What will Monday be?
August 12th 2007 16:33
Asia-Pacific will open their markets in less than 12 hours, the usual Monday headstart for the region before New York open theirs. After a weekend of processing information and leads from last week US close, the short-term signals are not very clear and more volatility imported from the US is expected.
But how will the Asia-Pacific markets react to China's inflation data due to be released tomorrow? Shanghai and Hong Kong especially could be under the spotlight.
A long time China expert, Dr. Enzio von Pfeil, who runs Enzio's Clock, expect the market to override rationality and give way to nervous sentiments.
The following are the thoughts of Dr. Enzio von Pfeil:
"Tomorrow, China releases some inflation data. Subscribers know that we are not worried: inflation is being driven very much by food prices, over which no Central Bank, China's included, has any power.
However, as market nerves are frayed, any "bad" headline data is going to frighten people into thinking that
- China will tighten, and that
- Her tightening measures will work.
We disbelieve these two assumptions, but the market will not see things as they are, but as the market itself is feeling. Feelings will override any rational analysis, the result being that any bad headline data will cause a strong A-share sell-off.
That sell-off, in turn, will whack our Asian and later the US market - as we saw some weeks ago."
At the same time the views of Austock analyst Michael Heffernan as reported by The Age on its Monday edition said:
"I think it will show that a number of the larger stocks are in pretty safe hands," he said. "What happens with people who can't pay their mortgages in the US has nothing to do with whether China is going to be building more bridges, their appetite for steel, the profits of BHP and Rio or the Commonwealth Bank."
The above quotes are the words of the experts but the market is the maker.
But how will the Asia-Pacific markets react to China's inflation data due to be released tomorrow? Shanghai and Hong Kong especially could be under the spotlight.
A long time China expert, Dr. Enzio von Pfeil, who runs Enzio's Clock, expect the market to override rationality and give way to nervous sentiments.
The following are the thoughts of Dr. Enzio von Pfeil:
"Tomorrow, China releases some inflation data. Subscribers know that we are not worried: inflation is being driven very much by food prices, over which no Central Bank, China's included, has any power.
However, as market nerves are frayed, any "bad" headline data is going to frighten people into thinking that
- China will tighten, and that
- Her tightening measures will work.
We disbelieve these two assumptions, but the market will not see things as they are, but as the market itself is feeling. Feelings will override any rational analysis, the result being that any bad headline data will cause a strong A-share sell-off.
That sell-off, in turn, will whack our Asian and later the US market - as we saw some weeks ago."
At the same time the views of Austock analyst Michael Heffernan as reported by The Age on its Monday edition said:
"I think it will show that a number of the larger stocks are in pretty safe hands," he said. "What happens with people who can't pay their mortgages in the US has nothing to do with whether China is going to be building more bridges, their appetite for steel, the profits of BHP and Rio or the Commonwealth Bank."
The above quotes are the words of the experts but the market is the maker.
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