I was having tea with a few buddies reviewing the economic panic gripping the world, and Malaysia is not spared, so my business friends in the group expressed concern, saying that many of their business friends are feeling edgy and panicky, especially those who hold substantial shares in the listed companies on Bursa Malaysia.
Generally we are in agreement that being a "tortoise" instead of among the hares running in the frontpack (like Singapore, Hong Kong and Taiwan) turns out to be a "blessing in disguise" for Malaysia in that Bursa Malaysia's exchange fell in smaller quantums that the rest in the region for the moment, but in the longer term, the local bourse too is subject to "jittery" investors, and the average Joe may just "cash out", pulling the depressed market further down the slide. What this "tortoise" analogy translates into is that the "pain" that has befallen other stockmarkets with immediate effect and in greater magnitude has been spared Malaysia. But if the worldwide "depression" comes about as predicted by the less optimistic US analysts, Malaysia's pain will still finally befall NegaraKu -- perhaps some few months (like 3-6?) later!
So how low can the Bursa Malaysia limbo bar drop?
Based on my business journalist's experience, if what the pessimistic business anaylsts in the US are saying, essentially that the current "Once-in-a-Century Happening" now hammering the US and European stockmarkets and the people be prepared for a depression in the league of the 1929 US "Great Depression", then the Malaysian market would see a down trend for the next six months to a year, and a low of KLCI touching 400 points cannot be ruled out.
Of course if our nation's leaders continue to live in "denial" because of political factors, then the pain will be deeper and faster.
And do we have a solution?
How about giving SD ANWAR IBRAHIM a chance to demonstrate what he can achieve -- which means that the UMNO-led government headed by DS Abdullah Ahmad Badawi must give way to Pakatan Rakyat instead of an UMNO-determined handover to Najib Razak. The less said about this last mentioned scenario the better, because there is nothing positive to say. Desi's principle is that if you have nothing positive to say, PLAYING MUM'S THE BLESSED WORD!
In concluson, I can just quote this phrase: BEWARE THE IDES OF MARCH. THat's when Najib is about to take/takes over from Pak Lah. From half-asleep leader to another in "denial" -- HOBSON's CHOICE!
News.com.au Top stories
Global stock prices fall after panic selling
From correspondents in New York
Agence France-Presse
October 25, 2008 07:42am
Panic selling drives down global markets
Analysts tipping global recession closer
Wall St closed down 3.59 per cent, Tokyo 9.6 per cent
GLOBAL stocks tumbled overnight amid a panic-driven market rout, on rising fears of a world recession that would hurt a wide range of industries.
The Dow Jones Industrial Average slumped 312.30 points or 3.59 per cent to close at 8378.95, in a volatile session that saw the blue-chip index down as much as 500 points.
The market action capped a week with a drop of more than five per cent for the benchmark Wall Street index.
But New York escaped the meltdown some markets experienced, such as the 9.6 per cent Tokyo plunge and losses of around 5.0 per cent in Europe.
The tech-heavy Nasdaq shed 51.88 points or 3.23 per cent to 1552.03, and the Standard & Poor's 500 index dropped 31.34 points or 3.45 per cent to 876.77.
The losses came amid a wave of panic in markets around the world as mounting evidence signalled that major economies are heading for recession from a credit crunch and banking crisis.
The rout came on “fears of global recession weighing heavily on company profits”, according to Jason Kunkel at Moody's Economy.com.
Al Goldman at Wachovia Securities said the plunge was the result of forced selling by hedge funds that are using borrowed cash and which must meet redemptions.
“The main cause is that hedge funds are being forced to liquidate positions because they are so leveraged due to credit default swaps,” he said.
“Estimates run to 30 to 40 times leveraged. This is forced selling, not an investment judgment call.”
Others said the crisis was deepening.
“We have now reached a point where fundamentals and long-term valuation considerations do not matter any more for financial markets,” said economist Nouriel Roubini at New York University.
“What matters now is only flows – rather than stocks and fundamentals – and flows are unidirectional as everyone is selling and no one is buying as trying to buy equities is like catching a falling knife.”
The global slide came after a profit warning from Japanese electronics giant Sony and a similar bleak outlook from US tech giant Microsoft.
French auto giants PSA Peugeot-Citroen and Renault ordered huge production cuts, while Europe's biggest airline Air France-KLM issued a profit warnings.
Chrysler, the number three US automaker, meanwhile said it would cut up to 5,000 administrative and temporary jobs by the end of the year.
Still, some analysts said the market may be getting close to the so-called capitulation that shakes out the last of the sellers.
“The worse and more volatile it gets, the closer the market is to a bottom and a turn,” said Bob Dickey at RBC Wealth Management.
“Markets do not bottom on good news. They bottom when the news is not only bad, but the expectations are even worse.”
Among stocks in focus, Citigroup slid 7.40 per cent to $US12.14 and Bank of America shed 8.39 per cent to $US21.07 as the banking sector took the brunt of the market turmoil.
National City Corp, a struggling regional banking group, fell 24.36 per cent to $US2.08 after agreeing to be taken over for $US5.6 billion ($A8.3 billion) by PNC Bank, up 4.57 per cent at $US59.48.
Oil giant ExxonMobil lost 0.44 per cent to $US70.08 and rival Chevron skidded 3.15 per cent to $US64.67 amid a further drop in crude oil prices, which fell as low as $US61 a barrel in London.
Microsoft lost 1.61 per cent to $US21.96 after the biggest software maker met a profit forecast but offered a weak outlook due to an uncertain global economy.
Bonds offered no relief for the market. The yield on the 10-year US Treasury bond rose to 3.697 per cent from 3.534 per cent yesterday and that on the 30-year bond increased to 4.087 per cent against 3.969 per cent. Bond yields and prices move in opposite directions.
The market action capped a week with a drop of more than five per cent for the benchmark Wall Street index.
But New York escaped the meltdown some markets experienced, such as the 9.6 per cent Tokyo plunge and losses of around 5.0 per cent in Europe.
The tech-heavy Nasdaq shed 51.88 points or 3.23 per cent to 1552.03, and the Standard & Poor's 500 index dropped 31.34 points or 3.45 per cent to 876.77.
The losses came amid a wave of panic in markets around the world as mounting evidence signalled that major economies are heading for recession from a credit crunch and banking crisis.
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