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Tuesday, January 22, 2008

Asian Markets Tumble Hard Once Again

Yesterday was already a red blood bath for Asian markets. Today is not any better. All markets ended negatively and I shall tabulate their performances below.

Index                         Last Trade  Change
All Ordinaries (Australia) 5,222.00 -408.90 (7.26%)
Shanghai Composite (China) 4,559.75 -354.68 (7.22%)
Hang Seng (Hong Kong) 21,757.63 -2,061.23 (8.65%)
BSE 30 (India) 16,729.94 -875.41 (4.97%)
Jakarta Composite (Indonesia) 2,294.52 -191.35 (7.70%)
KLSE Composite (Malaysia) 1,354.48 -54.12 (3.84%)
Nikkei 225 (Japan) 12,573.05 -752.89 (5.65%)
NZSE 50 (New Zealand) 3,607.13 -39.77 (1.09%)
Straits Times (Singapore) 2,866.55 -50.60 (1.73%)
Seoul Composite (Korea) 1,609.02 -74.54 (4.43%)
Taiwan Weighted (Taiwan) 7,581.96 -528.24 (6.51%)

ETF                   Change
IS MSCI INDIA 100US$ -5.4%
Lyxor Asia 10US$ -9.8%
Lyxor China H 10US$ -13.3%
Lyxor Cmdty 10US$ -2.9%
Lyxor HangSeng 10US$ -8.7%
Lyxor Japan 10US$ -5.8%
Lyxor Korea 10US$ -6.1%
Lyxor Taiwan 10US$ -10.1%
STI ETF -6.9%
US market will resume trade after yesterday's public holiday. Down trend should still be the trend. A further drop of about 4-5% in S&P index will end up joining the Asian markets Bear club. The bears are out running the bulls for sure.

From a long term investor's view point:

"We are now in a severe bear market. The stock market around the world has dropped more than 20% from its recent peak. The drop can be 5% a day. It can drop a few days in a row.

This is the work of hedge funds. When the market is weak, they sell in large volumes, causing weak holders to panic and sell their holdings. There are no buyers, so the drop is severe. Later, the hedge funds will bear back their short positions at the depressed prices and make a profit. It has happened on many occasions in past years, during bear markets.

Long term investors should not worry. This short term massive selling last a few days and will stabilise or recover. In fact, this is a good opportunity to buy stocks at extremely depressed prices.

Let's hope for a better tomorrow :)

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