Monday, April 9, 2012

Market Summary -- 9th Apr 12

FTSE STI closed 2,960.10, down 26.10 points or -0.87% with a total volume of 1.26b and a total value of S$776M.  Total number of advance vs decline was 104 vs 289.  Of the 30 component index stocks, 3 closed positive, 4 remained unchanged and 23 closed negative.  The 3 gainer index stocks were :-

1. JSH 500US$  +0.070
2. StarHub  +0.040
3. SIA Engg  +0.030

The top 5 loser component stocks were :-

1. JMH 400US$  -0.800
2. Jardine C&C  -0.730
3. UOB  -0.260
4. CityDev  -0.170
5. SIA  -0.120

US markets were closed last Friday but the below expectation non-farm payroll of only 120k jobs created for March vs expectation of 200k despite unemployment rate dropped to 8.2% disappointed investors.  Asian bourses were down for the day with Nikkei closed -1.47% despite reporting a trade surplus for March, SSE -0.90% after March CPI came in at +3.6% vs +3.4% expectation and HSI was closed for holiday.  STI in line with regional bourses dropped 0.87% in a very thin volume day and total value of the day came in only S$776M.  Only 3 of the index stocks managed to close positive.

The below expectation job numbers disappointed investors which sent US future sharply lowered and along with Asian bourses.  However, before start jumping the gun and turning into bearish or negative, one need to look at the whole picture.  As mentioned before US jobs market need US lawmakers to enforce a bill to create jobs and not just rely on current status in hoping of the job markets can turn around.  Those who for past 2 months felt very optimistic about the job markets will no doubt get the reality call with this poor set of data.  Stock markets reacted badly to the data merely because of past 2 months being over optimistic resulting in prices overshoot fundamental and now should be correcting to adjust to the fair valuation.  Nothing to be alarmed of.

China inflation might be above expectation but still below the 4% level which Chinese Government hopes to maintain.  There are analysts who past 2 months due to overly optimistic are starting to turn bearish ( with a call for STI to drop to 2700 level ).  Now, should those analysts in the first place like I mentioned maintain cautiously optimistic and not overly they should not have to switch stand just like a snap of finger as of now.  Should the view be suddenly turn to bearish ? Answer is too early to tell of as we do not have confirmation of data to indicate that and mostly predicting due to current weak set of data. 

Be careful not to over relying on analysts' view.  Not many analysts could provide a very unbiased and independent view.  The current global economic situation does not warrant overly optimistic or pessimistic.  Any stock prices being chased up and overshoot fundamental will get a wake up call and correct down.  Any stock prices being illogically thrashes down will rebound to catch up on valuation.  Focus on companies' valuation and with corporate earning set to commence this week, be alert on analysts' expectation.  They might not give you the correct picture.  Look at quarter to quarter basis of company's earning and not purely compared with what analysts' expectation.

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