Monday, May 7, 2012

Market Summary -- 7th May 12

FTSE STI closed 2,924.95, down 65.64 points or -2.19% with a total volume of 2.44b and a total value of S$1.38b.  Total number of advance vs decline was 61 vs 370.  Of the 30 component index stocks, 2 closed positive, 1 remained unchanged and 27 closed negative.  The 2 gainer component stocks were :-

1. SIA Engg  +0.040
2. StarHub  +0.010

The top 5 loser component stocks were :-

1. Jardine C&C  -1.100
2. UOB  -0.800
3. JMH 400US$  -0.500
4. JSH 500US$  -0.380
5. HKLand US$  -0.310

US markets fell at least 1% last Friday after a below expectation job data with only 115k jobs created for last month as compared with market expectation of between 160k - 170k.  Over the weekend, France and Greece election outcome also caused some shocking impact to the global stock markets.  Asian bourses being first to react to those shocking impact all closed in the red.  Nikkei closed -2.78%, SSE 0% ( the best amount Asia ) and HSI -2.61%.  STI in line with regional bourses sank 2.19% in a moderate volume day with only 2 index stocks managed to register positive closing.

French's Hollande won the Presidential Election and he is one of those campaigning for moving away from austerity which kind of opposite to what the previous President in doing ( partnership with German leader ).  This has without any doubt cast uncertainty about the unity EU leaders going to resolve the debt crisis in the future.  For Greece's election, none of the political party in flavor of the austerity measures won majority to form a Government instead some political parties which are anti-austerity gaining more seats in Parliament and that has cast doubt on future of Greece in the bailout (failing to meet austerity target) and even potentially being kick out of Euro.  All these short-term uncertainties are causing investors worries and fears resulting in selling down in the global stock markets.  However, most EU nations are bounded by the fiscal union pact being proposed and agreed on lately and no matter how anti-austerity the new leader is, he/she still have to go through discussion with others EU leaders in order to act.  Austerity vs Growth is the much talkabout issue in Europe.  The bearishness of austerity causing stock markets to drop is a fact but looking at the other side, there will come a point when the austerity impact hit the hardest then EU leaders will co-operate together to refocus on growth instead.  That will be the turning point in the austerity vs growth saga.  Investors should start monitoring for such event to occur and that should be the time to really buying fundamentally strong stocks on the cheap.

China in a league of it own now somehow was muted to these events as most believe the Chinese economy is hitting the bottom or about to recovery from the slump.

No comments:

Post a Comment