Wednesday, May 9, 2012

Market Summary -- 9th May 12

FTSE STI closed 2,900.91, down 31.07 points or -1.06% with a total volume of 1.71b and a total value of S$1.12b.  Total number of advance vs decline was 133 vs 255.  Of the 30 component index stocks, 5 closed positive, 3 remained unchanged and 22 closed negative.  The 5 gainer component stocks were :-

1. HKLand US$  +0.050
2. SingTel  +0.020
3. CapitaMall  +0.010
4. GLP  +0.010
5. SIA Engg  +0.010

The top 5 loser component stocks were :-

1. Jardine C&C  -1.280
2. JSH 500US$  -0.900
3. JMH 400US$  -0.500
4. DBS  -0.410
5. KepCorp  -0.150
5. F&N  -0.150

US markets closed negative with at least 0.30% drop but managed to recover from earlier more than 1% drop mainly due to fear of Greece unable to form a Government.  Asian bourses though yesterday were pretty much holding up well but gave up the strength and all closed in the red.  Nikkei closed -1.49%, SSE -1.65% and HSI -0.75%.  STI fell 1.06% in a thin volume day with less than 2 billion of volume done and most of the selling came near closing which caused the index to drop to the -1% level.  Only 5 of the 30 index stocks managed to register positive closing.

Greece inability to form a coalition Government weighed on investors as fear of Greece can get default with its bailout plan in limbo and exit of Euro.  A year ago the same issue of Greece default panicked the global markets and now we come back to the same Greece issue.  However, before jumping into panic mode, keep cool and think properly first.  The situation a year ago whereby if Greece default could create chaos to the global financial markets where now the situation will not be the same.  True that should Greece default there will be short-term impact on the global financial markets as private investors and banks being exposed to Greece debt are being forced to write-off the assets and in need to selling off other assets to repair the damage ( the best way is a sell off in equity to recover the damage ) but the global financial sectors is in a better position to absorb the impact of Greece default now than last year.  It is THE SAME OLD STORY and funds and opportunists practically making use of the same old headline to wipe saw the markets to churn some profit.  EU issue now is Austerity vs Growth and not whether Greece will default and exit Euro or not. 

The Austerity vs Growth issue will be more tackling after some change of leadership in country like France.  EU nations will have to work through some measures to balance between providing growth and continue the austerity to cut down on the high debts.  The convergence between austerity and growth will not be an easy path as expecting several sessions of EU Summit or talks between leaders to finally trash it out.  There will eventually come a point when all EU leaders finally agree on the convergence point and that will more or less hit the bottom of the EU debt crisis gain.

For long term investors, rather than like most being panicking with every negative news from EU should stay more positive as any panicking that causes weakness in the market will be an opportunity.

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