The Hang Seng Index (HSI) rose for six consecutive sessions before pulling back 1.4 percent on 14 January. The following day, however, the bulls came back with a vengeance pushing the HSI higher by 2 percent baffling investors who sold into the correction when they could have made even more money.
In the year of 2018, major stock markets peaked out and began tumbling down. For the year, the US Dow Jones Industrial Average slipped 5.6 percent while Straits Times Index (STI) and Hang Seng Index (HSI) shed 10.6 percent and 13.6 percent respectively.
2018 is about to come to an end. In the year, stock markets around the world had made new records but it did not last long. For the Hong Kong stock market, the Hang Seng Index peaked out at the start of the year at 33,484 points. Our local stock market was more resilient as the Straits Times Index only turned south after touching 3,641 points in May 2018.
Before the Trump-Xi meeting at the G20 summit, US stocks began recovering on renewed hopes of some resolution over the US-China trade war. The media was generally optimistic that there would be some positive developments from the meeting on 1 December 2018.
US auto giant General Motors (GM) recently announced plans for a major layoff of 14,000 jobs in North America. The move was designed to help GM slash costs by US$6 billion in face of the slowdown in the US and China markets, as well as higher raw material costs driven higher by the import tariffs on aluminium and steel.
On 13 November 2018, local investors awoke to the news that the US stock market had plunged overnight. The short-lived rally post the US midterm elections saw all gains being wiped off. For the US Congress, the Republicans managed to retain the Senate but did not stave off the Democrats from regaining control of the House of Representatives for the first time in eight years.
Technically, US equities have peaked out and are losing steam in the short-term. In the last issue of Shares Investment, my perception towards the US market has turned negative as I foresee tremendous selling pressure. With the US market leading the decline, global equities including Hong Kong and Singapore also followed to drift lower.
On 26 September 2018, US Federal Reserve hiked federal fund rate again by another 25 basis points to 2.25 percent. As the news was largely within expectation, investors’ initial response to the hike was largely muted. However, into the month of October, US investors grew increasingly worried about a more aggressive pace of interest rate hike. On 3 October 2018, after peaking at a record level of 26,952 points, the Dow Jones Industrial Average turned south by 124 points. On the following day of 4 October 2018, the Dow again shed 201 points. In a matter of two days, the Dow corrected 325 points.
On 24 September 2018, US President Trump and his South Korean counterpart Moon Jae-in signed a revised version of the US-Korea Free Trade Agreement. This was another breakthrough for Trump, following a revised bilateral agreement with Mexico. Following which on 1 October 2018, the US finally reached a pact with Canada to achieve a significantly revised North American trade deal. The trilateral agreement will be renamed the US-Mexico-Canada Agreement (USMCA) which will replace the North Atlantic Free Trade Agreement (NAFTA).
On 11 May 2018, Tun Dr Mahathir led the opposition coalition Pakatan Harapan to topple Malaysia’s previous ruling party Barisan Nasional (BN). At the age of 93, Mahathir who was previously Malaysia’s former Prime Minister for 22 years, was once again re-elected to become the oldest PM in the world.