May 2012 passed and we saw how Asian equities were hit. The MSCI Asia Pacific Index declined 11 per cent in May, the worst since October 2008 following the collapse of Lehman Brothers Inc. (Source: TODAY, 1 June 2012)
The Straits Times Index (STI) ended at 2,772.54 points on 31 May, no change from 25 May, when I last wrote about STI. As of now, STI is 2,758.60 (1 June, 2.58 pm), another 0.5 per cent decline. In comparison with 52-week low of 2,521.95 (5 October 2011), the index has another 8.5 per cent way to go before a new low can be set.
Last week, the Greek’s parliamentary election was the catalyst for the problem. This time round, the Spanish banking problem is the new cause. The economic slowdown in China and India added to the slew of problems.
During this period of uncertainty, capital is moving to safe-haven assets such as US dollar, US treasuries and Japanese Yen. Money is taking flight from Australian dollar and crude oil causing them to lose values.
I am less anxious now compared with 2008/2009 global financial crisis. The main reason is that I had downsized funds in riskier assets, for example currency-linked investment, credit-linked investment. There is a better spread of funds between different asset classes, instead of putting too much “eggs in one basket”. I have learned my lessons since coming out of 2008/09 financial crisis.
Copyright © 2012, limkimtong for Living Investment
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