After a devastating year for stocks…in which Wall Street lost five years of gains…investors worldwide are looking for a possible market bottom.I review the rocky year for equities and ask experts for their outlook for 2009.
Global markets are assessing the damage of a calamitous year that sapped 40 percent or more from many stock market indices.
The market also witnessed many brand-name firms going under or tumbling into deep trouble - Bear Stearns, Lehman Brothers, Merrill Lynch, AIG, Freddie Mac and Fannie Mae.
Because of the unprecedented losses, the feeling is that next year has got to be better.
” There’s no doubt to me that there’s significant risk to companies’ earnings in 2009. However I think company valuations are at historical lows, meaning we can see support to stocks going into the second half of 2009.” says Christoffer Moltke Leth of Saxo Capital Markets.
While there is no shortage of doomsayers arguing that the meltdown isn’t over yet, there’s also some brave hearts like Mark Mobius of Templeton Asset Management, who thinks there are gems among the wreckage.
Mark says, ” I’d overweight emerging markets. That includes Asian markets. Because emerging markets present terrific opportunities. We are down to levels that make it viable to be investing in these markets.”
By the end of 2008, the lack of credit had strangled key global economies, sending the United States, Japan, the eurozone and others into recession.
The fallout also sharply slowed growth in developing economies.
Things could still get worse before they get better.
But many analysts are banking on a “bottom” that will allow markets to recover even if the economy is still sputtering.
Leon Perera of Spire Research and Consulting says, “we should see a turnaround in the global economy in 2011. I think if you look at the global economic slowdowns since 1980s, early 90s, the Asian Financial crisis and even 2001 to 03. The pattern tends to last 2 to 3 years at most.”
Experts say, investors need to recognize big shifts in market and public policies and be content with single-digit returns in future years. The key thing, they say, in times like these — is to remain solvent so you can load up when opportunity comes.
December 19th, 2008
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Global markets have been extremely volatile because confidence has been shaken.Any negative or positive sign sends investors hurtling off in one direction or the other.But just how does panic, and the psychology of fear, play out?
A science called Neuro-economics studies how people make decisions.I spoke to Professor Neil Bearden who teaches at the INSEAD business school in Singapore. He has done research on the psychology of decision-making in business and economic settings. He says, “fear develops in the current market by contagion. If people around you are fearful, the closer you are to people who are scared, the more likely for you to become scared. For example, someone who lives next door to those affected by the Lehman minibonds will be more fearful than someone who lives a block away. So sheer proximity helps. Like how flu or disease spreads. Fear spreads the same way.”
So if I may, I suggest we refocus on market fundamentals and not easily react on short-term news.
November 6th, 2008
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Times are uncertain and the road ahead is rocky.
The fallout from the financial crisis is spreading to Europe already and Asia could probably be next to feel the spillover effect.
So hang on to that job, save that extra dollar and try to keep liquid or hold on to cash in the next six months or so.
During a financial crisis — don’t play the hero and make risky investments. Cash is king.
I remember my financial adviser telling me that before I even think of investing, I should make sure I have at least 3 months worth of salary in cash and at hand to keep me afloat. I believe it’s sage advice especially in times of a global economic slowdown.
In Singapore, the finance minister warned that credit crisis may impact the job market. However, the minister is confident that the country has the right fundamentals to sail through the rough patch ahead, despite concerns of slower growth this year.
In the global markets, the outlook is gloomy.
Traders say questions will linger about the effectiveness of the newly passed bailout plan in shoring up the financial system.
I had a chance to talk with Hans Goetti of LGT Bank and he says to expect the stocks sell-off to continue for sometime.
So brace yourself.
PS: Do let me know what you’re doing to stave off the impact of the credit crisis in your daily life? Personally, I have reorganized my monthly budget and have cutback on unnecessary expenses. How about you?
October 16th, 2008
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Lehman Brothers files for bankruptcy and Merrill Lynch gets taken over.
Morgan Stanley and Wachovia Corp. are in merger talks.
I asked our US correspondent Daniel Ryntjes how these latest developments are reshaping Wall Street?
He says: ” We come from a place wherein these names were giants of Wall Street. Now we see the biggest investment banks such as UBS and Morgan Stanley forming a global consortium of banks, with a liquidity pool of 70 billion US dollars to lend to troubled financial companies. We’ll see a Wall Street dominated by risk managers but not the high flyers. We’ll see a Wall Street operating on safe mode.”
Meantime, as I was making calls to market players ( which is a regular part of my mornings), I spoke with the head of treasury research in one of the regional banks about the contagion effect on Asia . He says the impact will be seen in credit risk and deleveraging. He also sees volatile trade in the coming weeks.
I also called the chief investment officer of a European private bank as to the best investment strategy in this troubled trading environment. Put simply, he said, ” Don’t play the hero. Hold on to cash”.
But a chat with an economist from a regional research firm, really struck me. He said he and others like him now have to carefully think before they speak because investors are so jittery — it’s so easy to push the panic button in these uncertain times. It’s quite scary.
Do the recent developments in the financial world affect you? Who do you think is to blame? How are you restructuring your investment portfolio? Are the sharp market drops making you shudder? Do let me know your thoughts.
September 21st, 2008
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Put the pedal to the metal!
I think in more ways than one, the first ever night time F1 race in Singapore is the most exciting thing to happen in this region after the Olympics.
I am not an F1 fan before, but now I’m familiar with Kimi Raikkonen , Lewis Hamilton and Fernando Alonso.
For those who don’t have the need for speed, like me, what makes this event different from other international gatherings held here? Well, not only does it raise Singapore’s profile as a premiere sports destination in Asia but it also shows a nation’s will to succeed against all odds.
A couple of years ago, who would have thought that F1 officials would even consider a race in and around the city and at night ? Wow.
I tell myself, this is something I got to see! It’s a once in a lifetime opportunity and it’s happening right here in my backyard, so no excuses! I’d scramble for a place near the Pit
( for a better glimpse of the cars and yes I admit, their drivers) or the Padang grandstand because the view there is unfettered and the stretch of road is long. Best of all, having my friends there with me makes the experience more memorable.
Of course, I can’t talk about F1 and not talk about all the biz buzz surrounding it. I’m in the news business and business news is my cup of tea. I can’t help but drink in the excitement that this event generates.The tourism dollars that such a prestigious event brings, the endorsement deals signed by the race car drivers, and the brand awareness for the carmakers. Even major international banks jumped on the bandwagon as they raced each other to sponsor the event. Hotels and restaurants also getting in on the action and marketing buffet lunches and dinners in time for the grand prix. As a journalist covering the business beat, it’s amazing to me to hear all the F1-linked client events organized by the investment banks.
Lest I forget, there’s also the extensive merchandising. There are special ones made just for the Singapore night race. I daresay, they’d be coveted collector’s items.
Grand Prix tickets are costly between S$500 and S$1000. But what it does to the Singapore brand? Priceless.
Business and economic prospects aside, this particular grand prix moves me because it makes me proud to be Asian. F1’s first-ever night time race tells the world that Asia’s time is here. That Singapore’s time is now. We’re revved up!
September 11th, 2008
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