Here's some optimistic news: in anticipation of yet another fed fund rate cut at the end of October, investors are pushing their money into Asian stocks. As the subprime credit crisis comes to a close, many believe that the American economy will recover as quickly as it had declined since summer, which will fuel the East Asian export markets in China, Japan and Korea.
The Hang Seng Index, Hong Kong's benchmark index, reached a record 28,000 points for the first time in history. The Korea Composite Stock Price Index rose to 2,014 points at closing, also reaching a historical record. The Nikkei surged to 17,046 points, the highest since August 9th (ie right before the subprime crisis hit), but still a way from 18,300 points. The Shanghai Composite Index climbed to a record close on Friday, at 5,552 points, before the holiday week. The question now is: how long can this last?
Analysts are always scared of some sort of "global correction" that will bring indices down. Undoubtedly, everyone else is kind of scared of that too. But to be honest, with the wearing down of the credit problem, there isn't 
foreseeable damage to the investing community. Investment banks such as The Bear Stearns Companies Inc. (NYSE:BSC), Citigroup Inc. (NYSE:C) and UBS AG (NYSE:UBS) (its fixed income department) got hit somewhat, but investors have accepted that fact already and moved on. In our hearts, we only look at the success of Lehman Brothers Holdings Inc. (NYSE:LEH), Goldman Sachs Group, Inc. (NYSE:GS) and Credit Suisse Group (NYSE:CS) (or maybe just Lehman and Goldman, since Credit Suisse issued a "profit may fall" statement after UBS's warning), believe in the power of the Fed to save poor investors, and continue on investing.
So maybe this rally will last longer than anticipated, as one of my acquaintance from Bloomberg L.P. said (a couple of months back, before the subprime mess). Property stocks are rising in hopes of new rate cuts, Sony Corporation (NYSE:SNE) and PetroChina Company Limited (NYSE:PTR) are doing their part to raise funds from the strong liquidity season, and even North and South Korean leaders did their part this week to strengthen ties: Korean construction companies and steel makers couldn't be happier. So tell me, apart from overpriced Chinese H-Shares in Hong Kong, what's not to like?
Comment Preview