Posted by: Financial Sith Lord | March 12, 2011

What’s ahead?

It has been a turbulent period for almost all of us, especially those who are self-made equity investors. The winds of trouble began with the uprising in Egypt, followed closely by the public protests in Libya and Kuwait (these countries are all members of OPEC). Then the devastating earthquake that shook Japan to its core.. The 8.9 richter scale earthquake followed by the destroying 10-foot tsunami paralyzed the country of the rising sun, to an un-established effects..

(image courtesy of connect.it.com)

Latest (as of the time of this post), several Nuclear reactors in the north-eastern part of Japan are facing possible meltdown, which could trigger a snow ball effect on its already unstable economy. As at Friday 11 March, 2011, all major stock markets within this region headed south, mostly towards closing time. Its a big possibility that many retail investors did not get the opportunity to liquidate their positions in the market.

Corporate and institutional investors may have the strength and capabilities of holding on to this hopefully short-term catastrophe, but in the long run, it would direly affect them as loses derived from retail segments of the market (equity and non-market related) may creep in into their financial statements and cashflow.

In 1998, it took a rouge currency trade operation to totally ruin global economy, and in 2007, the Investment and Commercial Bank’s skeletons burst out from their closets, which practically changed the entire credit system globally. In 2010, the Koreans created a jittery stir when they flexed their muscles publicly, showing signs of possible war. Still mending to all these effects, then comes the Egyptian uprising, the Libyan turmoil and now.. the earthquake and tsunami in Japan.

While we can possibly put the blame on US and its ally on most of the incidents, I cannot say that the US caused the earthquake and tsunami in Japan. Well, maybe not directly.

What’s going to happen to the markets?

let’s take a look at Malaysia. Trades with Japan will probably slow down, which might affect the Bursa Malaysia, as thanks to Dr. M, we’re previously and still are dependent on Japanese technology and expertise. Cash flow into the market maybe scarce as institutional investors (especially foreign origins) may stand on the sideline for the next couple of weeks. Prices are expected to fall to the 1,474 level. However, due to the tsunami, the chart created a 7-point downward gap, which normally would be covered within the close future.

(Charts courtesy of Chartnexus)

Corporate and Institutional Investors (as may be advised by their respective Fund Managers) would probably wait for the 1,474 level before re-entering the market, with a cool 219 points of possible gains. In the mean time, many would switch to the ever active forex and commodities markets, as I would identify, USD/Yen and Oil Futures be the best bets. As a Fund Manager (used to be!!), never keep your funds idle and non-productive.

On the local political front, BN is clearly making a statement by winning the last by-elections in Kerdau and Merlimau. Somehow, it shows that BN has somewhat regained the trust of the people, with its massive internal restructuring programs and initiatives. The on-going trial of the former opposition leader, has somehow managed to open the eyes of the public, on his true intentions and sincerity.

Dr. M’s latest book, ‘A Doctor in the House’, was successfully launched by MPH and he has successfully ticked several personalities mentioned in his memoirs. I’m not too sure whether it would lead to possible civil suits or not, but one thing is for sure, its best to just remain quiet, and move on..

What say you?

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