Market Sentiments

The bad news are decelerating and seems to be in a consolidating phase. There is a possible 2 months bear rally via covering shorts and short term trading opportunity.

If news starts to get marginally better as the days goes by, prepare for the incoming increase in inflation which the market is going to price in, in advance due to government's quantitative easing seeping to the real economy.

If the rally really persist, and if in Oct, there isn't any new lows, or if it hit a double bottom, it is an indicator that the market has bottomed. Equities should trade sidewards for a few years similar to the Dotcom bust that traded sideway until the start of the new bull market from 2004-2007.

Singapore Stock Market

After the S-shares have fallen drastically due to management discrepancies and scandals, the decrease in value shows how much premium we have placed on the s-shares as we still believe in the China growth story. The best time to buy is when there is a discount due to these type of scandals and negative news. Since all these news are somehow priced in the shares, the exact value of the negative news is unknown.

However, we must remember that not all shares are the same. There are gems lying around on the cheap being affected by their counterparts. Those that have the money to invest should take a trip down to their office, factories and shops to get a feel of their businesses.