Jan 11, 2016

Cory Diary : War chest

Even though Chinese Stock Market has been my primary concern in my earlier blog  ( link ) near end of last year. Never would I expect the Chinese Stocks to come down so fast and furious. Artificial brutal control do not work well in a capitalist market structure where there aren't good fundamental to support it. Is a good thing that they removed the newly introduced circuit control as this can allow the market to quickly stabilize to the right sustainable level. Question will be what is the Right Level ? If we look at the Shang Hai Index chart, there are few support level bands ~ 29xx, 26xx and 24xx. Considering China economy has not been growing well for more than a year, shooting to 5200 is really crazy. Now with correction on-going, back to 24xx level is not impossible. Whether authority will allow them to fall to that range is another matter. This is also complicated with local stock trading market conditions, de-valuation pace and market size.

In Singapore local context, is a double blows. In addition to China related issues, low oil price impacts are another serious concern. Huge industries and services are basically in a life damaging event. However all this issues may provide a life line to the local property sector. And I anticipate some of the curbs will be softened or removed. And despite poor Chinese export, import by America is not significantly reduced. In fact US GDP and Job Market are growing well. What this may mean is that other countries probably have eaten up China share of export. So I believe the world is still doing ok. Yuan will have to continue to devalue to make themselves cheaper. This process will stop the bleeding but will take years to reverse noticeably.

Therefore further drop in Singapore Market is likely sentiment and temporary. Soon we will realise we are over sold and STI will bounce back to a more reasonable stable level.

Below my War Chest Pie Chart ~ CPF, Pension, Property and Insurance info removed. Having tapped on 10% of my reserve, I am ready for more battles as it comes !


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