The Greece government on Nov. 4 decided to scrap its plan for holding a referendum with regard to Eurozone’s terms for a bailout package while its Prime Minister George Papandreau got a vote of confidence from his peers. This development, to some extent, would be received by global markets with a sigh of relief. As immediate reaction, Asian markets rose.
Along with the relief at the same time was the report from the labour department of US which indicated slight improvement in unemployment rate, reducing to 9 per cent level in October after a three-month stifle. It added that a modest 80,000 jobs were created. The October rate was said to be modestly better than expected although job creation did not meet economists’ expectation. President Barack Obama has set out to create more jobs in order to further improve the rate to 8 per cent by 2012 elections.
In Japan - now the third largest economy after China overtook it last year - Gross Domestic Product (GDP) gained ground in the 3rd quarter, for the first time this year. According to Bloomberg News, GDP rose 6%.
In the latest news (Nov. 9), Asia stocks climbed higher in reaction to news that Italian Prime Minister Silvio Berlusconi, who is besieged with personal issues, has indicated he will step down. At the same time, there were some cheers with regard to news that China’s inflation fell in October.
On the local front, complementing the latest news of foreign funds being net investors of stocks in Malaysia are cash-rich China and Taiwan firms in acquisition spree for assets and equities in recent weeks. The trend sets in after having witnessed a wave of Japanese firms in merging and acquisition foray here. Business Times, in its Nov. 4 issue, quoted an analyst as saying “some people think it is because these investors are worried that the booming China market will fail, and that is why they are moving their funds to other markets, including Malaysia.” Meanwhile, Iskandar Investment Bhd (IIB) and China’s Qingdao Zhuoyuan Investment Holdings are embarking on a joint-venture RM2.5 billion residential project in Medini Iskandar development area (Johor).
Do the news point to a relief – albeit probably temporary - for global markets, Asia and Malaysia? Well………at this juncture when the world overall is still in volatile times, just keep our watchful eyes open and observe diligently for more “signals”, especially in the face of the soon-to-be general elections in our home ground.
I remember a friend, who is in fund management, once told me that stock market swings are linked with stories to a larger extent than economic fundamentals. Even a set of simple statistics released to the media can either pep up or shoot down prices in the stock exchange. I cannot agree with him more.
Regards.
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