Goh Eng Yeow worries that the US financial contagion may have hit China.
MANY traders are hiding at the sidelines today, as they await the difficult passage which US lawmakers are expected to give the US$700 billion rescue package for financial institutions which will make its passage through Congress tonight.
For me though, a more worrying sign on the horizon is the steep drop in the Baltic Dry Index which tracks the costs of shipping commodities.
In the past two months, it had been falling almost daily. Then last week, the losses accelerated. On Friday alone, it fell 10 per cent. With this plunge, it is now 70 per cent below its May high levels.
To those who still cling on to the Asian de-coupling theory that as the US economy falters, China will pick up the slack, this is troubling news. The steep fall in the Baltic Dry Index suggests that China's red-hot economy may be slowing down too.
In the imperfect world that we live in, the Baltic Dry Index is one of the few measures which gives an indication of China's economic appetite. In 2002, it became an early indicator of China's astronomical growth, as its rates sky-rocketed with that country's apparently insatiable demand for everything from coking coal to soy beans.
But China is now driving the plunge in the index. The expected post-Olympics surge in factory production - as plants shuttered during the Beijing games reopened - has not occurred and there are reports that China's stockpiles in raw materials are overflowing.
Hong Kong and Shanghai were out of sync with the rest of Asia for the past two weeks, boosted by a belief that China will intervene to prop up flagging stock prices.
This was in the wake of a move to allow Central Hujin - a unit of the mainland Chinese sovereign wealth fund China Investment Corp - to start buying shares in the country's three largest banks - ICBC, China Construction Bank and Bank of China.
At the same time, investors were also heartened by moves by China's central bank to cut interest rates - its first in six years - and free up cash for loans by cutting the amount of reserves which mainland banks had to deposit with it.
But that may turn out to be a temporary reprieve for battered Chinese share prices, which has fallen 60 per cent this year if the Chinese economy slows down.
Shanghai will be closed for a week as China celebrates its National Day holiday. But Hong Kong’s Hang Seng is down 395 points, or 2.1 per cent, while Singapore’s Straits Times Index is down 13 points, or 0.5 per cent, as I write.
For traders already used to the never-ending stream of bad news coming out of Wall Street, this will be be another storm-cloud to look out for.