FBM-KLCI drop together with all the Asia share market

Yesterday FBM-KLCI drop together with all the Asia share market due to the news Chinese media had reported that Industrial and Commercial Bank of China and China CONSTRUCTION Bank were capping their 2009 lending targets, a move that would slow down credit growth. Asian markets retreated on July 29, rattled by a 5% pullback of the Shanghai Composite Index on reports that China’s two biggest state-owned commercial banks were restricting their lending. This reason is use by fund manager to take profit and I think profit taking activity may continues because they need some cash for coming Hari Raya on Sept.

Beside share market, Gold price also affected, after trading in a tight range for a few days, gold broke lower yesterday. Selling came on the back of

1. Weak investment demand, and selling in the physical market;
   
2. Dollar strength, which pushed the greenback from just below USD1.4300 to as low as USD1.4130 yesterday.

The trigger for this rally in the dollar was a much weaker-than-expected US consumer confidence data reading (down m/m in July). After yesterday’s sharp fall, weak long positions could be hesitant to re-enter the market. Gold support is at USD932 and USD926, with resistance at USD949 and USD964.

Now the share market and gold market will drop, so for me I think it is a good time to enter this two investment tool.