Friday, February 09, 2018

In the eye of the Wall Street storm, the air is still calm here

Bursa Malaysia ended higher yesterday in line with regional recovery to buck the drop on Wall Street on Wednesday.  The Malaysian Reserve reported it touched a 10-year high.

This blog did gave the hint that Bursa been under-performing but to go this high yesterday is a different story all together.

Naturally, there are those follow-the-crowd cautious dealers still holding on to the believe that when Wall Street sneezes, the world catch a cold. It may not be limited to the lower level. The higher executives too have the tendency to fear being proven wrong and is risk averse to express their own gut feel.

It is interesting though to hear there are research houses bold enough to view the global equity sell-off as temporary and no apparent risk to global economic growth. The operative word is apparent but they are not alone.

The Wall Street analysts that made the market correction call few days before last Tuesday's said it would only be only 5%. February is no witching hour like the thin trading condition of the 4th quarter.

However, who would be macho enough to put money where their mouth is? Analysts could only talk cock, but when Wall Street fell by more than 1,000 again last night and Australia caught cold this morning, would dare they put their money where their mouth is?

Expecting a nervous Friday and nervous weekend.

A quote Hugh Bonneville: "When you are in the eye of the storm, you are often not aware of the whiplash around you."

There air have been calm in Kuala Lumpur. Recently, Dato Najib announced Malaysian and Singapore is re-establishing old ties to link their two stock exchanges. It is a ground breaking initiative for the Asean market.

Only yesterday, someone from down south is talking of the size of the connurbation of Johor Baru-Singapore-Batam. Talks like this would turn a former leader in his sleep and Najib did took a swipe at him for not able to let go of old grievances.

Bursa's CEO and old buddy from the market days, Dato Seri Tajuddin Atan is in a cautiously buoyant mood (still having fear of being proven wrong) as The Sun reported:
Bursa expects the securities market to remain resilient this year, given the recent economic data and equity market performance, strengthening of the ringgit and expected positive corporate earnings. 
“Trading volatilities, however, may be influenced by local and external factors, such as geopolitical developments and the tightening of monetary policies in major economies in 2018.”
He is bullish on IPO. "... expect some big names", he hinted.

There are other buoyant factors including waivering stamp duties for SME, provide room for retail investors to borrow more for share financing, allow retail investors to short sell, and various othe rmeasures.

An interesting development is to allow for licensed market maker. Just like VAT is called GST in Malaysia, typically Malaysians call it differently as Trading Specialist. This is long overdue but encouraging development to boost liquidity and trade in the market.

Coupled with short-selling, it saved retail investors from getting whacked and deceived by big players, who in the past are protected by the establishment.

Mahathir has not responded to these announcements that is going contrary to his past policies. Perhaps, still sore from being taken back his Datokship from Kelantan, thus pursuing ECRL with his jual negara political narratives. Old school thinking not in tune with the time.

All the rosy pictures in the medium and long term will need to deal with the present risk of a turn in sentiment. The sell-off on Wall Street deepens and it is off by 10% of their high.

Business Insiders has two interesting headlined news here and here have to sign-up. One is likely blaming an investment hedging mechanism called the risk-parity fund. It is all too familiar blame and similar to past blames on program trading, options, and hedge funds.

They are now even questioning Trump's tax cuts backfiring on Wall Street. Don't missed out CNN Money's video of Trump's gloating of the Wall Street rise due to his election.

Doug Ramsey, CIO of Leuhold view the happening as the end of euphoria with Bit Coin 20 folds run-up, American version of Apek in terompah streaming into the market, et al. However, he said the trouble signs were equiry getting record cash but bond yeilds going up at record pace.

He saw all this in January. That is what he claims. Everyone are experts on the hindsight. They are after all, great salesmen themselves.While, their media are great doomsayers.

If Ranjit Singh can learn to be good salesman and not too much of a Baiyi Jaga regulators, the market could bounce back into a bull run. Malaysia has none of what was mentioned by Doug Ramsey.

Malaysians and the economy are pretty full from Gordon Ramsey's recipes. The fund managers need to relocate their investments. There is Malaysia ... taraaaaaa!     

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