Positioning for the upside

Markets have made new lows...

Till date,

DAX: - 8%

Dow Jones: - 8%

Hang Seng: -11%

Shanghai: -15%

STI: -6.5%


Yes, the markets may continue to fall but before we sell, wait ...

CIMB has advised clients to "Position for the bounce, even if long-term negative". Amongst reasons cited are "current weak sentiment merely represents a weak patch, not a turn in equity markets" and "As QE2 ends, the US will move back towards recession; within a quarter, we might have QE3 again, under whatever name it might be called. Again, this is not the consensus view for now, which is why we think markets could be due for an unexpected rally before end-3Q11, when expectations would probably change."