Blow Out Phase In Emerging Equity Markets

Money flows from developed nations like US, UK, Europe is getting invested in fast growing economies like India, China, Taiwan, Singapore, HongKoong, Phillipines, Russia. This flow is very strong and there is almost herd mentality among them to enter these markets in a rush. This is causing extreme inflation in assets of these economies, notably in stocks. This money also is very reluctant to react to any adverse news and under such circumstances, making money at heightened valuations is an extremely challenging task for traders. Best to remain invested in excellent quality companies with excellent free cash flows and strongest of business fundamentals coupled with strong economic link.

Volatility In Emerging Markets

Last week emerging stock markets saw volatile trading sessions with stocks of Hong Kong, Taiwan, India moving violently amid alternate bouts of buying and selling clearly signalling nervousness among investor/trader class at hightened levels. Also aiding the volatility is the fact that markets still are confused about the extent to which US fed might cut the rates or will he refrain from any rate cut this time around, and markets have discounted 0.5% rate cut by fed already in much advance. Any rate cut dissapointment might cause temporary selling in emerging markets.

Gold And Silver Have Corrected Sharply

Precious commodities like Gold and Silver have corrected over the past few days as investors took profits from these commodities after a descent run in them. Crude oil is also facing selling pressure at higher levels. Copper and Zinc prices too face possibility of profit booking from their recent hefty run. Agri commodities too look strong especially Wheat and Maize from long term point of view. Stocks in Hong Kong market took a much needed correction yesterday as well as today. Volatility in stocks among emerging markets especially in Hong Kong, India, Taiwan is rising due to extremely sharp rise in valuations in a very short span of time.