Tuesday, March 27, 2012

Market Summary -- 27th Mar 12

FTSE STI closed 3,018.91, up 44.41 points or +1.49% with a total volume of 1.81b and a total value of S$1.41b.  Total number of advance vs decline was 293 vs 102.  Of the 30 component index stocks, 28 closed positive and 2 closed negative.  The top 5 gainer component stocks were :-

1. Jardine C&C  +0.930
2. UOB  +0.460
3. DBS  +0.340
4. KepCorp  +0.200
5. CityDev  +0.160

The 2 loser component stocks were :-

1. JSH 500US$  -0.520
2. JMH 400US$  -0.020

US markets rallied at least 1.20% yesterday night due to 2 positive events; Germany agreed to increase EU firewall and US Fed Chief comment that loose monetary policy is a must to spur US economic growth.  Asian bourses taking the cue also rebounded from past days of selling.  Nikkei closed +2.36% at multi-month high, SSE -0.15% and HSI +1.83%.  STI in line with regional bourses closed +1.49% in a volume slightly higher than past days and 28 of the 30 index stocks registered positive closing.

2 positive events that caused global markets to rebound and might even headed for more upside.  However, do cautious that of the 2 events, only the EU increasing the firewall news is pretty much worth fundamental.  As known of, Italy, Spain and Portugal after Greece are the countries facing strict austerity measures to cut their debt and increasing the EU firewall will give investors a confidence boost to the EU debt issue as the EU leaders still working ways to resolve it totally.  On the other hands, the news from US Fed Chief I would say is pretty much investors speculating there could be a QE3 giving the way US Fed has been saying.  While do not rule out the possibility of that but going down the underlying of US growth issue, it is not just a QE that could resolve.  Both QE1 and QE2 have totally no impact on improving the job markets and what makes QE3 ( should it have ) be so special apart from printing more money that all.  Hence, investors should not be over-excited about whether there will be QE3 or not.  The problem with US is a political issue and it is never US Fed priority job to help creating job and spur economic growth, rather it is the lawmakers responsibilities.  Printing more money will eventually bring more inflation bubbles to the rest of the world.

On STI, investors should not focus on whether there will be a quarterly window dressing this coming Friday or will there be a QE3 or not.  Should focus on the individual stocks.  Quality stocks have been selling down past days with some hitting the oversold region, building or already built a base there and awaiting for rebound.  Short-term investors should take the opportunity to trade on "buy in oversold region and wait to sell in overbought region".  With holding power and probably 3 months time frame, the rewards could be attractive.  Long-term investors as mentioned before, March to June is the period whereby accumulate on weakness and probably using dollar-cost-averaging method and that remains valid.

Remember, current economic situation does not warrant to be overly optimistic or pessimistic, cautiously optimistic shall it be and need patience to wait to buy, need patience to wait to sell to get the eventual rewards.

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