Dear everyone,
Hope you have enjoyed your weekend. I know I did. All thanks to my Diff graduates who have recently profited in futures trading, I had the privilege of having the best seafood ever at Bandar DJakarta, Ancol.
Ok… The golden question everyone is asking in their mind is…
So how? Is the Global Credit Crunch over?
Instead of answering the question (Which I obviously won’t know for sure… duh!), Let me show you some statistics:
| Market | High | Date | Low | Date | 26/7/2009 | % decline | % Gain |
| DOW | 14198.02 | 11-Oct-07 | 6469.95 | 6-Mar-09 | 9093.24 | 54.43 | 40.55 |
| Hang Seng | 31958.41 | 30-Oct-07 | 10676.29 | 27-Oct-08 | 19982.79 | 66.59 | 87.17 |
| SNI | 18300.39 | 26-Feb-07 | 6994.9 | 28-Oct-08 | 9944.55 | 61.78 | 42.17 |
| STI | 3906.16 | 10-Oct-07 | 1455.47 | 10-Mar-09 | 2533.43 | 62.74 | 74.06 |
| Jakarta | 2838.476 | 14-Jan-08 | 1089.34 | 28-Oct-08 | 2185.65 | 61.62 | 100.64 |
Let’s Analyse:
1) The start of the “Bear Run” is generally early October with the exception of Jakarta and Nikkei, which began showing sign of weakness and started selling from its all time high on 26 Feb 2007.
2) DOW lose 54% while Asian markets lose more than 60% from it’s all time high. However Asian markets recover by a larger percentage averaging above 70% from its all time low with the exception of Nikkei.
Ok… So what can we infer? The US market is the reason for the global credit crunch. Asian markets lose more in market value as compared to US market but recovered much more as compared to US counterparts. In order words, should US market recover back to its all time high value, Asian market is likely to break their all time high value by at least 30%. In laymen term, the recovery in Asian would likely be much more “spectacular” as compared to the bull run in 2007!
Let’s look at the individual index:
Starting with Dow, We can see that it is reaching a critical level soon (9247). If Dow retraced back to 8500 level by next week and recovered back to test 9247, there is a good chance for DOW to test 10330 by September.
Looking at HK, Uptrend is almost confirmed since Market try to pull back to the critical level 18336 but now has lifted off. Good chance of the HK coming off to test 18336 level before it recovers up to test the next level 21313.
NK is the weakest among Asian markets. Critical level to watch is 9700. It has to stay above this level by end of this month for further upside. Next level will be at 11055.
Similar to HK, recovery on STI has been stronger than its US counterparts, reflecting bullish sentiment in the region. STI may pull back within the next few weeks to near 2336 level before recovering up to 2680 level by September.
Jakarta has posted the most spectacular recovery among all Asian markets. It has more than double its market value from its all time low on the 28 Oct 08. 2173 is a critical level for Jakarta Index. It is likely to pull back to close 2100 level before seeing any further upside of 2380 by September.
Overall: I’m expecting pull back all across Asian markets before further rally. The extent of the pull back will determine whether the recessiion is indeed over. The past week has already given signs of the region coming back in force. Earning reports on major US market has been positive so far. Now all eyes are on the 3rd quarter results coming out in Oct. If the US non farm payroll and unemployment rates are doing well, Asian markets will not have any reasons to hold back its further upside.
CK
Disclaimer Apply
| Market | High | Date | Low | Date | 26/7/2009 | % decline (from All time High) | Period | % Gain (from all time Low) | Period |
| DOW | 14198.02 | 11-Oct-07 | 6469.95 | 6-Mar-09 | 9093.24 | 54.43 | 512.00 | 40.55 | 142.00 |
| Hang Seng | 31958.41 | 30-Oct-07 | 10676.29 | 27-Oct-08 | 19982.79 | 66.59 | 363.00 | 87.17 | 272.00 |
| SNI | 18300.39 | 26-Feb-07 | 6994.9 | 28-Oct-08 | 9944.55 | 61.78 | 610.00 | 42.17 | 271.00 |
| STI | 3906.16 | 10-Oct-07 | 1455.47 | 10-Mar-09 | 2533.43 | 62.74 | 517.00 | 74.06 | 138.00 |
| Jakarta | 2838.476 | 14-Jan-08 | 1089.34 | 28-Oct-08 | 2185.65 | 61.62 | 288.00 | 100.64 | 271.00 |
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