Thursday, May 14, 2009

Answering More Queries On The Markets

Blogger solomon said...

What is your reading on the global economy. Are we out of wood or abyss yet?

Are the equities tried to catch up after investors overly price in depression before this?

Yes, we are kind of out of the woods, but there are still very dangerous pockets such as Central and Eastern Europe. That region may be facing a situation a few times worse than we did during the Asian Financial Crisis plus SARs added together.
Aaah, finally a smart proposition, you are about the only person wise enough to say that "equities are trying to catch up because prices have been overly depressed by stale confidence"... I totally agree. Many are of the view that stock prices have run ahead of fundamentals. While that is partially true, we have to say also that share pries have been unfairly hammered over the last 3 months of 2008. Thus, much of the rally this time around is just to get us back on fairer valuations, and not necessarily running ahead of a recovery.

Blogger chanyip said...

Dear Dali,

I have a question. When you said the market is ripe for a correction, the decrease in DJIA will be around how many points? 100,200,300? Hence, if that is so, what about for klse?

Thank you very much!

I think the Dow will find a new bottom at 8,000 while the KLCI will have very solid support at 980 for the rest of the year.

Blogger sopsky said...

Hi Dali,

"Well, you should have by now. I thought it was very clear from my posting on the yen dollar rate as a way of reading risk aversion."

You mentioned the above but on your dollar/yen posting, based on current rate of 95.xx, shouldn't one reduce the equities holding to 1/3? Yes, it did overshoot the 100 mark and that was went all would have gone in but shouldn't one need to re-balance based on the new rate?


12:57 AM

The rates are only a guide, if it has gone past 100, the risk aversion thing is technically over. Even if the rate falls back below, its more just volatility in the rate itself, I think the risk aversion things has subsided significantly now.

p/s photo: Amanda Strang


solomon said...


Many thanks for the compliment. For a non financial guy like me to catch that, it takes passion to read articles and do a lot of hearings with the so called financial experts who include u. (Not a angkat session but the is my expressed feeling.)

But of course, there will be a person unpleasant with me, my wife because I did not spend enough time with her.

Just need to ask you what will the worst case scenario for Eastern Europe and will its economic ripples hit us?

Hapi said...

hello... hapi blogging... have a nice day! just visiting here....

see said...

But with a liquidity driven market especially for HK & S'pore markets, the market can run far ahead of its fundamentals for some time, case point is China before the crisis. Me thinks gotta watch out when China turns off liquidity tap

In Malaysia case, doubt we getting any foreign buying at all. Dali, do you think there will be spillover of foreign funds to our market? We like pariah status.