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Money from moratorium fuelled stock rally

Asia Analytica
Asia Analytica • 7 min read
Money from moratorium fuelled stock rally
Certainly, excess cash that flows to the stock market will fall, but investors have made capital gains and the wealth effect will have a longer tail momentum.
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To say that this has been a year filled with unpredictability and uncertainties would be a gross understatement. The current stock market rally, for one, has defied expectations and is in stark contrast to the global economic recession and corporate earnings slump.

Without question, this has been a rally led by retail investors – with many professional asset managers sitting on the sidelines – not just on the Bursa Malaysia but also in the US.

Case in point, Tesla’s 435% gain in eight months is not only difficult to justify based on improvements in fundamentals over such as short time period but the stock rose 63% in the last three weeks, after announcing a stock split on August 11. We have previously written about the reasons behind this retail momentum.

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