Perception versus reality

7 Sept  2019

Dear Fellow Investor,

Perception versus reality

Despite the riots, the tensions, the violence, and the airport disruptions, Hong Kong is still in business. Notice the ultra high volume price bars on the right hand side of the chart which is evidence of panic selling by the fearful and uninformed investors and  buying by professionals .

Most Hong Kong citizens only want to go on about their daily lives and business and not cause disruption. It only takes a few troublemakers using social media to stir up the crowd. The Western media focuses on the troublemakers but not the majority of peaceful citizens. Even Donald Trump refuses to get drawn in and said Hong Kong is China and let them sort out their own problems.

China took a wise hands off policy and tensions seem to be lessening.   The reality is the majority of Hong Kong citizens only want peace and stability and that is why the HKSE will recover.

The  KLSE is also suffering from negative perception.  and lack of turnover.  I spoke with the head of research with a prominent broker Friday and asked him why the lack of movement ? The main reason he said is that on Bank Negara latest money supply release    money supply growth dropped from 4.4 % to 3.4 % year on year. That shows slowing credit growth and less money coming into the market  On a positive note GDP is increasing and FDI into Malaysia has been increasing.  FDI is long term money from Japan, Europe and the US.

He advised to avoid construction and property shares and focus on those Malaysian companies  which benefit from the strong US Dollar and US China trade war. We hold these in your portfolios. He also advised to look at Hong Kong and Singapore shares beaten down by the negative perception. Singapore has stabilized and is recovering.

Invest well and grow your wealth,
Bill

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