Asian stocks declined the most in two months, while commodities and currencies slumped, after the Securities and Exchange Commission sued Goldman Sachs Group Inc. for fraud and China curbed property loans. China’s Shanghai Composite Index plunged 4.79 percent after the government told banks to stop loans for third-home purchases. Hong Kong lost 2.45% and Singapore, 1.91%.
“The Goldman news, in isolation, undermines credibility in the financial system,” said Tim Schroeders, who helps manage about $1.1 billion at Pengana Capital Ltd. in Melbourne. “It also creates uncertainty as to whether this is a one-off action, or the first of many that results in greater scrutiny regarding the integrity of U.S. financial institutions.” (Bloomberg)
At the local front, FBM KLCI tumbled about 11 points shortly after the opening bell. At the afternoon session, the Index managed to recoup some of its losses and closed off low at 1,329.73, lost 6.10 or 0.46%. Daily FBMKLCI Average (or Pivot Point) was 1,325.88, lost 8.65. Total Volume increased by 29 mln to 812 mln.
Need not to say, market sentiment, which was fragile to external factors all the time, reacted pessimistically to the global slump. The Oscillator opened with a loss of 971 points and soaked deep in the red for the whole session and ended at -958.81. The Average recorded a loss of 865.73.
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In fact, market’s reaction to the Goldman Sachs problem was not as bad as I think. Selling pressure though prevailed today but volume was not significant by less than 900 mln shares. May be, a lot of investors holding shares within T+4 still hoped for a brighter tomorrow.
At day’s end, 12EMA (blue) of the MSCD plummeted to -243.36, lost 113.12. 26EMA (red) fell to –117.34, lost 59.89 and the Histogram, -126.02 lost 53.23.
The 12EMA fell sharply and depicted a wider gap between 26EMA. The Histogram casted an even longer negative bar after today’s trade. Technically, market sentiment is very weak now and needs a longer period to recover.
It is opined that market will be plagued by the Goldman Sachs (GS) crisis for some times as it is not clear how many Fund Managers would have committed the same fraud as GS. Adding weigh to the market, news reported that political heads in Europe started to mull the same action would taken on other European Fund Managers who might have committed the same fraud as GS.
My Portfolio: No Transaction
(Written and constructed by Smartbiz)
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