Master Rider Blog

So Far So Good

October 2nd, 2007 NW Teong

Global stock markets have continued to rise as expected and Dow and Nasdaq have just broken their recent peak registered in the middle of July to close at 14,087.55 and 2740.99 respectively yesterday. Please see the charts below:-

Courtesy of Yahoo Finance 

Regional markets such as Singapore, Hong Kong and other Asia markets are expected to surge in tandem and in fact have more reasons to surge as the domestic economies are still very strong as compared to that of US. This together with the formation of various funds in China which tapped the domestic money to invest in overseas markets such as Hong Kong, Singapore and so on would add fuel to the fire. No wonder the markets in the entire Asia, especially Hong Kong and Singapore are red hot at the moment.

If you look back on what had happened on 17 Aug where regional markets suffered a huge fall, it was merely a blip in a bull market (For those who have just read my blogs recently, you may wish to read my blog on 17 Aug, titled “Ignore This @ Your Own Risk”). However, we should not just ignore the cause for the panic as the sub-prime loan saga at that time can really go either way. While I did not say that this problem is over, it is at least being contained at the moment. The aggressive cut of interest rates by US Fed obviously has done a good job to address the sub-prime problem to certain extend. As to how much it has really helped is arguable but it has at least help to boost the investors and consumers confidence.  The best news for businessmen in other sectors is that with a lower interest rate, it means that their cost of doing business is now lower than before and this is very positive to those sectors that already enjoyed good growth.

A lower interest rates regime would be extremely stimulating for emerging markets as the domestic economy already busting with activities. Take Singapore market for instance, the property sector is growing at double digits and the GDP is expected to grow at the high end of 6% to 9% for 2007. This bullish view has already reflected in the record high of the Singapore Straits Times Index. To top it all, liquidity is every where. Yes, we have abundant of liquidity and the scenario that I have just described merely gives investors a good reason (or excuse?) to buy up the markets! If markets continue to surge for the next 1-2 weeks, watch out when we are nearer 19 Oct. Other than a speed bump on 19 Oct, we should have a relatively smooth ride toward the end of the year, of course albeit unforeseen circumstances. Oh yes, also watch out for the next FOMC meeting on 30-31 of Oct.

Continue to ride on this liquidity play and perhaps have a good harvest at the end of the year. Cheers!

Master “The Essence of Stock Investment” and ride towards the journey of your financial freedom to be the “Master of Your Own Destiny”!

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Entry Filed under: Macro, Stocks, Singapore