Friday, May 18, 2012

Market Summry -- 18th May 12

FTSE STI closed 2,779.10, down 43.51 points or -1.54% with a total volume of 1.61b and a total value of S$1.37b.  Total number of advance vs decline was 68 vs 369.  Of the 30 component index stocks, 1 closed positive, 3 remained unchanged and 26 closed negative.  The only gainer component stock was :-

1. NOL  +0.005

The top 5 loser component stocks were :-

1. JSH 500US$  -0.570
2. UOB  -0.540
3. Jardine C&C  -0.490
4. CityDev  -0.290
5. DBS  -0.270

US markets fell at least 1% after weak manufacturing data and concern on Europe, this time Spain.  Asian bourses were not spare the bearish sentiment with all closing in the red.  Nikkei closed -2.99%, SSE -1.44% and HSI -1.30%.  STI -1.54% in thin volume day with only 1 of the index stock managed to register positive closing.

After Greece, it is not Spain.  Spain confirmed entered recession after 2 consecutive quarters of negative GDP, Moodys' also downgraded rating of several rating.  Spain being the 4th largest economy within Euro is termed as too big to fail and the fear took no time to spread to investors.

STI hit the region between 2,750 to 2,780 today as expected when external factors overshadowed fundamental of the companies.  With no surprise, defensive stocks continued the selling down as funds cashing out.  The overall selling down should be 80% to 90% done and almost there to hit the bottom for STI.

There will be a G8 Summit over the weekend.  EU debt crisis and how to stimulate growth in EU should be the top of the topic in the Summit.  While not expecting a sparkling solution being proposed, the cue to look out for is positive development by the G8 leaders in recognizing there is an urgent need to tackle EU crisis especially the growth portion.  This might put a stopper in the downside of the global markets.  The game changers will be in June where events like Greece election, EU Summit and US Fed meeting.

In STI investors should focus on the valuation and fundamental of the stock rather than like majority looking out for all the negative news.

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