Tuesday, March 20, 2012

Market Summary -- 20th Mar 12

FTSE STI closed 3,002.73, up 12.64 points or +0.42% with a total volume of 1.08b and a total value of S$995M.  Total number of advance vs decline was 210 vs 146.  Of the 30 component index stocks, 18 closed positive, 7 closed negative and 5 remained unchanged.  The top 5 gainer component stocks were :-

1. JMH 400US$  +0.830
2. JSH 500US$  +0.410
3. UOB  +0.130
4. SembCorp  +0.070
5. CapMallsAsia  +0.050
5. SGX  +0.050

The top 5 loser component stocks were :-

1. SIA  -0.040
2. NOL  -0.025
3. GLP  -0.020
4. Wilmar  -0.010
5. OCBC  -0.010

US markets closed positive yesterday night led by news of Apple intending to distribute dividend and doing share buyback offsetting the lack of economic news/events.  Asian bourses were however not very impressed with the performance of US markets.  Nikkei was closed for holiday, SSE slided 1.38% and HSI -1.08% after China Government decided to hike fuel price due to rising crude oil price.  STI on the other hand outperformed regional bourses with a +0.42% close in a very thin volume day and even total value transacted for the day is less than S$1 billion.  The rebound back to 3,000 level was pretty much due to yesterday oversold down and some bargain hunting.

US markets continued to move up without any economic data/news and solely due to Apple was nevertheless irrational and illogical.  How can global economy represented by just Apple ?  In Asian bourses weakness were seen for past days as probably funds are moving out and flowing back to develop market ( US markets ).  That has absolutely nothing to do with Asian economy as a whole.  If funds flowing back to develop markets in anticipation of better return and hence pushing up the stock markets, it behaves more like speculation rather than based on fundamental reasons.  Without any doubts US economy is improving as compared with 6 months ago but still far away from fully recovering from the 2008 crisis in particular the job markets.  Speculation could overrun the fundamental.  Short-term wise, investors might see bright side in the develop stock markets but for mid to long term wise, the safer bet without any doubt would be still Asian markets.  Asian economy fundamental is stronger than US and the improving or recovering of US will implicate Asian countries benefit from it.  Should US stock markets reflecting the improving condition of US economy, Asian bourses should follow.  Hence, the short-term strength in US markets while weakness in Asian markets is definitely not due to fundamental reason.  Ruling that out, the chance of speculating is high.

Investors should bare in mind that, with the good fundamental of Asian economy, the weakness in Asian stock markets, should be accumulation opportunities rather than selling.  Funds that flow back to develop markets will return once the valuation is cheap and speculation over the develop markets is over.

Do cautious over the optimistic of the US markets while do not be pessimistic of the Asian markets.

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