U.S. Free Fall
The dow is on a free fall. Having already fallen below 9000, analysts believe it may even fall to the 7500 level.
PSEi & Asian Markets join the fall
The PSEi closed today at 2097.80, down a whopping 190.64 points with trade value at a little over Php3B. Why are the markets moving down so quickly? As far as the dow and other American indexes are concerned, I understand why. The credit crunch is really taking its toll on their economy. But what is really puzzling for me is that Asia has been joining in the nosedive. I haven't come across a compelling argument that Asia will fall into a recession.
China and Japan
I know that China is feeling the heat now but the consensus among economists points to a slowdown not a recession. If there will be a country in Asia to go into recession, I think it would be Japan. Simply because of their close ties to the U.S. and the major effect that the negative numbers in the automotive industry will have on their economy as a whole.
Middle Income Countries in danger
The middle income countries that export mostly to the U.S. are susceptible as well. However, many of such Asian countries have plentiful foreign reserves. If Asian countries play their cards right, we're looking at slower growth, but growth nonetheless.
Still in the green: the Philippine Economy
As regards the Philippines, the most conservative estimates I've seen are still in the green. The Arroyo government still sticks to the projection of somewhere over 4% in growth. The lowest I've heard is a projection of over 3%.
Trading Action
With the market now approaching that psychological 2000 level, I think that fundamentals will justify buying at around the current levels. However, the volatility calls for caution. Many investors say this is neither a buying or selling market. However, I think small purchases at regular intervals still seem like the best way to go to building a solid long position.
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