Hi Guys,

This is what I SEE

1) A SHRINKING ECONOMY THAT MIGHT IMPACT SHARE PRICES.

When Crude Oil Crashed from US$120 to US$60 Govt Revenue Impacted. So Govt implemented 6% GST to save tha Malaysian Economy. All Good Citizens are paying a 6% consumption tax to support Malaysia.

Now that Crude Oil has fallen another 50% from US$60 to only US$30 Govt has to revise budget downwards another 10%?

10% plus 6% GST means a contraction of 16%. The entire economy will shrink and shrink and shares will be impacted further. To fight this deflationary trend Govt tells banks to reduce SRR and pump more liquidity into the system. ValueCap & TPP will also help.

As such it is a time to bargain hunt fallen shares carefully. No hurry.  Don't keep Cash in banks too long as it is also unproductive.

2) WHY TPP IS IMPORTANT?

In 1929 when Dow Crashed the world's markets also collapsed. Why so bad? It was due to protectionist policy. Every country raised barriers against imports to protect their less efficient domestic industries. So the recession turned into a Great Depression.

This round the US Govt encouraged free trade instead. This is a good move. Malaysia should seize this opportunity! See how Singapore Economy did so well because it is an open economy. Singapore turned from third world into a first world nation.

3) IN THIS SCENARIO WHAT TO BUY AND WHAT TO AVOID?

Export stocks that will benefit from Strong US$. Rubber, plastic and logistic companies that will benefit from Cheaper Oil. Refineries like PetronM & Shell. Pengerang Rapid Refinery will also benefit.

Oversold undervalue Stocks. Companies with little borrowings. Companies with Lots of CASH. Now they can take opportunity to buy up other distressed companies. Like Canone buying up Kian Joo Can Factory.

Consumer necessities & repair outfits.

All banks, cars, even property stocks should be avoided. The exception is in Iskandar landed houses due to Johoreans earning Strong Sing Dollar.

Chose your Investments carefully in these trying times.

Trying Times?

Tough times never last but tough people do.

Good luck

Regards, 

Calvin