For the past month, we have seen massive rally for Asian markets like STI. The question on our minds now is if the rally is sustainable. It does seem that the current rally is building up to be a bubble as there are news that the 1st quarter earnings although better than expected are still not much to shout at. Note that earnings for financials and major companies as compared to the previous year are weaker on a year on year basis.
For today, the index has started to take a dip. If the dip continues based on this week trend, it would show that a correction is in effect where current prices would most likely be off between 15% to 20%. I would say that having a correction is healthy as it allows the economy to catch up, and the markets would then moderate towards recovery.
