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Sunday, January 10, 2016

2016: GLOBAL BEAR MARKET?



Some analysts have the view that the start to the year typically are associated with the post-holiday blues with low volume.

It was reported in StraitsTime that analyst, Charles Kong said, "Markets usually edge up on low volume. People take time to recover from the holidays and traders don't usually jump in straightaway."

Well, the theory has been immediately discarded when 2016 kickstart. All numbers in red and sell orders piling up.

The China market was in a free fall with a survey of China's manufacturing confirmed fears that growth was slowing in the second largest economy. The yuan also fell to its lowest in five years. Investors were also getting used to the circuit breaker, with so many people rushing to sell and worries of being caught stuck once the circuit breaker triggers the close of the exchange.

Source from Bloomberg

Over the past week, investors lost an estimated US$2.3 trillion (S$3.3 trillion) across global markets. In Singapore alone, the damage to local stocks was about $27 billion. 

The crash was so alarming that legendary investor George Soros warned that global markets were facing a crisis. "When I look at the financial markets there is a serious challenge which reminds me of the crisis we had in 2008," he said on Thursday. 

TOO MUCH BAD NEWS?

Some analysts pointed on how world events are created this panic.

"You had the sabre rattling in the Middle East and then it was Kim Jong Un's North Korea, and fear over the Chinese economy. This was a perfect storm of events that caused investors to run for the hills."

World's Richest Lose $194 Billion In First Trading Week of 2016

The world’s 400 richest people lost almost $194 billion this week as world stock markets began the year with a shudder on poor economic data in China and falling oil prices.

Forty-seven billionaires lost $1 billion or more during the worst week for U.S. stocks since 2011, according to the Bloomberg Billionaires Index. The combined drop was almost seven times the $29 billion lost in the first five trading days of 2015. The 400 people on the index had a combined $3.7 trillion at the end of the week, compared with more than $4 trillion a year ago. 


GLOBAL BEAR MARKET?  

Could this be a global bear market? Some market watchers are on record that the U.S. is already in a bear market and that it's just a matter of time before the markets fall at least 20 per cent from their high in May last year, the benchmark drop required to meet the bear market definition.

Like Toronto, most of the world's stock markets are already in a bear market, according to a report from the Swiss financial services company UBS.

And like mountain climbers, Stovall says, with all economies tethered together, even though the U.S. "seems to have a solid grip and a solid footing, the other countries don't, and should they slip off of the mountain, they will pull us down with them."
 



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