Victory Securities' Gao Juan

Translated from Sinafinance by Andrew Vanburen

IT IS TEMPTING in this long growling bear market to obsess about our investments and focus, laser-like, on our individual portfolios.

But unfortunately, there are fewer and fewer degrees of separation between regional markets in this global economy and Brave New World in which we all must toil.

Instead, we need to keep one eye on the eurozone crisis and one on our stocks, with chameleon-like optical dexterity.

Yes, Hong Kong’s benchmark Hang Seng Index did surge nearly 6% on Thursday to end the day just north of 19,000 points.

But why? I would argue it had very little to do with anything taking place here in Hong Kong.

Wing and a Prayer? Italy is the biggest of the at-risk EU economies. Photo:

In fact, the sharp jump in the Index was a direct result of two major news events occurring “abroad,” namely, the commitment by six major central banks to help keep troubled EU lenders afloat and the recent loosening of credit in Mainland China via a slight lowering of the reserve requirement ratio.

Investors who were transfixed on the financial fundamentals of their Hong Kong-listed stocks on Thursday morning would have completely been left off the boat on the intraday rally.

However, those with one eye on the budgetary and sovereign debt crises wracking the PIIGS (Portugal, Italy, Ireland, Greece and Spain) would have hopefully possessed some foreknowledge of the lifeline about to be thrown, and would have acted accordingly in their buy/hold/sell activities for the day.

As further proof of the joined-at-the-hip nature of global markets, just look what happened earlier this week when both New York and London/Frankfurt/Paris fell.

The Hang Seng opened significantly lower the next morning and lost its hold on the psychologically-important 18,000 level.

Make no mistake about it, we are living in interesting times.

While such a wish was an underhanded hex in ancient China, it also describes to a tee the current global financial scenario.

When I first began covering Hong Kong’s capital markets, it was the norm to see commuters focusing on the local financial page alone, and more or less assuming that North America and Europe would continue apace, growing steadily, and hopefully maintaining a steady appetite for exports transshipped through Hong Kong.

But those days are unfortunately a thing of a bygone global paradigm.

Therefore, I consider today's commuters and café patrons with one eye on the local financial pages and another on macro-developments in Europe (and the US) to be the best equipped to benefit from this maelstrom of a market muddle we are now experiencing.

We can only hope that the lifeline the six central banks threw to the EU this week is long enough to get through the weekend.

I, for one, will be watching.

See also:

DBS VICKERS: What to buy, what to exit from

GREENTOWN Chairman, How Can You Face Shareholders?

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