Liv­ing with dan­ger in 2016

China Daily (Canada) - - HONG KONG -

Any in­vestor brave or reck­less enough to try bar­gain hunt­ing in the Hong Kong stock mar­ket at the mo­ment could be play­ing with fire.

Yes, we know. It’s so tempt­ing to jump in, with stock prices hav­ing sunk so much in the past few months.

But be­fore call­ing your bro­ker, lis­ten to the dis­tant thun­der of pes­simism em­a­nat­ing from Wall Street and the City of Lon­don, and re­ver­ber­at­ing from mar­ket to mar­ket around the world.

In re­cent weeks, the New York stock mar­ket has tanked, and the slide in prices of some ma­jor tech stocks listed on the Nas­daq, in­clud­ing Ap­ple, has sparked fears of a dot-com bust that could even be big­ger in scale than that which hit in­vestors in 2000.

On top of such omi­nous de­vel­op­ments is the prog­no­sis of doom by some em­i­nent in­vest­ment gu­rus, in­clud­ing So­ci­ete Gen­erale strate­gist Al­bert Ed­wards, who pre­dicted that the Western economies are about to be hit by a fi­nan­cial cri­sis that could short-cir­cuit a US eco­nomic re­cov­ery and plunge the euro zone back into dis­ar­ray.

It is also re­ported that an­a­lysts at the Royal Bank of Scot­land have curtly ad­vised in­vestors to “sell ev­ery­thing” or risk be­ing caught in an im­mi­nent global stock mar­ket crash. That sounds se­ri­ous.

Sit­ting in Hong Kong and hear­ing all those re­as­sur­ances from lo­cal govern­ment of­fi­cials, in­vestors may take a more san­guine view of the fu­ture. But they would feel more wor­ried if they set their sights be­yond the re­gion which has ben­e­fited from the hard lessons learned from the 1997 Asian fi­nan­cial cri­sis.

The bas­ket case of Brazil — once a shin­ing ex­am­ple of ev­ery­thing good that an emerg­ing econ­omy could achieve — has the po­ten­tial to trig­ger a global debt cri­sis with far-reach­ing reper­cus­sions. Rus­sia, an­other emerg­ing econ­omy, is reel­ing un­der the dual pres­sure of slump­ing oil prices and US-led eco­nomic sanc­tions.

The prob­lem this time is that the Chi­nese main­land, which is be­set by its own set of is­sues, could not be ex­pected to come to the res­cue as it did in 2008. Mean­while, cen­tral banks of the United States and Euro­pean coun­tries would find they have run out of am­mu­ni­tion to fight an­other fi­nan­cial cri­sis. They have al­ready cut in­ter­est rates to near zero, leav­ing lit­tle room for fur­ther re­duc­tions.

To in­vestors in Hong Kong’s ex­ter­nally ori­ented econ­omy, 2016 is un­fold­ing as a year of liv­ing dan­ger­ously. So, take care.


In­vestors in Hong Kong’s ex­ter­nally ori­ented econ­omy must heed the dis­tant thun­der of pes­simism em­a­nat­ing from Wall Street and the City of Lon­don.

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