Whats' happening???

Global markets have enjoyed months of intense rally since mid june 2006.
Falling oil prices and sustainable economic indicators help improve investors
confidence of the economic outlook in the future. Expectations of interest
rate reductions have been greatly reduced until late 2007 due to critical
inflation rates that do not seem to subside. Investors are currently focusing
on the elections between the democrates and the republicans. It seems
there will be divisified government in US as popularity of Bush falls. This will
help improve financial position of US as democrate prevent Bush from dominating
by reducing spending and increasing tax rates to cut deficits levels.

STI have been neutral lately as DOW and HSI have been moving in opposite directions.
Rally forces seems to slow and a minor correction imminent. Sectors like property, finance,
construction and commerse have helped greatly in this rally while telecommunication,
electronics, utilities and pharm lags behind. Lately, small caps of hot sectors have been
catching up as coming results are expected to be a booster. The question lies in when the
correction will start as this will bring all high flyers a big hit. China counters have been
seen affected by governance and profit warnings sentiments. Bio treat is one that gave
many investors a surprise.

Results are being released in these 2 months but the markets seems more concern
on the general market sentiments. Attention are mainly given to selected performing
sectors like property, construction and finance. The sustainability of current record high
is very much questionable as concerns have yet to ease but the market keeps rising.
These are signs of sellers holding back until buying ease off before holdings are release
to realise the huge profits gained in this short period of time.

This is the time to differentiate between stocks with value and those that rose merely
due to sector sentiments. Time to do value investing or cash out and go for holiday.

Heiwa reports