Markets Compared

Markets Performance Year-To-Date

1) Nasdaq -7.5%
2) Dow Jones -12.4%
3) FTSE -15%
4) Nikkei -15.3%
5) Kospi -17%
6) Straits Times Index -18.7%
7) Hang Seng -23.2%
8) KLCI -23.22%
9) Jakarta Composite -23.3%
10) Shanghai -53.6%

Considering that Chinese mainland companies were supposed to make up close to a majority of Hang Seng index, the correlation has been disjointed between Shanghai and Hang Seng. That indicates that the mainland bourses were dealing effectively with the bubble in the stocks there coupled with feeling the effects of higher interest rates and very tight lending. It also shows that Beijing's mandate to puncture the equity bubble has largely been successful. Hang Seng's resilience has a lot to do with its monetary policy being dictated largely by its USD peg. Bearing in mind that most HK banks were not part of the US credit implosion and sub prime collateral damage, the Hang Seng's worse performance compared to the Dow still showed that Hang Seng index's red chips have been dragging the HSI lower.

Nasdaq's out performance shows that investors are punishing financials generally. Despite the huge amount of problems faced by the US economy: credit implosion; sub prime; higher oil prices; Fannie & Freddie - the Us markets have performed remarkably well. Are they right, or just deluded? Other Asian bourses seem to be hit harder, and for what reasons? A slowing US economy, easing in commodities, a stronger USD???

The KLCI is obviously in over sold territory as fundamentals would dictate that Malaysia is at a much better position than Japan and Korea at least. It looks like the last 7%-8% of losses has more to do with issues external to business and fundamentals, and more to do with the political premium of investing in Malaysia.

p/s photos: Son Tae Young