Thursday, April 5, 2012

Market Summary -- 5th Apr 12

FTSE STI closed 2,986.20, up 1.16 points or +0.04% with a total volume of 1.62b and a total value of S$1.13b.  Total number of advance vs decline was 180 vs 174.  Of the 30 component index stocks, 12 closed positive, 2 remained the same and 16 closed negative.  The top 5 gainer component stocks were :-

1. JSH 500US$  +0.940
2. Jardine C&C  +0.620
3. JMH 400US$  +0.300
4. HKLand US$  +0.210
5. KepCorp  +0.100

The top 5 loser component stocks were :-

1. DBS  -0.140
2. OCBC  -0.060
3. SIA Engg  -0.050
4. SGX  -0.050
5. StarHub  -0.040
5. ST Engg  -0.040
5. GLP  -0.040

US markets fell average 1% yesterday night despite a slightly better than expected ADP job number as concern of EU debt resurfaced again on top of US Fed comment of no monetary loosing at this junction.  Asian bourses mostly continued yesterday selling down but closed mixed for the day.  Nikkei closed -0.53%, SSE and HSI reopened after holiday closed +1.74% and -0.95% respectively.  Next week China will release its 1Q2012 GDP and investors probably expecting a better economic data.  STI gave up earlier gain and closed flat at +0.04% in a thin volume day.  Only 12 of the 30 index stocks managed to register positive closing.

The same old story again on EU debt but now the attention turned to Spain after yesterday a poor reception of the Spanish bond auction.  As mentioned before, after Greece, market will focus on Spain.  As for whether Spain will be like Greece which required bailout, it is too early to conclude.  Hence, investors should stay calm and not over react or over panic to issue on Spain's debt.  Further more, investors will also be looking at Friday US unemployment situation before next week earning season commence.

While markets might be facing the selling pressure these few days, cautiously bargain hunting could be observed.  As prices fall, valuation will become attractive again.  Investors should focus on this coming earning season and observe for quarter to quarter earning by companies to determine the health status of the companies.  As for the EU Spain debt issue, it is not a new news.  Whether Spain's reform with its austerity measures could meet its target, still too early to conclude but one thing for sure is EU leaders ( plus rest of the worlds leaders ) all knew the fatal impact of EU debt crisis have on global economy if the debts will not get resolve.  Instead of doing the quick shot of printing more money, they chose to reform and that will take time, not an instant effect to resolve the crisis.  This investors have to be strongly drilled into the mindset and give the EU leaders ample times to resolve the crisis.  Yesterday ECB maintained interest rate at 1% but warned of possible inflation upside as well as economy decline on the downside.  This has pretty much put the ECB in a 50-50 position of when and how to exit of stimulus to curb inflation and at the same time not jeopardize the recovery.  The lacking of detail on that also further weighed on investors' views on EU economy.

The selling pressure was there but market still in consolidation phase after sharp rally early this year, which caused share prices to over run fundamental.  Investors should remain cautiously optimistic and not overly pessimistic now.  Long term investors can take the consolidation phase to slowly collect and dollar-cost-averaging would be a better strategy at the moment.

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