Over the past two years we have seen at least three substantial corrections, this may be another one of them. In the short term ... the interest rate worry may encourage quite substantial profit taking.

A major momentum play in the region within the past two months is the H shares. We recommend investors take profits when there is still liquidity available.

It's very much more insidious than in the past.

The market will start to speculate whether the latest [China rate] rise is the first of a series.

At this level, global funds may start to move their bond holdings back to neutral, and the earnings yield ratios of the S&P 500 and MSCI World will move closer to the normal level, bonds no longer expensive or equities no longer cheap on a relative basis.

These are the two major sources of global liquidity. If both of them reverse, it is not going to be good for the global equity market, but it is too early to say that we are at the turning point.