Thursday, June 7, 2012

Market Summary -- 7th Jun 12

FTSE STI closed 2,759.26, down 1.57 points or -0.06% with a total volume of 994M and a total value of S$942M.  Total number of advance vs decline was 161 vs 194.  Of the 30 component index stocks, 15 closed positive, 2 remained unchanged and 13 closed negative.  The top 5 gainer component stocks were :-

1 . JSH 500US$  +0.350
2. UOB  +0.270
3. SembCorp  +0.080
4. F&N  +0.050
5. DBS  +0.040
5. SembMar  +0.040

The top 5 loser component stocks were :-

1. Jardine C&C  -0.400
2. HKLand US$  -0.180
3. CityDev  -0.170
4. SGX  -0.090
5. Wilmar  -0.060

US markets rallied at least 2% yesterday night as hope of stimulus from ECB and US Fed.  Asian bourses mostly advanced for the day with Nikkei closed +1.24%, SSE -0.71% and HSI +0.85%.  STI apart from the initial gap up in the early trading, most of the day was relatively flat and closed -0.06% in a very thin volume day.  15 of the 30 index stocks managed to register positive closing.

ECB maintained interest rate at 1% yesterday night but there were certain things worth nothing.  Of the voting members, some opted to lower interest rate and that leave door for a possible rate cut in July.  Furthermore, ECB was also prepared to take action as it deemed and at the meantime letting EU nation leaders to take the first step.  There was also news of possible formation of European Union Bank and Germany, ECB were ready to act to rescue Spanish banks if they requested for help.  All these were nevertheless the positive development ahead of the EU Summit at end of June.  While investors might be hoping that US Fed with the coming FOMC meeting on 18th - 19th Jun might roll out QE3, global markets rebound from recent selling SHOULD NOT be due to QE3 as that can never sustain the growth in US and help the labor market.  Focus should be on the EU debt crisis in which EU leaders are currently being forced into the corner and they have no choice but to act and that is the game changer.  Chinese saying of 狗急跳墙 and that is what the current situation is like.  Do not rule out a possible market knee-jerk reaction within the next 2 weeks possible due to outcome of Greek election or no QE3 from US Fed but that will not deviate the main focus on the EU debt crisis fighting by the EU nations.  Also keep in mind of the window dressing end of this month, the 1H2012 window dressing.  Investors might want to position yourself for it.

STI after yesterday panic short-covering and buying on hope, today theme was mainly profit taking.  Funds that were selling for past days were caught in a catch 22 scenario now as if they continued to sell in fear of the worst to come and should some positive news developed after that, they will have to force to chase back the stocks to window dress their portfolio.  They are also unwillingly to buy up now given no confirmation of positive development ( stimulus ) and do not want to get caught.  As such, stock prices are packed like sardine by them to prevent from moving too much so that when events happen ( be it positive or negative ) they are in a better position to act without losing ground.

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