A Total Bloodshed in the Global Stock Markets!

We are already in the very late stages of a historic bull market! The decouple story has ended as markets globally followed bit and bytes of US subprime market collapse that reverberated in the financial markets.

The markets all over the world fell on account of the subprime mortgage market collapse that trigged the near end of 5 years 'Bull Run' in the global equity markets. Financial markets today have become more consumer driven as like US, and weathering an US slowdown now remains a big challenge for the global, particularly export dependent Asian economies.

Subprime has removed the stains out of the financial markets and the color is now more visible. Valuations will tend to matter more as some markets might see near 10% or more severe corrections this year. Though the consumer growth might have shifted from US to China, but US still remains the largest consumer driven financial market.

With stock markets tumbling and Wall Street in hay day, investors are left out in dismay about the true future risk/return of equity investments outlook in 2008. Analysts are up in action to find the cue and a safe haven for the investor communities to bring back their sentiments in the financial markets. It seems that their might be some damage control to repair Wall Street from the subprime effects in the coming.

Markets Crashed on the Financial Highway!

The Hang Seng fell about 1383 points, the BSE Sensex saw a 2000 points intra-day drop, a total bloodshed in the markets with the single largest ever fall in a day. Major loss of investor's wealth (more than US$100 billion in a single day)occurred in BSE Sensex 30, the highest since it started trading nearly two decades ago. BSE Sensex closed 1408 points (8% )down to 17605.37 points. Indian investors are nearly in total shock as it has been touted as one of the worst dip in BSE's trading history. At this moment, investors might have thought of real estates as their portfolio as a better option than equities! But the odds again speak. Its' the housing market trouble in the US that has brought global investors down to their knees. The question remains, will the market go down further or the clear valuation levels are out? Are emerging markets free of an impending global credit squeeze?

Stock markets globally are also reeling under the subprime spillover effects, as most markets continued their downtrends amidst corrections (Shanghai SCI 300 saw a big fall-266 points down) after US has unofficially slipped into a recession. The world's largest economy and the Wall Street are down with bears hunting the bulls at major exchanges in Asia-Pacific, Europe, and China and in the US. The drop has been quite a dramatic in some markets like Nikkie 225 that already lost 11% in 2007, and Hang Seng, BSE Sensex among the major losers today.

Consumer driven global financial markets are under severe correction which might have been overdue. The last global financial crisis was triggered in Asia, Thailand known to be as one of the worst crisis ever to have happened in the financial markets. Asian financial crisis in 1997 was mainly confined to Asian economies, and that too, among Thailand, Singapore, Malaysia, Indonesia, Korea and Hong Kong.

Exactly after ten years on, we face a similar crisis, but this event have its root in the US. In the last decade or so, Asian economies emerged as tigers with unprecedented growth in India, China and other Asia-Pacific countries. It seems that the consumer growth has shifted its base from the US to other countries, particularly China and India, the two fastest economies in the world.

What To look For as a Safe Haven? Why not go for the Alternatives?


Oil, Energy, tangible energy resources, Gold, Alternative energy resources, investments in energy efficiency projects, Clean technologies are the options left out mostly for a risk averse and savvy investors, and some of these companies are having strong fundamentals and long term goals.

Some Options for Investors:

Power and Natural Resources
Water Usage efficiency projects
Alternative Energy Technology
Natural Resources
Agri- products
Clean & Renewable Technology
Solar panel industry
Commodities & Uranium

It should be remembered that market prices tends to be volatile to news, as investor's risk appetites have also increased in recent times. Investors too, will be more defensive rather than aggressive on account of uncertainties surrounding the subprime debacle clouting the global stock markets.


To learn more about how to invest in real uncertainty, visit righthorizons.com

Right Horizons Research Desk