Friday, September 25, 2009

Stockmarket & Economy - Up/Down?

Observation I : The Stockmarket

Once again, the market is abuzz with talks of correction (falls) as the cyclical dips of Sep/Oct visit. Your concern is not unfounded as cyclical indications point to a topping out of most markets, with Shanghai quietly leading the correction.

Some telltale signs are : substantial and rotational movements of secondary (cheap) stocks, cash calls, exuberance price & volume movements of stocks which have hibernated for sometime, the increased participation of mass market players and the likes. The game is old but the players are new.

(Indicative - 2008) (Indicative - 2009)

Indices LOW HIGH March 09 (Low) Recent (High) Resistance

HSI 10,676 32,000 11,344 21,929 23,800
Nikkei 225 7,000 18,300 7,028 10,767 11,300
JKT CI 1,100 2,800 1,250 2,482 2,100 - support
KLCI 800 1,500 840 1,231 1,230
Shanghai A 1,700 6,400 2,140 3,650 2,500 - support
SET 400 900 408 710 710
STI 1,500 3,900 1,455 2,707 2,980
Dow 30 7,552 14,164 6,469 9,917 10,050
S&P 500 840 1,540 666 1,080 1100

If you love staying in the market, there are always value buys if you have done your homework.

Observation II - Sustainable Growth or Recovery
Although more countries are pronouncing their exit from recession, unemployment or underemployment remain a feature albeit lower in numbers; consumer confidence have increased with higher end (luxury) and the lower bar (necessities) sectors enjoying patronage but the casualites of non-niche players remain; matching employment remains a challenge as job enlargement with lower wages await takers; costs of living have 'inched up' as the real dollar value declines with entrepreuneurs looking for ways to sustain operation, let alone maintain profit margins.
Questions remain whether the economy can survive if Governments remove aids and supportive measures implemented in the wake of crisis.
Observation III - Speculation
Some contend that the stockmarket have moved ahead of the economy. Perhaps, it is truer to say that there is a mismatch and displacement of capital where liquidity finds its way into speculative areana rather than the real economy.

Observation IV - Property
Property prices seem to have inched up and the take up of new launches are very encouraging. Have it occur to market players (buyers) that older developments used to be larger in space (1600 - 2000 sq ft) whereas newer launches are smaller. A 1600 sq ft at S$550psf is as affordable as 1000 sq ft unit at S$880psf in absolute ($$)value. But, you are getting a smaller unit for the same price!
Can the secondary market command the same price per sq ft, given that the (99yr) lease decline with age/time, ceteris paribus? A scan through the Property Sales/Purchase ads is sufficient to give you a clear answers.

I am not a bull, bear nor doomsayer. Over the years, money have been made and lost, be it bull or bear. Everyone wants to make money but few are willing and diligent in doing their homework. You are as lucky as where preparation meets opportunities - forwarned is forearmed.
It will take awhile for the US/West to rebalance their acts let alone recover. The East shall lead in this recovery. Sectors that are potential stars include food/commodities, pharmceauticals/healthcare, banks, green energy, education and port operations.
I may be wrong; Have fun and good luck.

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