 |
The recent financial shake-up in Hong Kong, the perceived safe-haven in Asia triggered
massive selling across the major stockmarkets worldwide.
Barely a week after the Hang Seng's debacle, world key barometer the Dow Jones Industrial
Average suffered its worst ever one-day decline in point terms, plummeting more than
500 points.
With the regional stockmarkets spiraling downward, some investors and even the best-performing
fund managers are already fretting over what to do with their investments.
The collapse sent a large number of investors retreating from the region, putting
further strain on the already-weakened local stocks. Regional fund managers are being
forced to raise cash to meet huge redemptions.
The Asian debacle has certainly caught many players by surprise. Table 1 depicts
the performance of selected Asian stockmarkets and their respective currencies (against
the U.S. dollar) at specific time frames.
| Table 1. Selected Stockmarket Performance Analysis |
|
|
Countries
|
Indices
|
Currencies
|
Indices
|
Currencies
|
| |
As at
31/12/96
|
As at
27/10/97
|
As at
31/12/96
|
As at
27/10/97
|
%
Change
|
%
Change
|
| Hong Kong |
31,451
|
10,498
|
7.735
|
7.729
|
-30
|
+0.08
|
| Indonesia |
637
|
490
|
2,361
|
3,567
|
-23
|
-51.08
|
| Malaysia |
1,238
|
693
|
2.5283
|
3.3580
|
-44
|
-32.82
|
| Philippines |
3,171
|
1857
|
26.26
|
35.42
|
-41
|
-34.88
|
| Singapore |
2,217
|
1620
|
1.4030
|
1.5830
|
-27
|
-12.83
|
| Thailand |
836
|
491
|
25.65
|
38.40
|
-41
|
-49.71
|
|
| Source: Normandy Research |
While prudent savings is important in anticipating rough times ahead, many are over
reacting by pulling out completely despite severe losses. One should not desert investments
entirely as extreme pessimism in any cycle or turbulence could result in missed opportunities.
Institutions with long-term perspective are beginning to pick stocks selectivly taking
advantage of the low prices. Bargain-hunters looking for short-term profits may trade
in and out of the market while there are others who prefer to move partially or completely
into fixed-income instruments.
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