My take on recent developments:

1. Both China and India raised reserve ratio indicate credit tightening cycle has begun. Interest rate could be the last resort should property prices in China remains lofty and headline inflation remains untame in India.

2. Strong 4Q GDP growth from the US would definitely lift the DJ but i am cautious on the follow through momentum. Despite Uncle Sam remains weak, the recovery is gaining traction stemming from technology exports.

3. Market most likely to react negatively on short term liquidity contraction and uncertainty on growth thus we expect volatility in the initial interest rate hike cycle. Investors should turn risk seeking once they see earnings momentum, that hold the valuation.

4. Korea and Malaysia have changed their tone in monetary policy citing cautious on the low interest rate effect. We are monitoring closely on the changes. Would China lead the pack in raising interest rate instead ?

5. I am expecting a lower low with intermediate technical rebound with support at 1,230 - 1,250. 2Q and 3Q might be volatile.

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25/1
US - existing home sales December data
SG - CPI December data
JP - BOJ monetary policy meeting and target rate

26/1
MY - BNM monetary policy meeting
US - Consumer confidence January & House Price Index November data
UK - 4Q GDP, Services November data
SG - IPI December data
CH - Leading index December data
JP - Small business confidence January data

27/1
US - new home sales December data
JP - merchandise trade balance total December data, merchandise trade exports and imports December data
JP - BOJ monthly report

28/1
US - FOMC to decide on rate
US - Initial jobless claims January data
JP - Large retailers sales, and retail trade December data

29/1
US - 4Q GDP, Employment Cost Index, personal consumption, Chicago PM data
SG - 4Q unemployment rate and bank loans and advances December data, and credit card billings and bad debts December data
JP - Jobless rate and manufacturing PMI December data

> Malaysia inflation rate rose by 1.1% y/y in December 2009
> SG non-oil domestic exports climbed 26.1% y/y in December 2009 as electronics shipments ended an almost 3 yr slump and pharmaceutical sales increased.
> China's real GDP growth accelerates to 10.7% y/y in 4Q09, +9.1% y/y in 3Q, +7.9% in 2Q. Exports grew by 17.6% y/y in December. Real GDP in 2009 moderated to 8.7% from 9% in 2008.

source: The Edge Weekly

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Thailand keeps key rate low
- 1.25%, lowest since 7/04
- BoT will consider raising interest rate at an "appropriate time", and cocnern over low borrowing costs may create bubble.
- consumer prices climeb 3.5% y/y in Dec
- inflation may accelerate to between 3 - 4% in 1Q (mainly due to oil price fluctuation and not a reflection of price pressure from rising demand.
- core inflation is expected to stay within BoT target of 0.5% to 3% in 2010 even with rising oil costs

Asian countries would not raise interest rate until US does it. My take is US will not raise interest in 2010 as core inflation is still low reflecting weak employment. Fed's long term projection on core inflation is 1.7-2% which is Fed's implicit target inflation rate.

18/1
Japan 11/09 Industrial production data
Singapore 12/09 Electronics exports data

19/1
Japan 12/09 consumer confidence data
UK 12/09 CPI
Bank of Canada interest rate decision

20/1
Malaysia 12/09 CPI
Bank of England to release minutes of latest meeting
US 12/09 housing starts and PPI

21/1
China 12/09 real GDP, IPI and PPI
Japan to release leading index and coincident index
ECB 01/10 monthly report
US to release leading indicators

22/1
BNM to release latest foreign reserves data
Euro zone 11/09 industrial new orders, 1/10 PMI
UK 12/09 retail sales

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