Wednesday, March 21, 2012

Market Summary -- 21st Mar 12

FTSE STI closed 3,005.63, up 2.90 points or +0.10% with a total volume of 1.86b and a total value of S$912M.  Total number of advance vs decline was 184 vs 179.  Of the 30 component index stocks, 14 closed positive, 5 closed negative and 11 closed negative.  The top 5 gainer component stocks were :-

1. Jardine C&C  +0.500
2. UOB  +0.140
3. OCBC  +0.070
4. ST Engg  +0.040
5. ComfortDelGro  +0.035

The top 5 loser component stocks were :-

1. JMH 400US$  -0.290
2. CityDev  -0.110
3. JSH 500US$  -0.070
4. KepCorp  -0.060
5. HKLand US$  -0.060

US markets fell yesterday night with at least 0.30% as concern of China economy slowing down.  Asian bourses continued the selling down from yesterday for the same reason and closing mixed for the day.  Nikkei closed -0.55%, SSE +0.06% and HSI -0.15%.  STI swinging between positive and negative managed to inch up 0.10% gain on close with the help of positive opening from European bourses.  Volume was slightly higher than past days but still shy of the 2 billion level.  Total value of the day however was thin as came in less than S$1 billion for second day in a row.

The concern of China economy slowing down is not something new, in fact China already lowered its target growth to +7.5% for 2012.  The news of that came in with markets gone up for past 2 months and lacking of any positive news at the moment, investors used that as excuse to take profit.  The selling pressure in STI still persist for the day but worth taking a deeper look at.  The higher volume for the day as compared to the past could signal 2 scenarios.  Scenario 1, funds doing the last dump as most of the stocks were able to hold at their respective supporting level.  Should that happen, the selling more or less dried up already.  Scenario 2, the higher volume merely due to short-covering in anticipating that US markets should rebound tonight and supporting levels holding firm for the stocks.  Should such a case happens, it cannot be ruled out that there are still funds trying to sell and hence capping any upside for the time being.

Investors should lookout for in the next few days, volume and price level of stocks.  Should volume declining with little movement of the price, that is trading in a very narrow range, that could be the sign that market has temporary bottom.

As mentioned, there is no need to be overly optimistic or pessimistic about the global economy.  To be overly optimistic about US economy and over pessimistic about China economy is not something investors should look at for the time being as this will result in squeezing both the long and short positions.  The market as a whole still consolidating ahead of next month earning season.  Whatever news appear that cause markets to swing one direction or the other are all old news, nothing to be alarmed of.


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