Bad news

A slowly recovering market is now hit by more bad news with the death of Ms Bhutto. Usually, this kind of bad news affects geographical markets like India and US. However, investor's confidence is at a all time low, thus, any bad news will trigger a sell down. In addition, as stated in my previous post, this period is the festive season which denotes low buying interest among investors which would not help a falling market.

There's too much uncertainty in the markets currently and I expect it would continue this way till Feb 2008. Currently, I would avoid India, US and Thailand like plague. India due to its proximity to Pakistan, US with its close ties to Pakistan and Thailand for uncertain political outlook in the near future with the Thai army not ruling out another coup.

As a note, I like to take this chance to condemn the person behind the assasination. This is not an act of terror, it is pure murder and regardless of race or religion, YOU would not be forgiven. In addition, I suspect that all these killings are political in nature rather than a spread of terrorism.

Festive Season

It's the festive season but markets do not look at all fanastic. All gains reaped during the previous 2 weeks had pared back down. The Fed's quarter point cut has not gone down well with investors although I do feel that a half point cut would be too much as all economic indicators show a slower growth rather than a recession.

Another reason for the fall would be the lack of buying interest during this festive period as most investors are taking a holiday break. In addition, some investors would have locked in profits for some Christmas shopping. Usually during festive seasons, the lack of buying interest would cause indicies to fall as without much demand, the price of individual stocks would fall.

I expect the next 2 weeks to be not that fanastic unless a sudden good news appear. There would probably be some chance to buy in during the last week of the year. However, things might pick up in the 1st quarter of 2008 when economic results are shown during these period.

Lastly, have a great holidays!

Market Recovery In Progress

Hi folks, I'm back from HK!

Tis the Christmas season, and so the retailers are having a great time. If you had managed to heed my advice and bought some UT last week, you should be making some money by now to spend on Christmas presents. As of last week, you would be able to see a positive mood on the stock indices. The momentum of the gains of last week had somewhat slowed down this week, however, it is still a recovery in progress till the end of the month.

However, we would need to take note of the macro-economic conditions and the pull out of investments seen in unit trust. For macro-economic conditions, economic data especially the job data had indicate that the US economy is not too bad. US would probably not go into any recession but might face slower growth. For asian markets, most of asia should be going into 2008 with strong growth but GDP growth might be curbed to prevent inflation from getting out of hand. China had declared a tighter monetary policy to curb inflation and the impact on the stock market would be negative in the short run but in the long run, Chinese stocks are still expected to post strong returns. For Korea, talks had continued on the FTA and things are looking up.

The pull out of investments in mutual funds is somewhat of a concern, as it shows that many investors are cashing out during this period. Using micro-economic terms to explain, this pull-out might drive down demand causing price of stocks to drop which in turn would be reflected on the price of the unit trust. However, it seems that the stock markets are still holding up well even with the cash out.

My advice would be to enter the market now as you had not done so last week as recovery would continue for some time with emphasis on Latin American, China, SEA economies. Even European funds look interesting for those looking at diversification.