Global Uncertainties Ahead

The Asian Stockmarket started off this week on again a jittery losing ground as all major Asian bourses fell significantly! This was following Dow Jones near 1% drop last Friday. Back home our Kuala Lumpur Stock Exchange had not been spared either. In fact it was the worst performer among all the major Asian bourses on Monday, falling by 4.64%! It is apparent that most people including myself have underestimated the impact of this global market collapse for the past one week! Monday's Asia downfall was again believed to be attribuable to the exits of yen carry trade funds though program selling. The same cause was mentioned in my posting dated 1st march. Carry trade is a strategy where investors finance purchases of assets by borrowing a low yield currency such as the yen. Now that the Yen is seen appreciating, these investors need to liquidate their holdings in order to close out their currency positions.

Despite the current prolonged market downturn, I still maintain my view that the stockmarket in Malaysia is bullish in the long run and the current undesirable situation will soon reversed, in view of the strong fundamental indicators in Malaysia and the fact that key emerging markets in Asia still offer one of the best growth rates globally amidst the slowing economy expected in US and potentially China (due to Chinese Government's efforts to avoid overheating economy). The current situation has in fact in my view provided great opportunity for long term investors to bottom fish and bargain hunt for fundamentally sound companies that are under-valuated, has great potential for growth and has outperform expectations! What is needed is a little bit of patience to weather the current STORM...thereafter Blue sky will come!!