The big question is can we influence the index thereby with a positive move in the index, the economy will showed a better health?....Most economist will said that it is totally hogwash strategy i.e.. to prop-up the economy by pumping monies into the stock market. The index is just the sentiment and reaction what the average Joe, Mat, Ah Chong or Muniandy..the investors see what is going to happen in the economy in near future. The problem is our economy is intertwined with the world economy especially in US, Europe and Japan ..and also Asia. The stock market also is subject to influence by outside force.. For example, the factor of foreign investors in our stock market …the outflow of foreign fund from local stock market caused a downward spiral on the index as shown currently where the European and the American fund managers shifted their portfolio out of the country since their home countries are facing credit crisis….thereby the argument “ Given that the stock market index is a vital barometer of our economic health, it should not be left entirely to market forces to influence its movement.” Thereby, the dimwit’s injection of 5 billion ringgit in the market is a good strategy to invigorate the economy……… is just blamed dumb.
Where is the market now….by October 22nd the market is as per chart below. The blue color chart is the KLSE Composite Index while the black color is the Singapore ST Index. Our KLSE Composite Index is still above the Jun 2006 low while the ST Index has blown passed the June 2006 low. The ST Index clearly leads to confirm the recession in Singapore…Are we still in denial and try to manipulate the Index….If the fund of 5 millions ringgit was an initiative to invest ala Warren Buffet…than I welcome it…..but please be reminded that….it hurts to catch a falling durian….on technical….the Composite Index showed a classic head and shoulder pattern…it is expected the target downward is to 850-830 level…
