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Credit Suisse
Asia to face temporary pullback rather than entering a bear market
Hit by a sharp resurgence of risk aversion across the globe, the Asian equity markets tumbled in the last three trading days, with the MSCI Asia ex-Japan and MSCI Asia Pacific indices falling 5.3% and 4.3% from their record highs on 24 July. We expect the Asian equity markets will see further headwinds in the coming week after the continued sell-off in the US equity market last Friday, driven by lingering concerns about the spillover effects of the subprime mortgage fallout and a widening credit crunch which will curb global M&A activities. The market has totally ignored the stronger-than-expected US Q2 GDP estimate at 3.4%, above consensus of 3.2%. The Dow Jones and S&P 500 plunged 4.2% and 4.9%, respectively, over the past week.
In view of the current hostile trading environment, we advise investors not to panic as we see limited signs of the beginning of a bear market. In his just released global equity strategy report, Credit Suisse Investment Banking (CSIB) Global Equity Strategist, Andrew Garthwaite, argued that we do not have the preconditions for a general credit crisis or the end of the equity bull market. According to Garthwaite, six pre-conditions need to be in place for the equity bull market to end: (1) equities become expensive against bonds; (2) corporates turn into net sellers; (3) a major macro problem occurs; (4) excessive optimism; (5) credit spreads need to be in a bear market; and (6) credit breadth narrows. At this stage, we only see two negative signs emerging, which are the widening of credit spreads and narrowing of breadth. Based on the experience of the narrowing of breadth in April 1998, the equity markets peaked nearly two years later. As a result, CSIB reiterated its bullish view on global equities though it saw risks for the equity markets rising.
hey guy no fear ...lasrt feb it last 1 wk...this time i think 2 wks the most..10 % down on the dow...stay invested...in and out void the benefit of staying..
From local Business Times Weekend:
Credit scare unlikely to deter US investments overseas
SIGNS that the era of easy credit is coming to an end have driven US investors to ease up on risky trades, but don't expect them to abandon altogether their lucrative positions in overseas markets. But some say that while it may make investors more selective, it won't necessarily sour them on lucrative overseas opportunities.
US subprime woes won't hurt economy US Treasury Secretary Henry Paulson said the meltdown in the subprime mortgage market reflects a reassessment of risk that doesn't pose a threat to the economy. 'I don't think it poses any threat to the overall economy,' Mr Paulson, a former chief executive officer of Goldman Sachs Group
You are so right !!!
The market beast respects no one... 
No matter how equipped one is in terms of knowledge, experience and intuition, there are always opposite camps of thought in any period. Most importantly, always maintain different levels of cash in the market at different times.
At this point, I hope most of us are not more than 70% invested so that we have adequate cash to buy in if it dips further. Else, one would just be at the mercy of the market, or simply, realise the loss and cash out in fear.
If we ask ourselves a fundamental question - Who make bulls or bears ? or Why stocks are volatile?
The answer is simple - Investors' emotion!
Only investors of steel will thrive when bulls and bears are in conflict. Without feeling the pain of bloodshed, how would one feel the joy of future gain?
Bull is running out of steam.... monday is going to be another bloodshed day...
I guess when stockmarket blues strike... the safe havens are in blue chips.... maybe that's how those shares got their name hehe.
Companies that deal with fundamental human needs, seldom collapse. Look at Exxonmobil, Shell, Singtel, Proctor & Gamble, etc. People still need fuel, communications, household products regardless of economic boom or bust.
The only difference is how many companies in the market can survive the worst of times. Perhaps this is a good time to review our own portfolios to see if they can stand the test of time and global economics.
It is not the end of the Bull market, only end of Bull run.Nimble and run is the game now.
Take care.
In a market condition like this, cash is king. I do not foresee the market trend to improve over the next few days. This is not only a technical correction, hence tread with care. Many feel that its time to go in and grab the bargains, but a few more days of successive massive drops in the DJI and Nasdeq, panic selling will begin and the market meltdown will begin. Just my two cents worth.
Credit woes...at the end of the day, where are the bank going to get the $ from their clients?
This issue is big...its not going to go away in a day or two. It require time to fix up this borrower's issue. Lot of pple will be declare a bankrupt, i reckon.
Dow drops another 208 points...this is going to be major. Now that investor sentiment is hurt. Are we going to see a mojor meltdown of the market since the tech bubble?
Recession is coming....be weary.
For those seeking for cheap discount on blue chip, please trade with care. Nobody is able to time the market. Market has no feeling. When it comes, it will hit you hard and bad.
despite
U.S. Economic Growth Beats Forecasts; Price Gauge Shows Slower Inflation
yet
US STOCKS-Indexes fall as credit worries persist
well...all those fears and panic yea...
as i refer to Cheongwee's post...dropping to 11,500 sounds REALLY BAD and tt's a lot yea...but we never know if such a thing will happen or not...many negative predictions & outlooks when such a major correction arrive
there are really rooms for DOW to fall.... since Mar has increase quite an amount.
was at 12000 - 12300 ....