Tuesday, February 7, 2012

Market Summary -- 7th Feb 12

FTSE STI closed 2,956.99, up 16.89 points or +0.57% with a total volume of 2.79b and a total value of S$1.59b.  Total number of advance vs decline was 313 vs 234.  Of the 30 component index stocks, 22 closed positive, 5 closed negative and 3 remained unchanged.  The top 5 gainer component stocks were :-

1. JMH 400US$  +0.330
2. JSH 500US$  +0.320
3. CityDev  +0.220
4. SGX  +0.130
5. SIA  +0.100

The 5 loser component stocks were :-

1. Jardine C&C  -0.210
2. NOL  -0.025
3. KepCorp  -0.020
4. F&N  -0.010
5. ComfortDelGro  -0.005

US markets closed in the red yesterday night with average drop of at least 0.10% as events in Europe regarding Greece debt weighed on investors.  Asian bourses mostly fell for the day with Nikkei closed -0.13%, SSE -1.68% after IMF warned of China growth could halve should EU crisis blow up and HSI -0.05%.  STI bucked the trend among regional bourses with a +0.57% gain with 22 of the 30 index stocks registered positive closing.

A point to note was that STI total daily volume has shrank for the day dropping to less than 3 billion as compared to past days.  This has to be cautious especially for those penny stocks without fundamental as past days have been speculated up.  The issue of Greece missing the deadline to secure the second bailout fund has hogged the headline lately and should Greece fails to get the bailout out it will default in March.  The possibility of that happening is there and do not rule out.  Another possibility of Greece being kicked out of Euro also there and investors must keep that option open.  Short-term wise should Greece default and kicked out of Euro, this will cause financial credit crunch but global Central Bankers are prepared for such a scenario to happen and ready to launch out stimulus program to provide the liquidity.  Bigger picture wise, Greece default/kick out of Euro is good for Greece ( whereby it could start afresh and restructure its economy ) and Euro nations as a whole ( as they could then concentrate of the fire power to protect Italy and Spain, those 2 countries should they enter Greece case of default is much more fatal and cause systemic failure around the world ).

Knee-jerk reaction might have should Greece default but should present a good buying opportunity when markets pull back due to that.  Markets indeed need a healthy pull back to consolidate before moving higher and Greece default could be the catalyst to trigger the necessary pull back.

As of STI, SembMar and SembCorp are posed to form golden cross and should it succeed this will bring the total number of component stocks with golden cross from 10 to 12 and providing the support for STI index.

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