As the hope for a turn-around economy in the US is fading, signs of economic slow down are flashing all over the world market indices world wide. If you've followed the Wall Street, combined with the recent U.S. Treasury Department's bailed-out of the two mortgage giants, Freddie Mac & Fannie Mae, there are plenty of reasons to begin re-evaluating your investment portfolios - your risk exposure. I would, if I were an investor, especially investing in a highly speculative emerging markets like Cambodia. Read the news, and follow the signs because the economic roads ahead is truly a rollercoster-ride. You could be on for a wild ride for quite some times and for the first time in your investment experience, it could be sickening.
Today, the TSX, Toronto Stock Exchange, is taking a rough beating - down more than 487 points, one of the largest losses in many years. Then, there is Lehman Brothers, another major financial institution in the US, loosing almost half of its value in one singel trading day. It could face insolvency before the week ends, as people are exiting their accounts and investors are bailing out. On a global scheme, there is now a realization that entire European nations, including Japan, are also experiencing major slow down in its economic activities, "R"ecession seems a lot more likely and that in itself send a very negative signal to the rest of the world. Asian markets are experiencing that sentiment which reflected on its recent trading activities -Down and Down. The question is are we heading for a soft landing or a hard one?
The one to watch is China which many believed to have somewhat less exposed to external economic fluctuations by having been tightening its own money reserve for a long while. But, will it immunes from the negative spread of the rest of the major leading economies? We don't really know. Some doubts that it will because in this new global economy, it will bring down everyone. Especially, when you plug into your equation, the economic of fear, psychological aspect of the game, then it could out run any logical or rational economic reasons. So, to say that China will be immune is to ignore the reality of human component and behaviour to that affect. Cambodia has begun to boost up its bank reserves as well, but could it be too little too late? If you ask me, I would have to say, yes. However, it is better than never.
Why I said to watch China, because China is a major power house in shaping up economy, particularly in our region of the world. China has invested a lot in the area, even in Cambodia. When an economy is facing a major slow down, there is an issue as we have seen in the US and else where around the world, there is a tightening of money supply, credits crunches, and then the fear factor of loosing Big. When the Panic sets in, there go the free falls on the major stock markets which could potentially wipe out a lot of greedy and inexperienced investors. The real estate market in the US is still on a down slope trend, and there is no sign of bottoming out as yet. Credits concerns still looming at large and there are so much going on in the finanical markets that people are just beginning to park their cash somewhere else.
As for the real estate boom in Cambodia, it is time that many need to seriously re-evaluating their risks. Frankly speaking, I won't be surprised to see that the real estate market in
Cambodia is bracing itself for the first time - the unpleasant reality of a major market correction. I hope and pray that it will not, and if it will, it would not be too unkind. Having said that, there is hugh risk on the down side which could potentially be sudden and traumatic. Some of you might loose big, especially if you got into the game late at the highs of the boom. There is sign of stress in that particular sigment of market already - Property Market Crash Imminent, Experts Warn (Cambodia Daily, issue September 5, 2008). And, if you are not following, the inflation rate is 22% for July. Could it be more? But, I can tell you that, you ain't see nothing yet. The worse is yet to come if you are not carefully prepared. Play safe, as the old saying goes, "Better be safe than sorry."
We are not immune to the world economic melt down. It is slowly on its way, and you will find it soon at a theatre near you. Stay in your comfort zone and whatever you do, please be safe.
Bests to All.
