Friday, October 24, 2008

Asian Markets Plunge: Chaos on the local front...

Asian markets plunge across the board with Kospi (-10.57%) taking the lead followed by Nikkei (-9.60%) breaking the 8000 point level with ease while Hong Kong and Singapore both down slightly more than 7% and counting...
Further devaluation of global wealth as the wrath of subprime collapse continues to rear its ugly head despite the global concerted efforts to address this destructive force.
While there are still ongoing debates by different quarters on the status of their economy, our government chose to be in denial as to our status. Some analyst predicted that our country would be in a technical recession next year. Technical recession? What the hell is that? It is whether we are in one or not.. not a matter of technicality. Want to talk about technicality? Allow me to provide you with some layman technicalities.

KLSE Composite Index stands 859 points from a high of 1526 points in January. And this is non reflective of the true situation that has been plaguing our exchange. Take a look at our broader market. Blue chips have fallen more than 50% while many 2nd and 3rd liners have fallen even more. Some as high as 90% and more. Translate in into market capitalization value. This would mean that at least 30B in value has been wiped off from this exchange itself. Conservatively Where did these money go? Ask ourselves these questions: How much did the foreign funds take out? How much of this portion is under margin financing?
It does not takes a rocket scientist to figure this out. There was this vast vacuum in our financial system created through the process of value inflation since end of 2006. And there have been series of systematic implosions since last year as funds started to unwind through the help of rating agencies.
Lets talk about the real economy. What do we have except for the NSEW corridors hype? What happen to them now? Conveniently shelved taking global situation as an excuse. In the first place, it was just a hype creation to enrich themselves through the process of inflating the share prices and distributing it at higher levels. Yet again, the investing public became fools to find themselves caught in their trap. There was no concrete move by this administration to ensure the welfare of our real economy. All talks that create hypes that doesn't work well for the real economy.
Technical recession? Hum-buggers them all!!

Forget about the 5B to ValueCap. Two possibilities here: First, it can be used to bail out selective idiots like it was done during the 97-98 financial crisis. Or it can be used to prop up selective shares... this is dangerous as it can easily be subjected to abuse if there is no transparency. The mobilization of this funds can only benefit certain individuals who have access to it. It is our money and this proposed move in no way can benefit the country as a whole.
So what is in store for us now?
Hold cash. Avoid all forms of investment. This destructive force is too strong for us to try to be smart. We are in uncharted territories. More serious consequences loom. Businesses is going to face hardships with dwindling global demand. Our 26M million population cannot consume what our country produced. So forget about self-reliant domestically. Self adjustment main priority. Consolidate your finances. Take time off to enjoy your liberty.


Anonymous said...

Testing Testing

Dow is going to hit new low. Level breached.

May Day! May Day!

chapchai said...

What is the situation with the Malaysian ringgit? It appears strong now.

Anonymous said...

cash is no use unless spent.

inflation is 8+ %.
so why keep cash.

better to look for growth sectors in malaysia. govt needs money. oil and gas must grow. buy oil and gas stocks. guarenteed better return that -ve real interest rates.

guru jay

Jeffrey said...

"Our 26M million population cannot consume what our country produced. So forget about self-reliant domestically. Self adjustment main priority. Consolidate your finances. Take time off to enjoy your liberty."

Looks and sound like doomsday, isn't it?.. sigh. what we gonna do?

Now, I have more time to go fishing and catch my own dinner..gotta be self reliant and plant my own vege and start rearing chickens. Anybody wanna join me fishing?.

peng said...

Just waiting for the real deal on this subject from you.
The signs are clear, but our government is still denying it. So we better save ourselves.

HopefulPessimist said...

Sounds really scary...

Mat Salo said...

Hello TW,

Great commentary, Sir and I concur with your analysis. Do ypu think it has hit rock-bottom yet? I think it should be a while before bottom is broached so I suppose for people with spare cash around to hoard and wait till next year at least. If it was me, I'd wait for Messrs Barrack & Co to get inaugurated in January before markets look for direction from the Oval Office and thus the whole world would follow suit like lemmings, heh.

Yes, all the previous 'corridor' talk was just that - talk. It's made a few individuals (close to ruling party of course) rich thru' share inflation. This Value Cap is interesting. They'll never call it a bail out, oh no. They'll clain they're buying now because it's a wise investment decision since shares are so cheap... hmm.

TheWhisperer said...

MS Bro,

Bottom is nowhere in sight yet. And I do share your view on Obama but i believe his option remained limited to deal with mass destruction of this magnitude. It was a great take nevertheless. We only need to wait with bated breath.

Guru Jay,

Its okay to spend if you have the extra.

Good luck to your O&G investment.

My advice would be a simple 'Wait'. Don't go against the market forces. You would be blown away like a piece of paper. Even trees get uprooted in situation like this.


Its scary alright. We need to adjust ourselves. Don't wait.