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MSWG Weekly Newsletter 03 April 2020 (English)

03.04.2020

Desperate Times Need Desperate Measures

 

There is a triple whammy affecting global capital markets; the trade wars, the oil prices and the COVID-19 pandemic.

Recently, Bursa Malaysia and Securities Commission made certain decisions regarding short selling, margin financing rules and continuous trading. The rule changes and decisions are due to the desperate times that the investors, brokers and the Exchange are facing. After all, desperate times need desperate measures.

 

Short-selling

In a pronounced continuous downspin in the market, it is wise to stop short selling temporarily, (despite there being an uptick rule). Our market saw wild continuous downward pressure recently; at times our FBMKLCI index was down over 90 points during the day.

MSWG Weekly Newsletter 27 March 2020 (English)

27.03.2020

Perhaps not the time for bottom fishing yet

On Tuesday’s (24 March) overnight trading, the Dow Jones Industrial Average (DJIA) soared 11.4% to its best day percentage gain since March 1933 as the US Congress and the White House neared a deal to inject nearly US$2 trillion of aid into an economy ravaged by the COVID-19 pandemic. At the time of writing, a US$2 trillion stimulus package has been approved by the Senate to support the US economy.

Rather than rejoicing by treating this as a clear buy signal, investors should first ask themselves whether the technical rebound is sustainable or merely a temporary reprieve in a bear market.