Monday, February 27, 2012

Market Summary -- 27th Feb 12

FTSE STI closed 2,946.78, down 31.30 points or -1.05% with a total volume of 2.08b and a total value of S$1.28b.  Total number of advance vs decline was 160 vs 381.  Of the 30 component index stocks, 4 closed positive, 21 closed negative and 5 remained unchanged.  The 4 gainer component stocks were :-

1. SIA  +0.100
2. SIA Engg  +0.010
3. ST Engg  +0.010
4. SembMar  +0.010

The top 5 loser component stocks  were :-

1. JMH 400US$  -1.130
2. JSH 500US$  -0.560
3. CityDev  -0.230
4. UOB  -0.200
5. DBS  -0.140

US markets closed mixed last Friday with DJ in slight red while Nasdaq and S&P500 in positive.  Asian bourses were mixed for the day with Nikkei closed -0.14%, SSE +0.30% and HSI -0.88%.  STI fell 1.05% in a moderate volume day with only 4 of the 30 index stocks managed to register positive closing. 

Investors attention shifted back to Europe as focus will be on EU building more firewall around the debt countries.  Despite the recent approved bailout of Greece, concerns still weigh on whether Greece can meet the requirement down the road and adding more rescue funds to build a better firewall around the EU debt countries ( Italy, Spain and Portugal ).  From the look of the situation, EU might want to walk the way of letting Greece default in an orderly manner somewhere down the road and at the same time building up rescue packages for rest of the EU debt nations.  Should EU let Greece default in the recent meeting, this will create a disorderly default and without sufficient firewall among rest of the EU nations, panic and speculation could spread and beyond control of EU leaders to contain the crisis.  Do keep the option opens that Greece could be in an orderly default somewhere down the road.

In the local front, recent dismay corporate earnings coupled with EU debt sentiment piled on the selling pressure can caused STI to perform worse of than regional bourses.  The pull back should be a fair correction to adjust the fundamental valuation of the market to prevent it from over run its fundamental.  Investors should instead focus on the valuation of individual stock rather than looking at value of STI to decide on action.

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