For those of you who are just about to get into the market or to keep accumulating, you probably wont get a better opportunity than today and over the coarse of this week!
We saw the last excellent time to jump in in May last year when the market fell by 10% because of the "Greek Debt contagion"! We'll it bounced back a treat in the second half of the year after those risks were managed! And so will the risks the markets are currently facing!
Looks like all the negative planets have aligned beautifully to drop the ASX today and this week in general!
Between Libya's crisis, China raising interest rates and now the terrible Japanese earthquake, we are seeing some incredible buying opportunities in the market!
Gaddafi is a step closer to being toppled. The Arab League has called upon the UN to impose a no fly zone and increase pressure on Gaddafi to leave office. The Arab League has never done this to their own before, and it gives the Green light to the US and the West to sweep him from power. It will still take a few months, but this is a major event in ridding him of the Libyan people. This, coupled with the Libyan export sanctions (nee zero oil purchases from Libya), the US and EU are isolating the event in Libya from the international oil market. Saudi Arabia and Kuwait have already increased production and have taken up the slack in oil supply, these events will bring down the price of oil thereby lifting the Dow Jones in 2-3 weeks time.
Japan is struggling at the minute, but it will bounce back and over the next 12-36 months the tens of billions of cash that has been sitting in investment accounts by the Japanese Insurers will be opened up to the Japanese economy, boosting their growth from Q3 2011 for the next 2 to 3 years!
And of course the Kinesi! They will continue to rasie interest rates to keep their inflation under control, but all the fear mongering that they will fall into recession is rubbish! When the CPI and PPI numbers start to fall towards 4% from the 4.9% over coming months and their GDP stays above 7.5%, all the media will jump back on the Kinesi bandwagon!
Again, everyone needs to think about the economic fundamentals. When the $50-100Billion worth of cash that the Japanese Insurers are now realising from debt and equity markets start flowing into rebuilding the tens of thousands of homes, bridges, buildings electricity lines etc! Where are these minerals going to come from? A lot of the steel, copper, metals that was damaged by the tsunami will not easily be able to be re used to rebuild buildings due to the sea(salt) water damaging the strength, chemical composition of the material!
What does this mean? in as little as 4-8 weeks when the dust settles these Japanese steel mills, electricity generators, manufacturing companies will be launching a massive purchase of raw materials like iron ore, coal, copper, nickel, zinc to rebuild Northern Japan!
Keeping our mineral prices at record high levels!
It is important to keep looking at the big picture and take advantage of the current situation! Market always over react to natural disasters, then the assess the situation and move upwards in the sectors of the markets that will benefit from the situation. In this case, it is the Materials and Energy space! GO SDL!
Enjoy!
AGU Price at posting:
6.5¢ Sentiment: Buy Disclosure: Held
