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THE exhilarating ride experienced by bullish Asian stock markets in the past fortnight has been nothing short of spectacular.
With investors loading up heavily on blue chips on fear of missing what might turn out to be a fresh bull run, prices returned to levels before investment bank Lehman Brothers collapsed last September.
In Singapore, the Straits Times Index (STI) was on the upswing almost daily during the week, punctuated by an occasional bout of profit-taking which took it down marginally. All in, it rose 102.47 points or 4.2 per cent last week to 2,533.43, crossing the 2,500 level for the first time this year. This took its total gain over the past fortnight to almost 10 per cent.
In doing so, it mirrored the spectacular gains on Wall Street where the Dow Jones Industrial Average surged 3.99 per cent last week, buoyed by economic data and better-than-expected corporate results.
Still, the biggest question at the back of investors' minds must be what to do next.
To put things into perspective, it is useful to recap market movements in the past 10 months. Between last September and March this year, the STI and other widely watched market indexes roughly halved in value as the global financial system came under severe stress following Lehman Brothers' collapse.
Then between March and now, the STI recouped its losses as investors were lured back in significant numbers, convinced the financial doomsday scenario painted by analysts was unlikely to be played out.
The only seeds of doubt appeared last month when the STI and other indexes retreated slightly as market watchers debated whether the rocket-like ascent of Asian markets in the past four months was sustainable.
But in the past two weeks, lingering concerns were banished by the torrent of strong economic data pouring out from the region, which started with Singapore's second-quarter gross domestic product flash estimates. It again lent credence to the theory that Asian economies had packed enough 'rev' in them to take up the slack caused by the sputtering economies in the United States and Europe.
The strong pick-up in the housing market and sales of big-ticket items such as cars in Singapore also seemed to confirm that it is business as usual again.
Yet, there are some market watchers who wonder if traders might just be pushing their luck too far by attempting to ride the rally a little longer in the hope that there would be a further upsurge in prices ahead.
The economic landscape is now vastly different from that a year ago, when the global credit crisis was largely confined to the world's financial markets before the collapse of Lehman Brothers.
Since September, the crisis had crossed into the real economy, causing widespread pain as cash-strapped companies went belly-up and the jobless ranks swelled.
Citigroup summed it best when it described the current rally as pricing in a V-shaped recovery in earnings. Given investors' heightened expectations, companies had better deliver, it said.
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