CNY Mood - Stay Sideline & Focus on CNY Celebration

Fundamental & Technical Commentary

As of last week, there were some profit taking and retracement on global markets especially in Asian region due to several matters like High inflation rates in Emerging markets and US & EU economy recovery momentum.

Arrival of High Inflation

The emerging markets like China, India, and Indonesia are most badly affected by the high inflation currently. These 3 markets are certainly underperformed the others as the worry of high inflation may hurt the economy recovery strength, thus most analysts are anticipated the governments may raise the interest rate in February or March. There are few notes taken:

1. The unbalance of economy recovery globally, where the emerging market are growing too fast, pushing all the properties & commodities resources flying sky high - Thanks to the hot money flowing in from US & EU countries.
2. The most unexpected bad weather - Causing the commodites especially the agriculture prices fly, and creating the high inflation.
3. Most comsumers consume 40% of their expenses in food & petrol- High food & petrol price may hurt the consumers spending desire.

Global worries

1. The uncertainty in US economy recovery - Having the risk of losing momentum - Still require the government stimulus package which is still on going.
2. The EU soverign debt issue - The worry and focus on PIIGS may impact the EU and global economies.

CNY Mood - Stay sideline & focus on CNY celebration
2011 CNY is just around the corner, which is in another 1.5 weeks to go, most investors or retailers are taking profit and withdraw it for CNY preparation. This is quite normal as most people would not wish to stay worry while celebration CNY. Furthermore, most of the stocks in Malaysia & globally have been experienced quite a fruitful bull run in 1H Jan 2011. People can just easily collect the minimum of 10-30% profit and back for CNY holidays! Subsequently, the overall market may enter into a quiet trading season again through out the CNY period, thus I strongly recommended just let's go for the CNY celebration & wish everyones has a prosperoous year ahead! Happy Chinese New Year!