Buy Singapore stock below 3100 ? - wait

On 2 May - I agreed with" sell in May". On 28 May I sold 30% of my stock. On 6 June I predicted that STI would drop below 3100. and it happened on 14 June.

And I suggested to monitor foreign fund flowing by Philippine Peso exchange rate.

PHP drop further from 42.2 on 5 June to 42.85 today. Foreign investment fund continuously flow out from Asia.


We can't decide unless we knew what was happening. 

Foreigner invested Asia trust funds. And those fund were trading both Asia stock and currency. In 1H2013, funds bought Japanese companies share and selling Yen. They drove Nikkei up more than 50%. Yen went below 100

Asia trust fund earned a lot money. It worked so well until 23 May. Yen reverse it's falling and went up. Yen exchange trading cause huge loss. They were selling share to cover their loss. And Nikkei fall. Foreigners withdraw from trust funds. It caused Asia markets to go down further. 

Japanese bond crisis become our new focus.

In past 20 years, Japanese Government relied on issuing bond. Total Government debt is around 250% GDP.  In the past, interest rate was low which was around 1%. But the total debt amount is huge. Therefore bond interest cost 25% of total Government revenue. 

The new PM decided to drive interest rate down further by double the amount of their QE progromme to 7 T Yen. Lower interest rate would promote spending and investment. It could reverse deflation into 2% inflation. Small amount  of inflation may promote economic grow.

Government bond with less than 1 % interest. If inflation would go up to 2%, bond holder's real interest rate will be 1% - 2%= -1%. Investors want to sell their bond immediately. Central bank's 7T bond purchasing can't meet sellers demand. Bond seller drive up both interest rate and currency.

Only when Bank of Japan could buy all seller's bond. Interest rate and currency will remain at high level. 

No quick fix available. And market should go down further. 
  

Nikkei 225

Strategy : Actually monitor market and waiting for technical analysis market reverse confirmation. e.g.  Nikkei 225  Stochastic value go beyond 20. Buy slowly