The fundamental condition of the economy is getting better. The fundamentals did not turn sour during the past two months of the new year Listed companies are going on to announce their corporate results; those companies with good improved profits would make their stock prices look cheap as PE ratio would be much lower to attract investment interest.
The Jasmine Revolution that started in Tunisia has spread like wild fire, engulfing North Africa and all the Arab
countries in the Middle East. It is like a domino effect after Egypt.
Tunisia is still in turmoil since the president stepped down. Egypt is under the control of military junta. Oil
producing Libya is out of control. Peoples of Iran, Bahrain, Yemem and Jordan demonstrate to overthrow the governments.Midde East and North Africa countries can be grouped into oil and non oil producing ones. All this are risk that we human being cant control.
Though all this happen i still believe that the market would be moving upwards.
Oil price hitting 100 and above... This can lead to vicious inflation and recession happen at the same time. It happened in the 70s of the
last century once due to certain rise in oll price.
A price rise is either due to demands increase or supplies decrease.
1) If the price rise is due to increase in demands, the issue is not so critical as it signifies economic prosperity; people have more money to spend
(though it may be due to printing of currency notes). People do not grumble that much if inflation is due to booming and growing economy.
2) If the price rise is the result of short supplies, then except for a few hoarders, most people whose income remains unchange will suffer as income lags behind rising prices.Consumption and expenditure will be cut, and economic recession follows.
For people out there who follow my blog and are investing in Unit Trust/ mutual funds. Is a good time to switch them to equity funds like Asia, US or commodities. I believe the market is going to do well this year.
Currency to watch EURO against USD.
