunes have seen a sharp turnaround this year, as expectations of the end of QE gained traction and prices saw a sharp drop of 24 percent from mid-April to late June. According to fund flow data provider EPFR Global, investors have pulled $38.8 billion from gold funds so far this year, the highest annual amount since 2,000.

The yellow metal has now lost over 28 percent year to date, and is now poised for its worst annual performance in over three decades.

(Read More: Look out below if gold fails this technical test )

Turning tide

Many more bullish industry commentators are starting to turn more bearish following the Fed’s tapering move.

Jonathan Barratt, founder of Barratt’s Bulletin, who has championed more bullish views in recent months, told CNBC he was starting to get nervous.

“The bullish boots are strapped on as long as $1,170 stays in play – if that goes then they are going to back in the cupboard for some time,” he said.

Barratt added that it was becoming harder to disagree with the fundamental headwinds facing gold, including the barrage of exchange traded funds (ETFs) selling, the lack of inflation in the global economy and the fact that other assets offer a yield to investors so are therefore more attractive.

(Read More: Fed taper: A nail in gold’s coffin?)

“It [gold] doesn’t have any friends. At the moment a barrage of fundamentals suggest that USD 1,170 [per ounce] will be tested and if that happens to break down that suggests a deeper, darker consolidation period,” he added.

NationsShares’ Nations urged investors to stay away from gold producers, which he said were set for pain once the price of gold plummets below production costs, at around USD 1,200 per ounce.

“I would not want to be a gold miner right now, particularly given the input costs, including fuel, are not going to go down nearly as quickly as their output prices. I think being a gold miner would be a really tough business to be in in 2014,” added Nations.

“I would buy gold puts because it’s going to start getting pretty ugly for gold and the true believers aren’t going to be throwing in the towel until they get a little bit more pain,” he added.

(Read More: China’s biggest jeweler sees gold in the masses)

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Pitch your start-up, and have a few drinks to boot

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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 Jason Saltzman wants to celebrate start-ups.

The founder and CEO of AlleyNYC, a co-working space, had more than 200 budding entrepreneurs and enthusiasts gather in New York City this week for a new monthly competition event, “Startup Battles.”

“Most pitch events are kind of dull,” said Saltzman. “We wanted to create an environment where people want to be excited.”

The event differed from other pitch events partially because of its open bar and DJ, but mostly because of its unconventional judging panel, which included “Weeds” and “40-Year-Old Virgin” star Romany Malco.

Read more: Expecting more tech IPOs in 2014

Providing a party atmosphere is the latest trend at pitch events. Saltzman said the number of events hosted at AlleyNYC has increased by more than 70 percent this year over the year before.

With youth unemployment still higher than the national average, and 54 percent of millennials starting a business or wanting to start a business, according to the Kaufman Foundation, some see a life pursuing start-ups as a good alternative to a traditional career path.

“We’re at a time in our life that there’s an entrepreneurial renaissance,” Saltzman said. “I think it’s here to stay for a long time, because a lot of these companies are actually making money.”

Read more: New Obamacare enrollment delay: Small businesses

 Gillian Morris is the founder of the most recent first-place winner of “Startup Battles,” called HitList, a mobile app that lets users list places they’d like to travel and alerts them when prices there drop.

“Start-ups have become very, very sexy. There’s something about doing something more fulfilling, and it’s becoming a more legitimate career path,” she told CNBC.

The trend in pitch events comes at a time when New York City’s tech scene continues to grow, and the local government offers subsidized office space and grants for tech start-ups.

Read more: NYC tech boom: Not just mini Silicon Valley east

 For Saltzman, his move to New York City aligned with launching AlleyNYC as he saw tech become embedded in many industries. “You have so many validated industries,” he said. “You have fashion, finance, education—whereas the Bay Area is very technology-focused. So many companies and industries need disruption.”

The tech sector is on the verge of ending the year on fire, with few signs of slowing down in 2014. According to data published by CB Insights, there are 590 U.S. tech companies in the IPO pipeline next year, compared with 472 this time last year, that are either backed by venture capital or private equity and valued at $100 million or more.

Read more: Here’s what the 2014 tech IPO pipeline looks like

Meanwhile tech stocks continue to soar as the Technology SPDR (ETF) is up 20 percent year-to-date.

Some see the high growth as a sign of a bubble among top tech firms, while others think there’s still room to grow. “I think there might be a bubble at the absolute top in terms of sky-high valuations, but there’s a lot of substance being created in the middle,” Morris said.

While Morris still sees many opportunities at the venture level, Saltzman draws a distinction between companies that are valued based on their high levels of users, versus those that are actually making money.

“When it comes to business-to-business related products where you actually have revenue, and the valuation is based on the money you’re making—that’s not a bubble. They’re making money,” Saltzman said.

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Intel using robots to help you with smart devices

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Big tech is getting serious about robotics.

Google just bought Boston Dynamics—the maker of the robots Cheetah and BigDog—Amazon is using robots in its warehouses, and robots play a key role in the manufacturing of Intel’s chips.

But inside Intel’s small robotics lab in Santa Clara, Calif., engineers and computer scientists are working to ensure a better smartphone, tablet and laptop experience better by making the devices more responsive to touch.

Intel is working with a variety of the world’s biggest phone and computer manufacturers, as well as other consumer electronics companies, on making their products better. For proprietary and competitive reasons, Intel won’t disclose any of the companies with which it is collaborating.

Read more: Robots, self-driving cars—what’s Google doing?

The Intel robots are serving a specific purpose in this endeavor, lowering the cost of expensive focus groups and product testing with hundreds of beta users.

A group of cognitive psychologists craft a questionnaire for focus groups: How does your phone feel next to your ear? Do you like the swiping action on your tablet? Are you satisfied with your laptop’s scrolling action?

After being crunched, the data from all those focus groups reside in the robot’s computer memory. The robot does a number of tests on what people like and don’t like about using their smart devices, conducting meticulous measurement and analysis of eye and hand movements.

Read more: Game-playing robots and other cool stuff

 Oculus, from the Latin word for “eye,” is a robot specializing in checking out the look and feel of the smartphone or tablet experience.

Matt Dunford, who works in Intel’s robotic lab, says Oculus has its hands full and faces constantly evolving challenges.

“Consumers see their friends with a new device and feel like it’s way better than the one they have,” he said. “Now their expectations are up here, even though the device they own is down here.”

Read more: McDonald’s: More than a trillion served, by robots

Then there is Andy, also known as Auditus. This robot operates in a soundproof room within the lab, and which measures a phone’s audio clarity. The lab is experimenting with how sound travels through the network to the phone and to the ear.

—By CNBC’s Mark Berniker and Josh Lipton. Follow Mark on Twitter @markberniker and Josh @CNBCJosh. 

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Cut your emerging markets exposure by a third: Goldman

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Goldman Sachs has a clear warning for investors: Emerging markets will continue to disappoint.

In a December report, the bank’s investment management division predicted “the strong possibility of significant underperformance and heightened volatility over the next five to 10 years.”

The client note, titled “Emerging Markets: As the Tide Goes Out,” recommended that investors with a “moderate” tolerance for risk reduce their exposure by one-third, from 9 percent to 6 percent of overall portfolios.

It’s not time to increase portfolios in those markets, even though it may seem attractive because investments appear to be cheap, the report warned.

Read more: Bulls of Rio: JPMorgan Brazil fund feeling upbeat

The iShares MSCI Emerging Markets Index is down 8.4 percent this year as of Dec. 20. It was down more than 17 percent in late June but has recovered slightly.

Goldman Sachs used the 59-page report to argue that growth in emerging markets from 2003 to 2007 was a result of specific economic circumstances that aren’t likely to be repeated; the political and economic reforms needed to improve growth are too painful to undertake.

There has also been a “seismic shift” in investor sentiment on emerging markets for the worse. “The returns were not as attractive as expected, the economic growth rates were not as sustainable as imagined, and the countries were not as stable as believed,” the report said.

Common themes in Goldman’s pessimism on countries like China, Brazil and Russia include overinvolvement of governments in their economies, increasing reliance on commodities and unfavorable demographic trends.

Read more: Place your bets: China or Japan?

Goldman noted that China, for example, has five main problems: “severely imbalanced growth, a weakening demographic profile, financial repression that has distorted allocation of capital, growing pollution that has endangered the health of its population, and an antiquated household registration system known as ‘hukou’ that has hampered access to education and social services.”

In Brazil, Goldman said, the government’s large economic role is the most important reason for underperformance. That has created high interest rates, corporate strategy dictated by the government—often because of direct ownership—and high taxes.

Goldman expects “low single-digit” returns for emerging market local debt in 2014 with a range of gains and losses of about 10 percent. For stocks, the bank sees “high single-digit” returns with a range of gains or losses of about 20 percent.

—By CNBC’s Lawrence Delevingne. Follow him on Twitter @ldelevingne.

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Will Asia’s gold bugs come to the metal’s rescue?

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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While Asian consumers have been an important force in the gold market, helping to offset the blow from heavy bullion-backed exchange traded fund (ETF) selling this year, they may not rescue the precious metal from its steep drop this time around, say analysts.

Gold prices fell 2 percent on Thursday, breaking through the key psychological level of USD 1,200 an ounce as speculation about the Federal Reserve scaling back stimulus further heightened deflation fears. Spot gold was last quoted up 0.3 percent at USD 1,193 in the Asian trading session.

(Read more: Fed taper: A nail in gold’s coffin?)

 “We have seen gold prices being supported at current levels previously, and normally we would have thought that would be the continuing story with emerging market demand lapping up the excess supply. But what is throwing a spanner in the works is India,” Mike Harrowell, senior resources research analyst at BBY told CNBC on Friday.

India, one of the world’s top consumers of gold, has imposed a wide range of restrictions to curb bullion imports in an effort to control the current account deficit.

(Read more: India slaps on more gold duties to defend rupee)

Earlier this year, the government hiked the import duty on gold to a record 10 percent and tied bullion imports to a fixed level of exports via the 80:20 rule. This rule stipulates that 20 percent of all gold imported must be exported before further imports can be made.

 The measures have been effective in suppressing demand, with gold consumption slumping 32 percent to 148 tons in the third quarter, according to the World Gold Council.

While gold demand out of China and other emerging markets in the region remain intact, this is unlikely to help drive prices higher, said analysts.

“Those sorts of buyers tend to be value [driven] and tend not to push the price very hard,” said Harrowell.

Ric Spooner, Chief Market Analyst, CMC Markets says the key question for gold is when ETF selling will finish.

(Read more: Goldman predicts steep losses for gold in 2014)

SPDR Gold Trust, the world’s largest gold-backed ETF, said its holdings fell 0.48 percent to 808.72 tonnes on Thursday from 812.62 tonnes on Wednesday.

“Over the next 12-18 months, – it’s hard to make a case for gold – we’ve got low inflation and potentially a rising U.S. dollar in the background of the Federal Reserve unwinding its monetary stimulus,” said Spooner, who adds that a drop below USD 1,180 would be a “bearish development” for the precious metal.

 “But what plays at the back of my mind is that it remains to be seen whether the world will exit from the current round of major central bank stimulus without inflationary pressure – that makes a case for potentially owning gold, so we may find a base around USD 1,150-USD 2,000,” he added.

According to Frank McGhee, head precious metals dealer with Integrated Brokerage Services, the significant rotation out of the metal into U.S. equities is likely to going to continue through next year and drag prices lower.

(Read more: Gold is just the tip of the ‘Taper Tantrum’)

He forecasts the precious metal will trade around USD 900 by mid-2014 – marking a 24 percent decline from current levels.

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What drives bull’s next leg?

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Sure we’ve had a big run,” Jim Cramer said. “But I think there are places where you can come right in and buy.”

The Mad Money sees plenty of opportunity in five sectors of the market. They are banks, housing, retail, airlines and oil.

“Of course on any given day they could trade lower, but I think all these sectors present significant opportunity,” Cramer explained.

Following are Cramer’s insights for each sector.

 Banks

“If the Fed is to be taken at face value, there will be no increase in what the banks have to pay you on your CDs, but they can invest your deposit dollars in Treasurys that make them much more money,” Cramer said.

In other words, banks make more money in a rising rate environment. That’s bullish. However, Cramer sees other catalysts too.

With the economy improving, Cramer expects new businesses will begin to form – businesses that will turn to banks for loans. And he feels most banks are in excellent financial shape due to stricter regulations therefore, Cramer believes “banks will return capital to shareholders in the form of dividends or buybacks.”

Although there are many ways to leverage the theme, Cramer is quite bullish on Bank of America. “Technicians take note, Bank of America’s chart is a Picasso in the waiting,” he said

Housing

In the housing sector, Cramer thinks companies are about to command more aggressive price-to-earnings multiples.

“Recently, Lennar told a compelling story that said demand had stayed pretty consistent, but supply has fallen behind. That means there’s an imbalance that favors the homebulders,” Cramer explained.

That kind of imbalance warrants premium.

“Given that Lennar has about USD 2.50 in earnings power and this company has growth characteristics and margin improvement possibilities that are better than the average stock in the S&P 500, it’s not a stretch to see it headed to the USD 40s, a nice gain from the USD 37 perch where it now finds itself. Gunslingers might want to go for DR Horton or Pulte or even lumber company Weyerhaeuser, which is also well behind the market.”

Retail

“This sector has done nothing for several months now, as everyone’s been so worried about the holiday season. I say enough already. Time to circle back to Macy’s, GameStop and Best Buy,” Cramer said.

After talking with CEOs Manny Chirico and Frank Blake on Mad Money, Cramer is also bullish on VF Corp and Home Depot. “I think both should have strong holiday seasons.”

Essentially, Cramer believes that retailers that execute well and understand their customers will continue to thrive.

 Oil

“The market has pretty much collectively decided that, after Warren Buffett bought Exxon, it’s the only oil worth owning. The market’s also made a judgment that the domestic oils have had their day and it’s time to move on,” Cramer noted. “I think that’s ridiculous.”

With signs suggesting that the economy is coming back, Cramer expects to see the demand for oil and other kinds of energy increase not decline.

Although there are many ways to leverage the trend, some of Cramer’s favorite energy plays include Conoco, EOG, Noble, Schlumberger and National Oilwell Varco.

Airlines

“I think you can easily buy the airlines, which have stalled out,” Cramer said.

The “Mad Money” host suspects airlines are becoming more profitable and thinks the sector is investable now as a bet on better than expected earnings in the weeks ahead.

And if you’re looking for a single stock ideas, “We now have the completion of the American Airlines-US Airways deal and the stock’s only at USD 26, which I think is radically undervalued based on next year’s prospects,” Cramer said.

Questions for Cramer? madmoney@cnbc.com

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Don’t expect big things from Washington in 2014

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Think about 2014 as a year of diminished D.C. expectations—and then you’ll see the pattern in my predictions for the next 12 months.

Start with the budget, where Senate Democrats and House Republicans have struck a modest deal replacing part of the budget sequester with savings they like better.

Look for them in early 2014 to follow up with spending bills that throw scraps to defense and domestic priorities Congress has neglected—but make little fundamental change.

Lawmakers will avoid both a government shutdown and another debt crisis. Been there, already burned by that.

More predictions: 4 ways to make money off Washington next year

The Obama administration will grind along to the 2014 open enrollment deadline of March 31 for those troubled new health care exchanges that Americans without insurance must buy from.

 Even if enrollment comes up short of the 7 million person goal, White House allies will recruit enough young people to the system to keep the exchanges financially viable for 2015. Obamacare will still have health problems, but it’ll get the chance to survive and grow.

More predictions: Tired of Obamacare? More of the same in 2014

By the fall, voters will go to the polls for another round of mid-term elections.

Without much faith in either party, they’ll start no revolutions this time. Republicans will hold their House majority, Democrats theirs in the Senate.

More predictions: Get ready—Here comes the REAL economy

And then the status quo will limp along toward the 2016 election of President Barack Obama’s successor.

—By CNBC’s John Harwood. Follow him on Twitter @JohnJHarwood.

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Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Could this be the next big social networking site?

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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If you haven’t heard of it yet, you may need to listen in a little more closely as social media site Whisper.sh has exploded in the 18 months since its inception, now boasting three billion pageviews a month.

The site allows users to post ‘secrets’ or thoughts anonymously, through the use of pictures with bold eye-catching quotes at the top, much like internet ‘memes’ — which are described as units for carrying cultural symbols or ideas that virally spread across the internet.

The sentiment on Whisper is serious and thought provoking, and the content is often the kind of thing individuals would not want to shout about in public. The look is similar to the long-running PostSecret website, but Whisper has features which make it more of a social network.

(Read More: Can Japan`s answer to WhatsApp take on the world?)

“That moment in the locker room when all your team mates are making fun of gays and you`re just sitting there like ‘glad you don`t know about me'” one reads. Another reads: “I am nervous that our honeymoon will suck since we are both virgins.”

Others are more lighthearted: “I still pick my nose on occasion. Sometimes tissues just don’t cut it.”

Users tend to use the mobile app for an average of 20 minutes a day, checking content between 8 and 10 times a day, and are aged between 17 and 28, and the majority are female (70 percent), according to media reports.

(Read More: Dating in China to heat up? Tinder’s on the way)

Jeremy Liew of Lightspeed Venture Partners – the first investor in popular photo messaging application Snapchat, which was reported to have turned down a $3 billion offer from Facebook – told CNBC he was excited about Whisper’s incredible growth. Liew invested $3 million in Whisper in April this year.

“Three billion pageviews a month is a shockingly big number for a company only 18 months old,” Liew told CNBC.

Facebook, arguably one of the first hugely successful social networking sites, has reported over one trillion page views per month, by contrast. It has 1.19 billion active users, with 728 million of these active every day.

Co-founder of Whisper Michael Heyward told technology website TechCrunch earlier this year that the site was designed to contrast with the identity focused social networks.

(Read More: Facebook marketing? Don’t bother, says new report)

Where Whisper differs from Facebook, Twitterand Pinterest, however, is that while these sites encourage people to post things they are proud of, like wedding pictures and holiday snaps, Whisper is where users go to spill the secrets they would normally only tell to a close friend. Other users can post supportive comments, and users can respond to one another.

“As is always the case with these companies the most important thing to look at is: are they delighting users? And the best way to tell is how engaged are they? How often are they using a product? How many times a day are they opening it and how many days per month are they opening it,” said Liew.

“Both with Snapchat and with Whisper, we`ve seen extraordinary engagement,” he added.

Users can download the app for free but have to pay to send messages to other users.

– By CNBC`s Katie Holliday: Follow her on Twitter @hollidaykatie

Copyright 2011 cnbc.com

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow