Lim Say Boon, Chief Investment Officer of DBS and former co-head of Standard Chartered Bank’s chief investment and advisory office, believes that Asia has entered a new bear market.
Since March 2009, the MSCI Asia Index has increased 60% until early August 2011. However, since August, the Korea Composite Stock Price Index (KOSPI) and Hang Seng Index decreased by 18% and 16% respectively. A slump of 20% in major market indexes in recent two months often indicates a bear market. Although the decreases in the two main Asian market indexes are not as high as 20%, the numbers are very close. In addition, due to the concern of the worsening European debt crisis, the Asian stock market lost two days in a row.
In his interview with CNBC, Lim Say Boon indicated that this cyclical bull market is over. “We are in a new bear market. The cyclical bull market that started in March 2009 is dead, it’s gone. It’s not coming back”.
According to Lim Say Boon, the two-and-a-half year cyclical bull market is short and it exposed the structural problems in the global economy. He also did not think the quantitative easing in US and the government interventions in China had obvious effects on the market.
Lim Say Boon is not optimistic about the Asian stock markets. He advised the investors to be careful about the rebound signals in the short term, since such rebounds are not likely to last long. However, Kim Say Boon still suggests the long term investors to buy stocks during the recession period.