Where is the stock market heading...

Oblivion! That is where our stock market is heading. And this is not due to the current financial meltdown across the world. There are just too many inherent weaknesses in the system that spells one way, doom. We were building a financial centre, a really huge one to befit our ambition, but relying on the foreign funds to come in and prop it up. For our own market, including funds and investors, is just too small. The over reliance on foreign funds and fund managers means that they can push it sky high and let it drop like a coconut when they decide to pull out. And they are just doing that right now. The next problem related to this wild ambition is the padding of the stock markets with as many stocks as they can grab hold of, and many were simply junk stocks. To make things worst, derivatives upon derivatives were created almost daily which means that the market is over diluted. Every dollar is spread too thin. As long as the foreign tap is open, and the funds keep flowing in, it looks sustainable. The commission structure that favours funds and house trading is a killer to the small traders. When big boys trade without having to pay commission except for a small clearing fee, how could small investors survive when they steamroll their way over them? Then there is the new game of short selling. Small investors normally trade one way. Investing for the long term and and normally long in the market. And the big boys just shorted them out, all the way. The more ruthless is the shorting, the greater the profit for the big boys. Where would all this lead to? The death of small investors. Small investors are being driven to extinction. All their money gone in a game with a loaded dice. Their money were also gone when IPOs after IPOs were listed and subsequently all melted away. The billions that were sucked out from the stock market are hundreds or thousands of times the fees that the SGX collected from the listing companies. What we have is a stock market that is not only leaking, but with a hole as big as a big longkang. Unless the whole system is restructured, fast, it will only head one way, for sure. The big volume of daily trading is only an illusion. The quantity of stocks is also an illusion. Many of the penny stocks are waiting to fold up. Just shell companies in a way. And the big stocks are also not spared from a system that allows shorting the stocks down, with no regards to their value and business.


Matilah_Singapura said...

The stock market is bloated with shit because there is too much govt intervention in it.

Consider your local wholesale fish market which kicks off in every major city about 3 am. These markets clear perfectly. There is no bailout, no transparency issues etc. Prices rise and fall according to demand -- i.e. it is free,and purely demand-driven. The ONLY govt interference in most cases is that of public health -- to keep things clean and uncontaminated.

Ghost said...

Singapore is doing all it can for the market's 'hot money' and this means that the small investors in Singapore lose out. That is not news. As the Singapore stock market is so depended on a few big players, we are in more danger than most SEA markets. For Singapore, a lot will depend on the Dow. Pray it go up

redbean said...

hi ghost,

welcome to the blog. luckily this is not the 7th mth : )

because of our size, we are very precarious. the small investors have lost a lot of money over the last 10 years. we have bitten too big a piece of meat and is choking to death.

Anonymous said...

There were forecast of the Dow down to 8,000 pts and ST index slipping to 1,800 pts not long ago. Those forecast doesn't look too pessimistic now, it seems. The realisation is that the acions taken by the US Govt and the Fed have been much too late. George W. Bush was hoping to pass the mess to the next President, but the storm hit a little too early. He is going down as the worst US President in history.

redbean said...

the american financial crisis is spreading and words of fear are making it worst. we have a sell down and a run for safety today at the local exchange.

we will have to pray that the wall street does not collapse tonight. it will be ugly.

george is doing his killing, this time in the US.

Matilah_Singapura said...

> it will be ugly. <

Are you joking?

It would be serenely beautiful.

The guilty jumping out of windows, or being charged in court, the undeserving penalised for being greedy (in a bad way)... probably stomping on a few people along the way... all this is priceless entertainment lah!

Let the motherfucker fall to 2000 points. Blood on the NY streets... from white-collar gangsters this time, not hoodlums.