Weekly Review on Asia

Summary :

1) China Tightened.

2) Obama Frightened.

3) Global Markets tumbled.

3) The Global recovery has not been sychronised.

4) There's no global Overheating occuring at this moment.

5) China need not adopt aggresive tigthening.

6) Obama's banking split will not lead to another credit contraction similiar to the one created by the Lehman Panic. 

The equity markets are going through a needed correction phase. I personally see that the economies are not about to start contracting again and the "rally" will resume.

Visit to Resorts World Sentosa. Genting Singapore (GS)


arranged for a group of analysts yesterday to tour its new

integrated resort Resorts World Sentosa (RWS), which

recently had a soft opening with four hotels - Festive Hotel,

Hard Rock Hotel, Hotel Michael and by-invitation only

Crockfords Tower. According to GS, the hotels are very well

received (looking at 80% occupancy rate on weekends) and

while most guests are currently from Singapore, management

expects a dramatic shift towards overseas guests once the

casino and Universal Studio Singapore (USS) open.
 
 

Thought of the Week (Jan 26 2010)

With all the focus on politics, it's worth remembering that the Federal Reserve also faces some very difficult decisions at its FOMC meeting this week. The economic recovery remains tentative with no jobs added as yet. Concerns about a lack of credit have been exacerbated by proposed taxes on bank profits and restrictions on bank activities. At the same time, market fears of monetary or fiscal recklessness seem to be adding to inflation expectations, as can be seen in the chart. We expect the Fed to hold the federal funds rate in a 0-1% range throughout 2010, but there is a risk not only that they will tighten more aggressively but also too soon for a still fragile banking system and economic recovery.

What will impact the Stock Market (KLSE/HKex/SGX/ASX/NYSE) next week?

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