What will impact the KLSE next week?
1 China has begun a tightening campeign to slow the growth of M2 money supply. When they raised bank reserve requirements to 16 % on 12 January, Shanghai plunged 3 %. If history is a guide expect more tightening in the weeks ahead. In January 2007 they lifted reserve requirements to 17.5 % and the stock market collapsed. This drains huge amounts of Yuan from the Shanghai money markets and lifts bank lending rates. Yi Gang, deputy head of the PBoC, said this is necessary to dampen the rise in consumer prices.
This tightening has triggered large corrections in Asian markets. The KLSE will not be spared- especially the popular shares that have run up. Other Asian Central banks including India/ Korea/ New Zealand and Australia have begun to tighten.
2 Obama has declared war on the banks because they are reluctant to lend to small businesses/ consumers to get people back to work but rather use government bailout funds to speculate in the bond and stock markets. He threatened them that he will cap credit card rates, forbid banks to speculate in the stockmarket and operate hedge funds as well as a host of other restrictions. These restrictions will go right to the bottom line. That is why the Dow dropped over 500 points last week.
For now Keep cash and be patient for a better entry point on the KLSE/HKex/ASX/NYSE/SGX. I'm waiting for UpComing Storm.
"Kill the sheep investors(bear), Ride the Bull" - Eclectic Investor