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Full Version: How does outside/foreign market affect us?
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Question lng po, How does other market ( DOW, NASDAQ,..) affect us?
If they are up ,does it mean that PSE will be going up? or there are other factors to consider?

...I've heard from the Bearbull himself before that "when the US sneezes, the whole world catches the colds". Though this wasn't an original from him, I guess the correlation still holds true but in a weak form na which was unlike before. I say in weak form na kasi hindi na siya madalas nakaka apekto sa market natin. Decoupled yata ang term na gamit dun bos. Sometimes we ignore what the DOW does for himself. On occassions, yes, we go alongside the DOW, but it is no longer like 85% of the time.

...what affects us basically for me, is the foreign capital, foreign money or hot money or parked hot money. These funds move the market like no local fund can. Last year, November, I think, that month started a downtrend for the PSEi.If I am correct, funds were being transferred away from our markets here in Asia to be placed in a surging US. So if we're going to close our minds, of how the DOW affects our market, and say that whenever DOW is up, so are we, well then that is wrong (and I hope I'm right Smile )

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Thanks Comm Ollie for the answer!

I agree that it is the foreign money/capital that is affecting us most

God bless!
It affects us directly and inversely. Historically our biggest trading partner was the US, recently taken over by Japan. So it follows that whenever the outlook for the US economy rises as evident by the rise in its stock market, then we could expect robust trade and therefore increase economic activity and a rising local stock market manifests. That's the direct relationship. Now there is also a reverse or inverse relationship. That's the one outlined in crisp detail by my tito ollie. Lately, the dominant relationship is the inverse one. If you ask me, I agree with tito ollie and staniel1211,pay close attention to "hot money" flow.
Thanks StockJunkie for sharing your thoughts Smile