- The worlds longest-running bull market officially ended Monday. Malaysias stock market benchmark is more than 20% off its highs.
- The FTSE Bursa Malaysia KLCI Index went 12 years without a 20% pullback from any peak. But that ended today.
- The milestone is an omen for the U.S. stock market.
Malaysias stock market enjoyed the worlds longest bull run for 12 years running.
The FTSE Bursa Malaysia KLCI Indexs 2.69% decline unraveled the record streak. Its a bad omen for the rest of the worlds stock markets, and U.S. investors shouldnt ignore it.
Stock Market Bull Run Ends In Malaysia
The FBM KLCI is a market capitalization-weighted stock market index composed of the countrys 30 largest companies. Its a bit like the S&P 500 of Malaysia.
Its winning streak started in 2008 as the Southeast Asian nations economy emerged from the global recession.
After 12 years, the worlds longest stock market bull run is finally over. | Source: Yahoo Finance
The index went 12 years without a 20% pullback the technical beginning of a bear market.
But amid global panic and uncertainty Monday, the good times came to an end with a 21% drop from its all-time peak.
Why the U.S. Stock Market May Be Next
Singapores Strait Times Index (STI) closed 1.22% lower Monday. South Koreas Kospi Index dove 3.87% as coronavirus cases swelled in Asias fourth-largest economy. But Asian markets arent the only places feeling the pain.
The U.S. stock market endured its worst plunge in two years, with the Dow Jones Industrial Average (DJIA) crashing by 1,031.61 points or 3.56% by the time the closing bell rung. The bloodbath more than eliminated all of the Dows 2020 gains.
Mondays downturn may just be the beginning.
Coronavirus and political uncertainty the same factors at play in Malaysias downturn threaten to bring the U.S. stock market bull run to an end in 2020 as well.
Coronavirus & Political Turmoil Give Investors an Escape Hatch
From coronavirus to political threats like Bernie Sanders, the U.S. stock market faces similar headwinds to the ones that wiped out Malaysias historic expansion. | Source: MANDEL NGAN / AFP
At the end of January, multiple analysts warned coronavirus would make a good excuse for investors to flee an overheated market. But the pandemic isnt the only headwind that has finally made the euphoric outlook untenable.
A succession crisis in Malaysias parliamentary government was the final straw that sent the FBM KLCI swooning. And there may be political turmoil looming for U.S. markets next.
In a presidential election year with a socialist in the lead for the Democratic partys nomination, U.S. investors cant ignore the threat of political uncertainty.
The U.S. stock market is due for a correction. | Source: Yahoo Finance
Billionaire investor and Omega Advisors founder Leon Cooperman said last week that Bernie Sanders is a bigger threat to the stock market than coronavirus. That was a few days after former Goldman Sachs CEO Lloyd Blankfein said Sanders would ruin our economy.
Even mainstream Democrats are worried, while former White House Press Secretary Sarah Huckabee Sanders cautioned Republicans not to underestimate Bernie Sanders. After the senator from Vermonts decisive win in Nevada, his frontrunner status is unquestionable.
Its an aphorism that markets abhor uncertainty. And the U.S. stock market is ripe for a correction after an 11-year bull run.
Its previous record was nine-years, five months during the roaring 90s. That bull run finally ended when frothy share prices fizzled out amid 2000s own set of political and corporate uncertainties.
Disclaimer: This article represents the authors opinion and should not be considered investment or trading advice from CCN.com.
This article was edited by Josiah Wilmoth.