Posted on November 3, 2009 - by kevinscully

Vix index is on the rise and has exceeded 30 in recent weeks on growing uncertainty…..expect more volatility ahead?!

Photo by geishaboy500

Last week I made a presentation to 200 lawyers from New York at the invitation of Ambassador Ong Keng Yong.  My topic was on the Asian stock markets.  Here is a summary of that presentation.

My view is that Asia learned its lesson from the Asian Financial Crisis and built stronger banks and stronger national balance sheets which enabled it to weather the Global financial storm well.    With countries and Governments introducing fiscal stimulus plans at 2-5% of GDP and up to 10% of their reserves, its not surprising to see GDP growth rebound strongly – but consumption is still relatively weak.

With this back drop, the main question facing investors is when Governments will start raising short term interest rates from near zero levels or when will Governments start cutting back on fiscal stimulus packages which are already straining National balance sheets of OECD but not Asian countries.  This is probably what is spooking stock markets now especially in the US and Europe. Read more…

Related posts:

1. Volatility and uncertainty continue but this is expected to last for another 4-6 weeks……the VIX index starts to rise again (worth keeping an eye on)
2. Double dip or mild recovery in the US…..the uncertainty is causing a boom in the bond market and low volumes in equities……
3. 2010 – expect a year of more modest gains compared to 2009….the easy money is over so stock selection and valuations become more important