‘Get out when market rallies’

‘Get out when market rallies’

GET out of the stock market when it rebounds, advised savvy stock picker Oei Hong Leong yesterday. He foresees the credit crisis getting worse as European financial institutions wobble.
‘I can tell you honestly, if there’s any rally in the market, just get out. It’s better to cut losses,’ he told reporters who had asked if he saw more opportunities in the stock market.

Mr Oei felt the US government’s US$700 billion (S$1 trillion) package to bail out banks by buying their toxic mortgage-linked debt is ‘far from enough’ to restore stability in the financial markets.

It is most important to restore confidence, he added.

During the US financial firestorm last month, Mr Oei had scooped up one million shares of American International Group (AIG) at US$1.80 apiece as the insurer faltered, and donated them to the Lee Kuan Yew School of Public Policy.

He sold them at US$5 apiece soon after, following the school’s request that the donation be made in cash. By then, the US government had given AIG an US$85 billion loan.

Yesterday, Mr Oei said US financial institutions like AIG were seen as too big to be allowed to fail. ‘And the US government is big enough to save them,’ he added. ‘They can print more money and IOUs. They can issue bonds.’

But in Europe, banks may be too big to save, he indicated. Citing Deutsche Bank as an example, he said its exposure or liabilities are equal to 80 per cent of Germany’s GDP.

Commentators have noted that European nations may not be able to bail out banks with such massive liabilities.

‘The Europeans are in big, big trouble,’ Mr Oei concluded. ‘I don’t know how they can settle it.’

Source : Straits Times - 08 Oct 2008

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