Friday, December 12, 2008

Time to buy battered stocks: JPMorgan

Published: 2008/12/11

Now is the time for investors to buy battered stocks as the global financial crisis is expected to retreat by the second half of next year, an equity strategist says.

"We have seen the peak of selling (of the stock market) in October," said JPMorgan Asian and emerging markets equity strategist Adrian Mowat at a briefing in Kuala Lumpur yesterday.

The stock market, which took a beating in October, following panic-selling in global markets, led the local benchmark Kuala Lumpur Composite Index to a four-year low.

Valuations are cheaper compared with previous crisis, he added, but investors are staying on the sidelines.

"Malaysia is unlikely to be a leader in recovery because international markets tend to go for markets with more liquidity and China will lead the story," Mowat said.

My comments: I don't know how he can come to the conclusion that the crisis is over. For me, it is still too early to tell whether the bottom has been reached. The monthly S&P 500 chart shows that it may have found support in the 750-800 region. If this is the true support, then the market should test this in the next 3-6 months time. Even thought the chart shows that it is really oversold, but we need to remember that this is a strong downtrend. Thus, indicators can stay oversold a long time. Based on my interpretation on the S&P500 chart, I cannot come to the conclusion that the crisis is over.

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