Monday, June 25, 2012

Market Summary -- 25th Jun 12

FTSE STI closed 2,815.26, down 12.83 points or -0.45% with a total volume of 1.24b and a total value of S$776M.  Total number of advance vs decline was 158 vs 184.  Of the 30 component index stocks, 6 closed positive, 3 remained unchanged and 21 closed negative.  The top 5 gainer component stocks were :-

1. JSH 500US$  +0.300
2. SIA  +0.150
3. StarHub  +0.090
4. SIA Engg  +0.040
5. SingTel  +0.040

The top 5 loser component stocks were :-

1. JMH 400US$  -1.150
2. Jardine C&C  -1.070
3. KepCorp  -0.110
4. CityDev  -0.100
5. SembMar  -0.090
5. OCBC  -0.090

US markets closed positive last Friday rebound from the steep sell down the day before.  Asian bourses however were mostly down for the day with Nikkei closed -0.72%, SSE -1.63% and HSI -0.51%.  STI fell 0.45% in a thin volume day with only 6 of the index stocks managed to register positive closing.

Over the weekend, leaders from Germany, France, Spain and Italy met ahead of the EU Summit on 28th - 29th June to come out an agreement for a 130 billion euro growth package while resisting Euro bond measures.  However, that move did not quite give investor the confidence as such Asian bouses were mainly under selling pressure.  European bourses also opened in the red with US future in negative also.  What most investors hope for is Euro bond.  Whether that will solve the current debt crisis and what impact the Euro bond would bring if implemented perhaps still uncertain.  The Euro bond could be a 赤壁之战中铁环相连锁.  In the story Romance of the Three Kingdoms during the Battle of Chibi, Wu army used a trick to con Cao Cao to chain up all his battle vessels with big iron chains so that the vessels will not swirl about and Cao Cao's army (mostly did not know how to swim) were able to walk properly on the vessels to fight.  However, by chaining all the vessels together if one of them caught fire, it will spread to the rest and make all sink.  The Euro bond if not careful could result in the above situation whereby the next bubble would basically sink the while 17-nation Euro bloc of nations.  Alternatively, Germany proposed a project bond in place of the Euro bond and that is to specifically target to in-debt nations to allow borrowing of funds to stimulate their own economy.  That perhaps could be less "dangerous" than Euro bond.  The EU debt crisis while we want a solution but we also do not want to implement something that nobody know of the negative impact if couldn't manage properly, careful plan measures should be the way.  They might take times to solve the crisis but at least reduce the big uncertainties.

Singapore this afternoon released its May CPI coming in at +5%, below expectation of +5.1%.  It brought a little relief to the stubbornly high inflation but still not good enough.  Despite MAS's effort to strengthen SGD to curb inflation, the inflation still at the higher end.  This is something to ponder about as to whether the current tools MAS used is already unable to combat inflation.  If so, the next step would be to increase interest rate.

Overall, investors do not place high hope on some super solution from the EU Summit but watch out for the positive development.

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