Added $4,000 Yesterday, and US on the Mend (30 Oct 2009)

After two days of falls in Asian markets on Wednesday and Thursday, I added in more to my portfolio yesterday. While psychologically, it is scary to add in more when the market is dropping, I have found that you usually get things cheaper during those times. Today is a pretty good day for markets so far, but I didn’t know how today would turn out when I placed my trades yesterday.

Additions were as follows:

Aberdeen Singapore Equity Fund - $2000
Aberdeen Asian Smaller Companies Fund - $2000

Total: $4000

Yesterday night, US also reported its third quarter GDP results. The US economy grew at a seasonally adjusted 3.5% annualized rate in the third quarter, the first quarter it has recorded positive growth after 4 consecutive quarters of negative growth before. While the road is recovery from here is likely to be a slow one for the US, we can all at least be relieved that it looks like the US economy is turning the corner. Economists are likely to be cautious about rushing in to declare that the recession has ended. It took months before the National Bureau of Economic Research declared that the recession in the US started in December 2007, so they are going to take some time before declaring that the recession is at an end (likely months after it has clearly ended).

The key thing is that one of Asia’s biggest export market, the US, is on the mend. I believe there are big changes involved going forward. Even on the mend, the US consumer is unlikely to go back to its free spending ways any time soon. So, the void will have to be filled up by emerging market consumers, including Asian consumers, which had previously been always been more interested in saving money than spending it.

But even for the stressed out US consumer, the signs of its economy recovering will also allow some of its consumers the confidence to start spending again. After all, its far easier to give into the temptation to spend money than it is to save it. This is why I think it is possible for Asian consumers to step up even as the US consumers take a step back. Just the other day, I was actually contemplating whether I should buy a car after all. (My two kids were growing bigger now). But with COE prices having gone up so much, and ERP charges going up as well, the high cost of owning a car again put me off. But going by the way COE prices have been going up, I am sure many others gave in to the temptation of owning a set of wheels even if I didn’t. So, can the Asian consumer help to fill up the gap left behind in the retreat of the US consumer? I am quite confident the answer is a “Yes!”