Wealth Management Singapore

The MSCI World Index of stocks fell for a sixth day, its longest losing streak in almost a year. The global index of equities in 23 developed nations retreated 0.4 percent as at 27th Jan morning New York, bringing its six-day slide to 5.4 percent.

Greek bond yields surged to a 10-year high amid concern growing sovereign debt will derail the economic recovery. The yen and dollar gained as commodities dropped.

Some reasons for the fall

• Investors are concerned that economic growth will falter as the Federal Reserve and the European Central Bank curb stimulus measures extended for slightly over a year since the height of the crisis.
• Plans by United States President Obama to curb risk-taking by banks and impose fees to recover losses on a bank bailout fund plunged the stock market back into the fear and uncertainty that marked the financial crisis.
• Economists predict central banks in China, India, Brazil and Australia will push up borrowing costs. Concerns about Chinese bank-lending restrictions are sending most Emerging Market shares lower.
• Earnings setbacks also hurt stocks.

Commentary

The proposed measures, which aim to roll back corporate excesses and limit dangerous risk-taking on Wall Street are unlikely to adversely affect Asia’s risk-averse financial institutions.

China’s lending slowdown may benefit the domestic economy by reducing risk and investors should still buy shares of the nation’s banks. They could even be beneficial to Asia as US banks may have to move their hedge fund businesses to the region, analyst said.

Recall the sentiment before the correction, some investors are wondering if the price level too high. Now that the correction happened, it presents an excellent opportunity for investors with time horizon of 2 years or more to invest!