Market Crash

I am quite surprised that during the recent market crash which affected practically almost all the stock markets worldwide, there has not been any write ups by market analysts on the subject. More particularly, especially over the past few trading days when the market sell-out was at its high point, with the Shanghai Stock Exchange dropping more than 8 % in one day alone (14 Aug).

Suddenly, no one wants to make any analysis on the markets and their prospects anymore on either which way they would move. Perhaps most of these analysts are themselves caught in the massive sell-out and are too busy trying to engineer solutions to ride over their predicament, having no time to offer any advice to investors. Or perhaps they are just at a loss of words because the storm took them by surprise? But it shouldn't be, because the signs were all there. The barometer has always been crude oil price. It went up earlier to US$65 per barrel for a temporary period, and then came right down after the Iranian nuclear deal agreement was made by the US led alliance (which, if approved, would mean millions of extra barrels of Iranian crude oil flooding the market which had taken so much effort and length of time to rise to that level).

As a result, after the announcement of the Iranian nuclear deal (though still subject to approval by the US Senate) the crude price has dropped, initially, to US $50 per barrel and then recently to US $40 per barrel over the past few days, which precipitated the "collapse" of the China market and the collateral ripples around markets worldwide. The counters in SGX that are reliant on oil, oil & gas products and services, are those that have been hit hardest. Ezra, once a market darling and priced about 1.00, has sunk to an all time low region of around 0.10. As long as crude oil markets are laden with over supply, the prospects in this industry looks gloomy. Already Shell Petroleum has announced massive job cuts due to eroding profit margins. Many others in similar or integrated services will probably follow soon depending on circumstances. The motto to watch how markets are going to move would probably be to follow the price and trend of crude oil movements in the coming months.

The only positive thing to look forward to is rather ironical. China is the number one consumer of crude oil, and yet it is baffling why its share markets are the first to suffer the sell-out and dumping of stocks. In retrospect, the dampening of crude oil price should be something advantageous and instrumental to the growth in business volume and profit margins of Chinese companies and not vice versa. This dichotomy is the result of the "price bubble" that had been built up over the past prior months in the heightening of Chinese stocks that were not based on fundamentals but merely on investor expectations and anticipation. As such, we can probably view this recent sell-out as more of a correction (a dissipation of the bubble) rather than a collapse of the Chinese markets. But it'll depend on whether the marked down becomes a trend or only a knee jerk market reaction to the dampening of crude prices.

Airline operators, shipping stock, land and other transport operators should stand to gain as a result of the sinking of oil prices. SIA, NOL, and the other operators listed on SGX should probably report much improved financial performance at least for the next quarter should the status quo be maintained during the period.

Just my 2 cents worth.

If seen that China sneeze the whole world catch the cold including US. Share price all over the world have fall like 10-pins.

Stock markets around the world are concern about falling oil price, falling commodity price, the recent devaluation of the chinese yuan and soon the inpending increase in interest rate by the US Federal Reserve. (I strongly believe will be only 25 basic points.)

Market pullback doesn't signal the end, instead, it's an opportunity for investors to cherry-pick fundamental sound stocks at more reasonable prices. Bottom fishing gradually as no one knows when it hit bottom.

To add onto Aquarius lists are: deeply under-value property stocks, cash rich companies, companies that able to generate rich cash flow yearly, telco companies as many people cannot go without phone and transport companies which stand to gain from cheap fuel.