Why is our stock market going up amidst the economy crisis?
Malaysia’s stock market has seen an unlikely rally in recent weeks. Nobody can be sure why is the market going up when the economy does not look likely to recover in the next 6 months.
Take a look at this article from The Star – Can the market rally be sustained?
Let us take a look at some of the reasons which I think have contributed to the market rally one way or another.
- Malaysians are still spending especially with the smart marketing moves made by the businesses. We’ve seen a LOT of warehouse sales this year.
- Some Malaysians are still unaware of the actual economy situation in other countries. Malaysians tend to be oblivious at times. This indirectly leads to more spending from this group of oblivious Malaysians. So in a way, they are helping our economy.
- 2006-2008 are 3 years where a lot of people get their hands into property investing. Most of them buy for their own use and 2009 is about the right time their properties get completed. And of course, upon completion, people will need to spend a lot of money.
- A lot of operations in the US, UK, Australia, etc are moving to Malaysia as a cost cutting measure. It’s cheaper here so a lot of companies are going for the offshore model. This has in turn create more job opportunities for the people here. True, we still have jobless people but we’re not as badly hit as US or UK.
- Kudos to our Bank Negara. The folks over there are really doing a good job. Without them, I’ve no idea where our economy will be heading.
Those are some of the reasons I can think of which I feel have helped our country in this recession. But having said that, I do feel that the stock market has gone a little bit too high up. Perhaps the fund managers are doing something there, I don’t know. But if I were you, I’ll be extremely careful. I do have a feeling that the bubble might burst anytime.
Well, again, I must say that I am not an expert. For me, I’ll stay put for now and will only invest in a company if I feel the company has good prospects AND the stock price is reasonable. I’ll do that irregardless of the economy and the stock market movement.
It’s investing we’re talking about here, not gambling. So don’t speculate too much. If you feel it’s cheap, buy. Else, just wait. It pays to be patient.
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