25 June 2009

Reason of Correction

Many of my friends make a lot of "horizontal-wealth" through investment during 1st half of 2009. However, starting middle of June 09, share market around the world turns ugly.

Profit taking?
Or, continuing of bear market?

Let's do some analysis over here:
  1. Like I said before, US funds accounted more than 50% of global market investment.
  2. Economists foreseen that USD will weaken in the immediate future.
  3. And, June is window-dressing month for fund managers.
If you relate these 3 assumptions together, the secret had unfold.

  • From March 09 onwards, US funds have been flowing out of US to other countries. Emerging Markets rally. USD weaken.
  • When mid-year reporting seasons approaching, fund managers lock-in their profit, pull their funds back to US. Emerging Market correct. USD strengthen.
Make sense?

10 June 2009

Back to 90's Asia Bull Rally?

Still remember 93-94 Asia market bull run?
What is actually causing the bull run during that "sweet" time is happening soon (1-2 years).

Main factor: Weakening USD

During that time, because of weakening USD, funds being flowing to other market instead of US. And, Emerging Market - especially Asia - being the top spot for foreign funds to invest in. Malaysia, by that time didn't left out from the opportunity, and changing the lifestyle of many Malaysians (from ordinary person to Stock Traders).

This time around, many economists predict that USD will weaken because of the massive budget deficit recorded, high unemployment rate and weak economy's figures. What's the big deal?

Do remember that US funds reaches as high as 50% of world's share market. See it now?

For sure, US funds will flow from US to Emerging Markets (to get out from holding US currency).

Then, which asset classes they may went in? Fixed Income or Equity? It is very much depends on the risk appetite of investors. But, from the current scenario (June09), investors are most likely to move out from being conservative to aggressive mode. For that reason, Emerging Asia is the region where investors could not afford to miss out. More capitalised market like China, Hong Kong, and Singapore will most likely to benefit from these in-flow of funds.

Which sector/type of companies being recommended by you???

03 June 2009

Battle of Bankruptcies???

Battle of Bankruptcies???
General Motors (GM) VS Lehman Brothers (LB)
If we analyze corporate bankruptcies occurred in U.S, we could found a huge differences in-terms of market reaction. Lehman Brothers bankruptcy last year had caused the market slump to all-time lows around the globe.
However, General Motors story didn't have any impact on the market either. Instead, market gone up "crazily". In fact, GM's demise had broken the U.S history -- largest corporate failure.
Why such differences? Let's have a look:
  1. Expectation. LB caught everyone surprise when U.S government didn't lend a hand to rescue it, although LB is much more popular than Fannie & Freddie. In contrast, GM should have closed down long time ago, if not because of U.S government stubbornness to revive the company. Finally, "Paper cannot used to cover Fire". GM's case is expected.
  2. Factor. Before GM announcing the final decision on whether it will survive or demise, market had actually factoring the possible worst outcome ways before GM's due date.
  3. Relief. Market's arrow points to the sky instead of ground, because of the credibility of U.S government measures to revive the economy. Sometimes, facing the truth is the best solution for moving ahead. Peoples are relief that, after so many months of speculating, GM finally closed down.

What should I said further?

Good Luck...