Thursday, May 24, 2012

Market Summary -- 24th May 12

FTSE STI closed 2,779.53, down 0.89 points or -0.03% with a total volume of 1.22b and a total value of S$897M.  Total number of advance vs decline was 174 vs 160.  Of the 30 component index stocks, 9 closed positive, 2 remained unchanged and 19 closed negative.  The top 5 gainer component stocks were :-

1. OCBC  +0.130
2. DBS  +0.090
3. HKLand US$  +0.070
4. SPH  +0.040
5. Capitaland  +0.030
5. SGX  +0.030
5. UOB  +0.030

The top 5 loser component stocks were :-

1. JSH 500US$  -0.440
2. Jardine C&C  -0.200
3. F&N  -0.070
4. CityDev  -0.070
5. Wilmar  -0.050
5. SIA  -0.050

US markets reversed a loss of more than 1% to close mixed due to optimism of the EU crisis from the EU leaders dinner.  Asian bourses were however switching between positive and negative according to news flow and closed mixed.  Nikkei closed +0.08%, SSE -0.53% and HSI -0.64%.  STI unable to hold up the gain in the closing stage and closed -0.03% in a thin volume trade.  Only 9 of the 30 index stocks managed to register positive closing.

With no surprise, the EU leaders dinner session was not about dishing out policies but discussion and consensus about the EU debt issues.  EU leaders all agreed on EU nations needed to stimulate growth and hoping Greece stays in the Euro.  At the same time, they also pen out contingency plan of the scenario that Greece could exit Euro.  One of the topic being discussed to tackle the EU debt crisis is Eurobond vs Project bond.  All these should provide more detail in the June EU Summit.  Stock markets some how were focusing on the surface news of Greece exiting of Euro and forget that should no contingency plan is being drawn up and if things really fallen apart then it will be too late to pick up the piece.  The move of the contingency plan should be looked as being positive rather than negative.

HSBC reported China flash PMI data for May to be 48.3, lowered than that of April.  That has caused some bearish sentiment in the Asian bourses in which most bourses gave up earlier gain.  The official PMI data which will be releasing in early June normally comes in better than the flash estimate.  On the surface the data is bad as showing continuity of contraction but this has nevertheless speed up the urgency for the Chinese Government to roll out stimulus to jump start the economic growth.  It should be a piece of good news as a whole.

STI continued to show weakness especially the defensive stocks as probably the last bout of selling is taking place.  Investors should not take the surface news and reacting panicking to it.  Rather focus on the fundamental, wait in patience for that window of opportunity to bargain hunt.  Short-selling and panic selling should be able to drive the price lower and that will be the window opportunity for fundamental sound stocks.  The one with the patience with be rewarded.  Again, watch out for game changers in June.

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