Low interest rates' a double whammy for some.

Central banks in many large economies around the world are keeping interest rates really low, near zero in countries like the USA and Japan, in fact. Low interest rates are seen as the way to encourage economic growth by making borrowings cheaper.

To revive their sickly economies, the relevant countries' low interest rates could be instrumental. However, as money would go to where it is treated best, a lot of this cheap money is finding its way to Asia. Although the USA would like to see inflation in their economy, their money printing has also caused inflation in Asian economies.

Declining value of the US$. Source: Wikipedia.

The low interest rate environment is hurting people who save. They get less interest income for their savings and they are also impacted by higher prices like everyone else. They are being paid less and forced to spend more! A double whammy!

Savers have to put their money to work if they want to be paid more than the paltry interest rates on savings offered by the banks. This means taking on risks by investing their savings. This sounds simple enough but we have to remember that not everyone should be taking risks. What about the elderly?

I get worried when my mother and others her age are telling me now that they should invest their money in real estate, bonds or the stock market because they are getting next to nothing for their savings in their bank accounts. Do they have a choice?

Related posts:
1. Perpetual bonds: Good or bad?
2. Money continues to flow into Singapore.
3. To protect our wealth, we have to take risk.

Stocks rise, Neptune Orient gains
Tuesday, 27 March 2012

© 2012 - The Edge Singapore

CapitaMalls Asia: To buy on possible weakness.

There is a rather obvious negative divergence between price and the MACD. Higher price was achieved with a lower high on the MACD recently. So, we should not be surprised if the share price should decline in the near future as positive momentum in the short term weakens.

However, look at the OBV. There is no sign of smart money retreating as price rose. In fact, it is scaling higher. This suggests that smart money could use any price weakness as an opportunity to buy.

Indeed, if we look at the weekly chart, there is no sign of a negative divergence. The MACD is rising higher into positive territory. The longer term technicals definitely have a bullish bias.

However, with the share price nearing the declining 100w MA which is at $1.71 now, the near term weakness is not unreasonable. The 100w MA is expected to provide some strong resistance.

With the OBV rising, any pull back in price to supports is likely to be a buying opportunity. The pull back should be on the back of declining volume to make the case for buying more compelling.

Of course, the counter could decide to do a correction using time instead. That would be most annoying but that is Mr. Market.

Related post:
CapitaMalls Asia: Going XD on 23 April.