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Wednesday, 27 June 2007

The Greatest Crash in Stock & Property Market is coming

ok...finish reading the article on my previous post? Now read this one :) and see what conclusion you derive for yourself....

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By Dennis Ng

Recent plunge in China stock market and Dow didn’t trigger any effect on Asian Stock Markets, in my opinion, this is a sign of market going crazy. Even recent plunge in China market, DOW and other global markets also didn't react as well.

This is a global bull run driven by liquidity......however, when things turn around, it will be a BIG, BIG Crash becos much of the liquidity is attributed to Leverage by Hedge Funds, Private Equity, Yen Carry Trade etc, etc.... when liquidity tide turns and risk premium increases.....the crash would be like an avalanche....

The Crash would occur in both Global Stock Markets and Global Property Markets....remember the global stock market crash in year 2000 to 2002 was buffered by rise of global property markets.....so if BOTH Stock and Property markets crash, it will not be a pretty sight.

When the crash does come, it might be worse than 1928's Great Depression.

yes, in my opinion, STI index surpassing 4,000 points is a foregone conclusion.

However, I also think there'll be a crash in global stock markets and global property markets sometime in future, possibly end year 2008 or year 2009, after Beijing Olympics and U.S. Elections.

What will be the trigger for the Crash? It can be anything.

the thing with Global Liquidity as I mentioned, it can vanish overnight as well, when everyone rush for the exit, it is when the crash would occur. What cause everyone to rush for the exit door....I really don't know.

Prime Minister Lee said that even if China Stock Market crash, its impact on the world is expected to be limited.

In my opinion, actually if and when China Stock Market crashes say, from 5,000 points (now about 4,200 points) to 2,000 points, it might still create a domino effect. Why?

Imagine if by then majority of people in China are risking alot of their money in the stock market and even borrowing to "Play" in the market, when a crash comes, many households will go into financial ruin....it might then lead to a fall in consumption, and if and when the China's economy slows down (it need not even go into a recession) from the current Official 10% growth rate (unofficial REAL growth rate I guess is 20% instead) to say, 5% growth rate, it would be sufficient to create a demand shock to the rest of the world.

Do NOT underestimate the IMPACT of a DOMINO effect.

As I mentioned, my personal opinion is that when the next crash comes, it will be the WORST in Human History, as it would be the BIGGEST Crash in Both Global Stock Markets and Global Property Markets.....

why it will be the WORST in history is becos of the HUGE expansion in Deriviatives and LEVERAGE in the past 5 years......and the Massive Growth in things such as Collaterised Debt Obligaitons, Hedge Funds, Private Equity Fund etc....

Please note that yes, if this CRASH occurs, Singapore will NOT be spared. Singapore is like a small "sampan" in a big ocean. However, in my opinion, Singapore will be one of the Few SAFE Havens in the whole world becos Singapore is one of the rare few countries in the world whereby we are financially strong, each S$ issued is somewhat backed by foreign reserves we have.

Furthermore, Singapore is a Global Financial Centre, whereby even in a crisis, there'll still be Wealth parked in Singapore due to the many advantages that Singapore has.

We will not know the exact timing of the next Crash. My guess is end year 2008 or year 2009, LBWOES's guess is much earlier than that.

Importantly, we must ask ourselves how are we prepared for this Crash, how are we positioning ourselves to not only survive the Crash but be one of the Few that will actually increase our wealth massively in the coming Crash.

Each Crash is a MAJOR Transfer and Re-allocation of Wealth. The IMPORTANT question is whether you will receive wealth or you will suffer loss.

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