Intel reported second quarter results which were much better than expected and more importantly, gave guidance of “a clear expectation for a seasonally stronger second half”. Given that Intel is a bellwether in the technology industry, this was a huge confidence booster that the industry was on the rebound.
China also reported that its GDP accelerated to 7.9% in the second quarter, on the back of an increase in consumer spending and increased factory output. The government estimates that China’s full year economic growth will be 8%. Despite the global recession, China just keeps chugging along, and continues to surprise analysts and economists alike with its ability to grow.
This coupled with the recently just announced 20.4% second quarter GDP growth of Singapore’ economy, are all indications that the global economy is turning around. We saw most Asian market trade sideways over the last few weeks after the strong surge up till May because people were waiting for more hard numbers to confirm the expectations.
I emphasized that patience was key. I was honestly expecting to have to remain patient for longer than one month, but already, it seems that the stronger numbers are starting to come in. These are the kind of numbers that investors are waiting for, to confirm that the worst is behind them, and that the global economy is turning.
We will see such economic news get increasingly positive in the next 6 to 12 months. The 1st quarter was so bad that it set a very low base. So, it will be relatively easy for many economies to show growth even if not in the 2nd quarter, then definitely the third. Companies which were previously very uncertain in their outlook, will also see substantial improvement in their sales and earnings and they will give more confident guidance, like what Intel did.
It’s a great time to position yourself for the second phase of the market recovery. I have been buying on dips over the last 2 months, and I have looking forward also to this second phase, I think it will be a good one.
In other news, just read that bombs went off at two hotels in Jakarta. Unfortunately, it seems that there are still terrorist elements there that are determined to make life unhappy for everyone. However, the Indonesia stock market hardly reacted to this. Terrorist bomb attacks in Indonesia simply no longer have the kind of shock factor they once had previously. As a result, they are almost a non-factor in stock market considerations now.
Don’t let such news deter you from investing. It is important to filter out headline news which are “sensational” but ultimately having little impact on the economy, versus the news that matter more. While such news are tragic, the actual impact on the economy is relatively small. Indonesia looks set to have a smooth election (relatively), and continues to be one of the more resilient economies this year. Two bombs are not going to change that!
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