The year could not have started worse than the main stock markets have. With declines on its first trading day unknown in recent years, and that have led all the benchmark indices, without exception, to place themselves in negative territory so early. To the despair of small and medium investors who were waiting for the arrival of bullish movements to greet the year.
And what has been the cause for sellers to have imposed themselves so overwhelmingly? As many financial analysts had predicted, the origin of these sudden movements could not come from another geographical area than China. The excuse, in this case, has been a more disappointing data than what the markets expected. Where the activity of the manufacturing sector of the Asian giant deteriorated during last December.
The importance of this bad macroeconomic data lies in the fact that Serious doubts about the evolution of the Chinese economy re-emerge. Even different analyzes in the Spanish specialized press have shown that the financial bubble in this part of the planet can burst at any time, even if it will be sooner rather than later. The effects have been immediate: exit from the markets by investors, both institutional and retail.
Sudden drop in all bags
It is not surprising that Western stock markets have picked up on these concerns and closed at levels not seen in recent months. Dragged down by the premature closure of the Chinese stock market, which has been left at around 7% on its first day of trading. The Dow Jones index in the United States, for example, has fallen at 1,6%. But the worst part has been borne by European equities, without exceptions.
The German Dax has depreciated with the largest drop, 4,28%, the Eurostoxx-50, almost 3%, while the Spanish benchmark index, the Ibex-35, has been one of the best unemployed have come out of this waste seller in the financial markets, with only 2,42%. However, the concern among Spanish savers is maximum, fearing that this early-morning stock market crash is only the prologue of more pronounced falls, even of a new recession on a global scale. And that could generate serious damage to your assets, if at this time you have buyer positions in any of the financial markets.
A first effect that is extracted from this Black Monday in the stock markets around the world is that It is the indices and values most exposed to the Chinese economy that have suffered the most from the hit of the prices. And that they have even reached the markets for raw materials, and even oil. Not surprisingly, as productivity declines in this part of the world, the consumption of these financial assets will be clearly lower.
Reaction of the futures markets
A great uncertainty that investors from half the world have is how the markets will evolve from now on. If the serious falls will stop, or if on the contrary, they will become more acute in the markets, and panic will take hold of the markets. It may be the unexpected gift that their Majesties the Magi from the East bring you this new year.. But this time not in the form of perfumes, mobiles, shirts or other gifts, but through equities.
For now, the Asian futures markets have opened the session with slightly bullish openings in the European and North American stock markets, with timid advances, between 0,05% and 0,30%, which do not clearly indicate about the opening of the prices. markets around 9 in the morning this Tuesday.
With regard to the Asian stock markets, on which much of the attention of small investors depends, in the middle of the session, the main stock markets started the day with the majority of gains, led by Indonesia, and with the exceptions of the bags of the Philippines and Vietnam that started in losses. The Chinese stock market advanced almost 1%, while the Japanese barely appreciated by a few tenths. However, as the session progresses, the red color in prices is imposing on profits.
Possible Chinese financial bubble.
One of the explanations given to this behavior of the international stock markets in the first days of January, is due to to panic that the economic situation in the People's Republic of China is worse than its economic indicators indicate in principle. And that it would have dire repercussions on the whole world. First of all on the emerging ones (Brazil, Russia, India, Argentina, South Korea, etc.), which will be the main affected.
But also in the main economic areas (United States, European Union and Japan), which would undoubtedly be involved in declines in their respective GDP (Gross Domestic Product). Even to a new recession that would bring serious problems for these countries.
From this economic perspective, the steps taken by equity markets around the world are not very encouraging. And after the previous year has ended, with the forecast by reputable analysts, indicating an upward trend - in the case of the national benchmark -, of between 10% and 30%. At the moment the facts deny these optimistic scenarios, but logically 2016 has only just begun, although in what way.
Tension between Saudi Arabia and Iran
The situation is aggravated by the new geostrategic scenario in the Middle East, after accusations between Saudi Arabia and Iran after the execution of a Shiite cleric by the former. And that has led to raising the tension in this area of the world. It can also take a toll on the stock markets, although it will be necessary to ascertain to what extent, since it is a very hot point on the planet and with great repercussion on the markets.
Without forgetting that also the price of crude is at stake, since both are two of the major producers of this raw material. And that is currently at one of the lowest prices in recent years. Specifically, a barrel is trading at $ 36. And it was precisely one of the factors that led to the closing of the previous year with losses, and until the traditional Christmas rally took place.
They will be the two main points that you should look at in the coming days, to check the evolution of the stock market, and that foresee that they impose a certain volatility to all movements. Probably with important differences between their maximum and minimum prices, which will be very interesting to formalize if you are going to carry out trading operations in the same trading session.
Eight keys to preserve your investments
The main objective of your actions from this moment on will inevitably be preserve your actions. A decision not very easy to make, when you probably already have accumulated losses in the balance of your investment portfolio. In any case, and in the event of a possible worsening of the scenario, it is highly advisable that take a series of precautionary measures that will be very useful in case things get worse in the next trading sessions, or perhaps throughout the exercise.
- If your wish was to take advantage of the first days of the year to make selective purchases in equities, it is highly recommended that you stop this strategy and you are in complete liquidity before the arrival of a better outlook for the international economy. Do not rush when making any operation in the markets, since the price you can pay is very high.
- If you have bought shares, in any market, sector or stock market indices, and you have them with capital gains, no matter how small they are, now you can give a quick sell order to go directly to your checking account. Enjoying their performance, while watching the bulls from the sidelines.
- You can take advantage of investment funds, linked to volatility, or reverse investment (down) to take advantage of these sudden movements that financial markets present, and as long as they persist in the coming days. In this way, you can significantly increase the capital invested.
- Under no circumstances do you invest your money in the Chinese stock market nowNor in its Asian neighbors, since they will be the places most exposed to developing severe falls if their economy continues to deteriorate.
- You should consider that all the stock market sectors will be exposed to the selling current of investors, but especially those listed companies that are linked to the Asian giant's economy. And of course those from the financial sector (banks, insurance companies, investment groups, etc.).
- The best way to start the year may come from banking products intended for savings. They will not give you a spectacular return, no more than 1%, but in return you will protect your savings with total security.
- Find out about the evolution of the investment funds you have in your portfolio, because even if you don't know it, they may be affected by the slowdown in the Asian economy. And now, it may be time to review them and change your strategy, perhaps to a more defensive one through the transfers you can make.
- And finally, forget about equities for at least a few days. This way you will avoid more than one tantrum, and above all you will be able to have the same heritage with which you started the year, which is not little in the current circumstances. Take advantage of the last days of these endearing parties to have a little fun, you will already have enough time to analyze the markets, and even to take positions in them, if conditions advise it.