So, another proof of weak government leading to a good economy?

I have mentioned in my earlier blog Hang Seng plunge causing a stir from critiques about weak government leading to a strong economy. 

The simple reason is a lack of interference from government allowing organic growth of the economy. I used Taiwan as a good example where government interference is low and that a weak government of Hong Kong may also result in a recovery for the Hong Kong economy.

The reason is simple, a strong government enable government with more power to rule over people and a reduction in check and balance. This leads to corruption, nepotism and bad governmental decision. Final result, a corrupt government and the use of the country system to kill off political opponents. 

This is a common trend. We can see from the trend in USA now the level of corruption cause the whole country to rot. We have incompetent politicians delivering bad policies and polarizing in their positions. USA as I see it is on deterioration.

Same thing with Malaysia, with so many years under the governance of a single coalition,  bad policies were introduced and implemented over and over again leading to the present state of the country. The reason for Malaysia to be so racially polarized.

I did not vote for the present government in Malaysia's latest election. I have voted for one guaranteed to fail, it was Mahathir's party. I anticipated Anwar's team to win the election. Even so, I wanted to ensure that they did not win big, at least not through my vote. I preferred a minority government where it can only be tasked to perform standard function and not meddle with the society. 

Let the society with ability to grow organically while the politicians busy fighting each other. Further more, while the government was formed as a result of a new coalition, it is of a weak partnership, with, how can say it? "sleeping in the same bed with different dream". Every single action result in criticism from the public. The government is afraid of the people. This should be the right way to enable a country's growth.

In my earlier entry On the road to radicalization under the leadership of Anwar Ibrahim, I was negative on KLSE. I anticipated a weaker economy as the government continued to deteriorate. Even so, I expected KLSE to at least rise back to its 55-week moving average (with resistance potential resistance between 1,471 to 1,508.) before further retreat.

Fig 1. KLSE weekly chart

KLSE's performance actually surprised me, breaking through its 144-week moving average and stayed above the higher side of my resistance expectation of 1,508. It reached a high of 1,534 and broke the downward trendline.

The question here is whether this is a false break? Will the counter retreat after this?

In its minor move, KLSE hovers between its 100% (1,508) to its 127%(1,534) projection. It has also broke the boundary of a rectangle formation, with potential target of 1,634.

In its major move, I will only expect resistance between 1,674 to 1,860.

So am I right that a weak government is actually good for the country?

Hap Seng Consolidated Bhd

I was struggling with what to write for this week. 

Chinese New Year is coming, so my first thought was a read on SSEC and CNY. Going through the charts, I noted that SSEC broke through its previous low and on its way to its next level that I have estimated earlier in So Biden and Xi finally met at San Francisco.... CNY also corrected as I have expected and further its decline after the correction.

I then considered JPY and Nikkei. But when I checked on these 2, Nikkei was only ecently updated. JPY on the other hand corrected after my entry Nikkei & JPY divergence, it nevertheless went on continuation after this correction and the original objective still valid.

How about KLSE and MYR? My readings on On the road to radicalization under the leadership of Anwar Ibrahim still valid.

So what should I do now? I ever contemplated of and entry with no update, or even skip blogging this week. Afterall, I need to prepare for Chinese New Year, which is only a week's away.

Then I remember Hap Seng Consolidated Bhd. It is a Malaysian company, what is so special about this Malaysian Entity?

This entity has a diverse range of businesses, including plantation, properties, credit finance, automotive, trading and building material. Business wise, I find this company interesting, its 5 types of businesses while loosely connected, are independent and diverse between necessity to luxury. It is quite robust as a business entity.

However, question still remains: why the interest? 

Well, a friend asked me some time ago if his company's stock worth buying. I did a brief read then but did not take any action thereafter. 

So probably this is a good time to give an official update.

Fig 1. Hap Seng Consolidated Bhd weekly chart

I have no idea of the news on Hap Seng, but it plunged in 2023 to a low of 3.03 by 18th June 2023. It recovered with a surge reaching its 55-week moving average resistance by 15th October 2023. 

It has since retreated until 21-week moving average support level. However, it lacks the momentum for further up-climb. It seems to have more probability of continuation downward.

The interesting part is this. There is a divergence on the highs. While lower high on chart (comparing peak of 29th January 2023 and that of 15th October 2023), MACD reached a new high. It is probable for further decline before moving higher. 

The first support I will consider is its 61.8 - 78.6% retracement support between 3.52 to 3.9332. This zone is crucial because breaking this level will mean crossing the previous low of 3.03, leading to new lows of 1.0700 to 3.7393.

Should the retracement support level holds, we may then see hope that this counter going higher. We will then see target of 5.53 to 6.31.