It's really a roller coaster of sorts. The ugly results of 7 years of loose US monetary policy can hardly be expected to be purged in just 10 months. This outcome, as read from the papers, is the worst that many brokers have seen.
This looks to be the case when you consider that 80 percent or more of the local market trading is traded at less than $1 per share. But is this really the case? I kind of agree with Business Times writer R. Sivanithy that this contention doesn't really hold water when you look at the figures.
Take the Straits Times Index: the index has only fallen 33 percent from last October, when it was at its all time high. The rate of loss is 3 percent roughly for 10 months - hardly shocking when the stock is on a run that lasted 4 years and saw the STI rose a stunning 220 percent.
Secondly, the present loss is not as bad as the previous fall - 10 years ago: when the STI lost 60 %. Thirdly, current unemployment figures are not that bad at all.
The question is: if we are halfway to bottoming out, it should take roughly ( in my opinion) another 9 to 12 months to hit the bottom and regain previous momentum. If we are not, then where would be the bottom? The longer it hits the bottom, the longer the recovery. And hence the problem: how many of our mega sized financial institutions around the world will fall due to the current crisis fallout? Seen in this light, the current US bailout of Fannie Mae and gang makes sense. Unfortunately, Experts generally agree the worst has yet to hit us yet.
No comments:
Post a Comment