Does a bell ring at the bottom?
Below are comments sent to all members on June 14 2006, and today shared with all viewers.
Motherboards win over Motherlands 8 AM June 14 2006
The sell-off in Thai shares is a rare buying opportunity, and the marginally increasing interest rates concerns are well overblown by ever alarmist Swiss/EU and USA voices and news reports....at some point soon we will realize that those interest rate increases are coming to an end.
Interest rates, viewed historically, still remain relative low here as in the US/EU and inflation is overblown because productivity is going up as everywhere -and if global economies do cool down eventually, so will the high price on Oil. Ever higher productivity can support some inflationary pressures.
Outsourcing (the new and to be sustained saver), to faster growing developing countries is ever more successful and growing; this binds us all together ever more and further enhances growth. Mutual dependence is a great binder as we are more and more mutually depended to supply chains, warehouses, just in time delivery, assembly of data as well as materials and products, etc...all great ever more reasons to get along. Remember a couple of years ago when India and Pakistan almost had a nuclear fallout? This fear "saber rattling" back then was quickly quenched when the political powers realized what it would mean.
OR when Taiwan nearly voted in a politician which wanted independence, only not to, as they realized "motherboards won over motherlands". The world over is realizing their is more to gain by economic gains then geopolitical gains.
"We are now all partners in a twenty-four by seven by three sixty-five supply chain". Jerry Rao, New Delhi.
And a Hedge fund collapse fear, while always possible, has now diminished along with the fact that few such funds much invested here to begin with and those that did, mostly sold out here already.
I remain a buyer of oversold select Thai value equities.
Does a bell ring at the bottom? Posted on June 14 2006. 5PM
With the SET at 646, I view this now an important bottoming process! I think the selling is overdone. A rare buying/entry point is now at hand to average into attractive shares. The global sell off in metals completely disoriented the global stock markets, as so much capital where buried in this latest frenzy. They so sold their good stocks so to cover their losses incurred on speculative trades on commodities.
But potentially lower oil and metal prices are a long term positive for Thailand!
Thailand today has some 60 Bill. US$ in foreign reserves, or 50% more then 10 years ago, at the peak of the last long bull market. If you consider that the Baht has devalued some 50% against the US$ since, Thailand's foreign reserves are up 100%, in Thai Baht since 1996 which was the height of its old glory days.
The metals run up of late was just another speculative bubble which now burst and so far more then I expected agitated equity markets here, as everywhere. The recent speculators in the metals are the bad guys they are a force to be reckon with.
Core metal prices became way over heated and overpriced in already what everybody knows: India and China are huge users of these. Now these commodities are tumbling as suddenly speculators realize the global economy is not overheating, in fact slowing a bit including India and China, and inflation concerns seem overdone. In time, all this will be good for Thai stocks!
Paul A. Renaud.
