Forgive them Lord, for these drongos know not what they do: Asian stock markets are split down the middle today, in the wake of the Bali bombings on the weekend.

It's a noticeable and obvious schism. East Asian markets are showing major gains - at the time of writing.. Japan's Nikkei 225 is up 3.6%, Taiwan almost 6%, Korea 2.5%, and Hong Kong's Hang Seng over 3%. Noticeably the composite indexes in countries which have a Muslim majority or are experiencing extremist Muslim separatist influence locally are experiencing continuation of losses from yesterday. Today Malaysia's KLSE is down 1.3%, Philippines 1.9%. and Indonesia almost 4%, translating to an almost 15% decline in two days. Singapore is up by 2.5% - a small isolated market completely surrounded by massive Muslim populations, yet Singapore itself is gravely concerned with developments in neighbouring countries.

There is evidence that FDI (Foreign Direct Investment) has started to be significantly diverted away from South East Asian countries with Muslim majorities or separatist pressure groups. This extends the direction of flow experienced by developing South East Asian countries to China in the past months.

Such kneejerk reactions may be ill advised however. Bali events suggested that extremist Muslim targets are against Western and non-Muslim symbols and people. If anything, predominatly Muslim countries may be much safer than non-Muslin countries. Bali is a case in point - A Hindu enclave in predominantly Muslim Indonesia that attracts many Western and East Asian tourists. Kuta Beach with it's transient population of Western pleasure seekers, informal style, and foreign beer culture was as good a symbol of what extremist Islam groups see as "Western decadance".

While it may be that this was the most high profile mark made by groups who wish to turn Indonesia, Malaysia, the Philippines, and even Southern Thailand into a Muslim state, the enormous majority of Muslims in these areas are moderate, tolerant and cosmopolitan. It will do nothing to further their cause and indeed set it further back. Those who know these markets have factored in the threat for many years, and despite the shock, to many an event like this was expected.

The cruel lesson of course is that an event like this can occur anywhere. Extra security can help, yet it plays into the hands of the bombing propaganda merchants, and in the end there is very little you can do to stop seriously demented people from making bombs, sticking it in their car, and detonating it in front of any of the thousands of symbols of Western or developed-nation power and values.

Investors and their advisers, strangely enough, are not the best in predicting trends and understanding ibusiness strategy. They panic and jump to conclusions. Advisers sometimes make recommendations based on interests other than the investors, as has been evidenced in several high profile cases very recently in the US. This may be yet another example of reason being thrown out the window in favour of emotions and easy answers to a complicated problem.

The smart guys should now be getting into and investing aggressively into the presently undervalued markets of Indonesia, Malaysia, and even the Philippines. Most likely sanity will prevail and we will see these markets bouncing back (including Indonesia) in a day or two, or maybe even within hours.