Our markets:

It’s not looking terrible or anything as we go into trade this week we had a nice 3% move last week, yes globally things looks a bit overheated and the events of last night and what’s going on this morning might just lead to a bit of a flatness, or even a touch of red on the screen but no great panic or anything, which is coming through.

I think globally things have settled a little bit and we may start a week on a slightly on a flattish kind of note and take it from there. Lots of earnings are still trickling in so we will be fairly stocks specific I imagine but I suspect we are okay in a trading range that is.

You have been speaking to a lot of people last week, how is the mood globally for equity?

I think nerves have settled a little bit and that you can sense because there is no bigger settler for nerves than markets stability and markets have been globally quite stable over the last few weeks.

Talking to those people I got the sense that it is a bit of an uneasy calm that prevails out there in global markets. The consensus view seems to be that we are not out of the woods completely, so for the moment people are happy that markets have moved up and they have benefited from it and the fact that volatility is reduced is also helping them. But I think there is a touch of caution out there. I think uneasy calm sort of describes what is going on or what the prevailed mood in the global market seems to be now.

Asian Indices:

US had a pull back late last evening. Asia is not very comfortable this morning perhaps because of crude which is at USD 128/bbl. Hang Seng is down 450 points, Kospi is down 1.25%, China is down 1.25%, and Taiwan is down 1%, so most markets down across Asia, we haven’t started this week with great global cues.

Price wise though we have had a better week like we said and it hasn’t been too bad on the flows front as well. When you spoke to a lot of global fund managers what is the cash commitment mood more importantly?

People are a little bit more relaxed and the most important factor is that volatility has subsided over the last few weeks more than the market going up I think what is settled the nerves is those huge jerks going up and down and that is sort of stopped for the last few weeks. The CBOE VIX has come down to almost its all-time lows, very close to that and that I think has reassured fund managers that for the time being you are not going to see those violent kind of moves in the market.

So I think the money managers are a little bit more relaxed at this point but are they complacent, not at all. You don’t get a sense of complacence at all this time around. While the have been selectively putting money to markets the sense I got by talking to a lot of people is that they have shifted around, like people shift around stocks in their portfolio. I think people have shifted around their portfolio quite a bit in favour of certain markets and against certain market. So a few markets have seen pullout of money and a lot of other markets particularly the commodity-linked markets have seen a lot of inflow of money.

People have reshuffled their country weightages their country allocations they have cut down some of their cash positions over the last one-two months. They are feeling a little bit better about global equities but if you ask them there is almost consensus opinion that they believe that they haven’t seen the worse for 2008. One could read that both ways- I don’t know how it will pan out but when almost every big fund manager that one speaks to says that ‘ we have stabilized for the moment but we won’t be surprised if there is another big leg down coming this summer and maybe by the end of the year we start bottoming out.’ I wonder whether it will play out almost exactly according to that script because too many fund managers are talking about that possibility.

Good now maybe difficult in summer in the next couple of months and then towards the end of the year things get much better. That is so much part of the expected script now for global equities that I wonder whether something different will play out but I don’t know how it will play out it could be a bigger rally than people believe now and that big summer fall may not come and then things may get worse when you begin to feel that we are out of the woods completely or the fall would be deeper than most people expect and we may not get such a meaningful turnaround by the end of the year. 

The short point that I am trying to make is that most of the smart guys are predicting the markets to play out in a certain way and they are bracing themselves for another fall in summer, which they will probably like to utilise as a buying opportunity globally but that is almost too much of a consensus about 80% of the people I spoke to predicted that’s the way the global equities will play out. But for the moment I don’t think they are complacent at all they are just breathing a little easier because markets have stabilised and moved up quite a bit over the last few weeks.