tag:blogger.com,1999:blog-18183714.post2954516996640643248..comments2024-03-08T20:25:35.963+08:00Comments on Malaysia-Finance Blogspot: SalvadorDalihttp://www.blogger.com/profile/06868577716920232901noreply@blogger.comBlogger2125tag:blogger.com,1999:blog-18183714.post-67871679266361924232007-03-06T01:03:00.000+08:002007-03-06T01:03:00.000+08:00Interestingly, i just watched an bloomberg intervi...Interestingly, i just watched an bloomberg interview. The fund guy was asked, what triggered the selloff? He said, unwinding of carry trade. Guess what, he was shot on the toe. The bloomberg girl replied, "the differential is still huge!" the fund guy was taken back by that, trying to reason that the differential has dropped from 300bp to slightly lower...sopskysalathttps://www.blogger.com/profile/18397095388809196477noreply@blogger.comtag:blogger.com,1999:blog-18183714.post-54345331643075605652007-03-05T22:36:00.000+08:002007-03-05T22:36:00.000+08:00"Nikkei down 3.3% to its lowest close since Decemb..."Nikkei down 3.3% to its lowest close since December as strong yen discourages investors."<BR/><BR/>The much talk about unwinding yen carry trade may have spook the investors lately and touted as one of the factor for the fall.<BR/><BR/>This round, the fall is swift and severe, having little signal to many before the collapse of great china wall.<BR/><BR/>So, as Dali as reiterate, the rate differential does allow plently of room for hedging, still. The media, finding no reason for the fall, is pointing to the carry trade and another by the swiss too. They can't explain it by human pyschology, as time and again, market is driven by fear, and as it kicks in, fear develops into selling - cutting losses or booking profits. The herd is selling, whoever buying is going against the majority. After the first wave of selling, contra players will contribute to the second while fund redemption, margin players will come in tandem, rocking the world equities.<BR/><BR/>If one had entered the market after the May selloff, the gain till date should be pretty comfortable to withstand the selloff and exit with a pretty full year gain.<BR/><BR/>Trend has changed for now, what's in many minds are whether we are in the first phase of downtrend or just some jitter correction which should see the bull rise again to higher high.<BR/><BR/>Whatever it is, the bullish mood is spoilt, and there is no point arguing with the trend and trade with ego to prove it wrong for market do no know what you are holding.<BR/><BR/>Nikkei, for once, looks nice for a recovery to 19000/20000, has taken a setback. Yen carry trade does has effect to world market, but why not when fund is repatriated back to Japan, it should do more good to the Japan equities than world equities.<BR/><BR/>Finally, market will repeat again, and investor will grow strong in term of better risk management, position size and trading system.<BR/><BR/>I end with one thought, has real economic fundamental changed? If market is any indication of future movement, we may be seeing a recession in the next 12-18 months.sopskysalathttps://www.blogger.com/profile/18397095388809196477noreply@blogger.com