As we started the New Year 2018, something surprising in the market has popped up. S&P 500 market index surged for 4 days continuously. It has gained more than 68 points or 2.6%. And Japanese Nikkei index has also surged 949 points or 4.2%. It seems that traders are more confident for the market in this New Year. There was enthusiasm all over the world.
Like what I wrote before, everyone was so concern about market crash in 2017. Investors and traders alike were very cautious and conservative then. But once they discovered that market crash not only did not happen in 2017 but has even been the best year for investment ever since, they were greatly disappointed and blamed their disappointment to market analysts and those doom and gloom proponents. From now on, these investors will no longer want to hear these warning anymore.
Trump tax cut plan would be ushered in for this year, market will be surely pushed further up. We will be entering the beginning stage of the market euphoria. If we are sober enough, we need to be reminded that we have started a journey to an intensifying stage on dangerous ground from now onward.
Back in Malaysia, the scenario is even more interesting. Malaysia market or KLSE index has been one of the worst (if not the worst) performing markets in East Asia Pacific region in 2017. Even though economic data has been reported very positively throughout the year but the KLSE market did not response in tandem accordingly. The suppression of market performance may have come from various reasons. But the main reason could be the uncertainty of the date of general election. This has kept foreign investor on their toe for a year long. Once we have crossed passed the end of 2017, what was uncertain has become certain for investors. The choices of the date for Parliament dissolution and election date has been so narrowed that guessing work is no longer necessary.
This is one of the possible reasons that caused foreign investors to rush into Malaysia market right at the start of the New Year. The influx of foreign fund has pushed the index well passed the 1,800 psychological barrier and landed at historical height ever since June 2015 at 1,817.97 last week end market closes. Its historical height of 1900 would be possibly reached and crossed over very soon if given enough time before GE 14.
At the start of the New Year 2018, everything turned positively cheering for Malaysia, including oil prices and currency appreciation etc. This is something note worthwhile. However, investors would still need to be cautious while enjoying profit at this moment. The risk of GE 14 is not yet cleared out totally. Only the uncertainty of the election date is removed but the risk of election result is still present.
When the time come close after Parliament dissolution, election result will still be another issue of uncertainty confronting the market direction then. Therefore, this bullish window would probably best be treated as short and temporarily.
For unit trust Fund investors, I would recommend small cap funds such as CIMB Principal Small Cap Fund and others for their upper headroom growth potential and their speed of ROI. But small caps are riskier than other equity funds. Before investing, risk assessment has to be taken into consideration, proper risk management should be installed in your portfolio. Pull back can happen any time in the process of trending.
From now, there will be a good but short opportunity to gain profit in Malaysia market as well as the rest of the world market. However, investors are advised to avoid from turning profiting into greed. When greed creeps in, greater disaster will be laid ahead without warning.
I wish you all stay invested, and invest safely! Happy and prosperous New Year ahead for your investment!
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