"I hope you are well.

"I have been studying the year-to-date returns on Asian equity markets year-to-date, and the divergence between the positive returns from South Asia (Indonesia/Phillipines/Malaysia/India until the past couple of days) and the negative returns from Hong Kong/HK China Enterprise/Taiwan is pretty stark. The positive exception in North Asia is Korea. Aside from drawing the obvious conclusion that China related markets are feeling the impact from nervousness with respect to macroeconomic tightening/specific measures to cool the property market in that particular economy (and I also saw the recent article Eoin published on the positive macro backdrop in South Asia which made a lot of good points), evidently it would suggest that the number of stocks in the region participating on the upside has been narrowing substantially. I had a look into this with the help of an analyst who is also in the investment industry and the upshot is that last August's interim peak in Asian equities (MSCI Asia ex Japan) was reached with well over 90% of the stocks trading above their 200 day MAs, the January interim peak for Asia ex Japan was reached with less than 80% of stocks trading above their 200 day MAs, and the recent modestly higher peak in April was reached with even fewer stocks trading above their 200 day MAs (in the low 70s).

"How much do you view this deteriorating participation as a warning indicator? Or taking the positive side of this, do you view the out-performance of South Asia (Malaysia/Philippines of late, and India/Indonesia from November 2008's lows) as evidence that these are the key regional equity markets to stick to, notwithstanding the current correction/consolidation across most risk assets. I would appreciate your viewpoint.

"I must say the main strong personal view I have on asset classes I have over the coming months in this sovereign debt backdrop for the west is that I want to keep owning precious metals and to buy the dips based both on fundamentals and technicals."

David Fuller's view I feel well and thanks for this informative email, certain to be of interest to many subscribers.

The "obvious conclusion" cited is no less relevant in my view. I have mentioned the growing importance China's A-Share leash effect from time to time and it has been mostly negative since last August, first because of a heavy increase in supply from record IPOs and more recently the efforts to cool property speculation which you cite.

The MA percentage figures provided are interesting and I commend your research efforts. I would regard 90% above the 200-day MAs as an overbought signal and vice versa. The lower figures indicate some loss of momentum and a number of indices have fallen back into their broadly sideways ranging patterns.

The deteriorating participation is a warning, not least as we have seen some sharp downward dynamics as investors are temporarily in thrall to Southern Europe's spiralling government bond yields. Behaviourally, the concept of any negative contagion - from rising bond yields to influenzas - is frightening. However we should also remember that crises are usually short lived and soon lose their dominant influence once past their nadir. Euroland's debt problems are unlikely to be a lasting concern for Asia.

I think markets such as Malaysia, the Philippines (note this week's downward dynamic), Thailand, possibly Vietnam and especially Indonesia (note this week's key reversal) have performed or have the potential to outperform over the longer term because they benefit from the Asian growth story and also the resources theme. In other words, they supply what China needs to import.

Gold is currently the currency that investors most trust.

Meanwhile, the silver lining in any crisis is that it provides more attractive entry points in assets that are dragged lower by panicky sentiment. Two months ago my concern was that prices for many Fullermoney themes were running away from new subscribers and those who wished to top up in ISAs and other accounts. I mentioned on a number of occasions that any current holder who was nervous about these positions and wanted to take profits should do so on strength, rather than during periodic sell-offs such as we are now seeing. Current weakness is rapidly creating buying opportunities in most equities, although some additional near-term weakness could easily occur.