chicken market

They say when the US sneezes, the rest of the world catches the cold. But why does it have to be so?

The credit and financial crisis is a Caucasian problem. They are the ones having a credit crunch. Our banking and financial system is sound. The confidence of the people in the economy is intact. But, why is our market performing worst than theirs? For example, the DJIA was up some 400 points on Thursday, but our market was down about 14 points yesterday. For the week just ended, the Dow was slightly up, but our market suffered a severe beating in the week.

During the week, Public Bank announced improved results. However, its share price still experienced a sell off.

Granted a recession in the US will induce a slowdown or even a recession in our country. But our diversified economy should be able to weather the storm better. We should be able to survive the economic reverse.

My opinion is that our market is affected by the movement of hugh foreign funds. They cause the volatility in our market. When they start buying, the market outruns its fundamentals. Conversely, when they sell, the market drops into the abyss. The reason being that their size is big in comparison to our market. Big storm uproots the trees.

The only remedy is that our institutions should play a more active role in the market. They should counter the activities of the foreign funds. This will result in a less volatile market.