Tuesday, January 3, 2012

Trading 2012

A late window-dressing was seen pushing the KLCI up to close at 1,530.73 points on Dec 30, the last trading day of 2011, with blue chips counters given a strong push during the pre-closing session. KLCI opened at 1518.91 points for 2011, which gives us a mere 0.78% gain for the year at the close of 1530.73 points on Dec 30. However, this can be considered a surprisingly good performance given the gloomy & volatile macroeconomic environment throughout last year, with the historical US credit rating downgrade to AA+ status, the ongoing turbulence in the EU debt crisis issues, & political unrest erupted in a number of western & Saudi-Arabian countries.

Going into the year of 2012, general consensus from local analysts is that the index will generally be trading within the range of 1,300-1,500 points, with limited investment choices but shall see some trading opportunities on cyclical sectors.

Trading risk in 2012
  • Possible delay of the 13th General Election, or if it does takes place, possibly a political tsunami as seen in the 12th GE, March 08, 2008.
  • Non-return of foreign shareholdings, which currently is at about 21.5% (Aug'11) compared to a peak of 28% in 2Q07.
  • Ongoing EU debt crisis remain unresolved.
  • US false recovery (simply a temporary boost from the year-end festive seasons).

Shall any of the aforementioned problems be resolved/factors turn out otherwise, it will surely present trading&buying opportunities in the market. 

We shall see if the Year of Dragon according to the Lunar Calendar will bring us luck & prosperity as normally perceived by the Chinese community.

Happy 2012!  

A simple illustration on how to trade in the year of 2012

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