Wednesday, December 12, 2012

Market Summary -- 12th Dec 12

FTSE STI closed 3,141.57, up 23.24 points or +0.75% with a total volume of 1.91b and a total value of S$1.34b.  Total number of advance vs decline was 245 vs 148.  Of the 30 component index stocks, 9 closed negative, 3 unchanged and 18 closed positive.  The top 5 gainer component stocks were :-

1. Jardine C&C  +1.460
2. UOB  +0.390
3. CityDev  +0.340
4. KepCorp  +0.200
5. JMH 400US$  +0.130

The top 5 loser component stocks were :-

1. JSH 500US$  -0.710
2. HKLand US$  -0.050
3. SIA Engg  -0.030
4. CapitaMall  -0.030
5. SPH  -0.020
5. SGX  -0.020

US markets closed positive with at least 0.60% gain mostly led by Tech stocks.  Asian bourses taking the cue ended positive for the day.  Nikkei +0.59%, SSE +0.39% and HSI +0.80%.  STI closed +0.75% in a new 52-week high with moderate volume and thin value.  18 of the 30 index stocks managed to register positive closing.

It was optimism that did the trick for markets up swing.  Optimism of the US fiscal cliff will be getting resolved and more Fed stimulus announced from tonight FOMC meeting outcome.  However, do note that till now there isn't any detail of the fiscal cliff deal and whether it is a short-term or long-term solution, nobody know as US will have another 20 days before the deadline.  As for US Fed FOMC meeting outcome most hoping for more stimulus from Fed.  Whether will there be more stimulus is one question and with too much stimulus, the side effects created by it so far nobody has seriously considered.  While stimulus can support the economy but at the same time it also building up potential bubbles.  Consider the scenario should US economy still needing stimulus to sustain in the next few years, inflation will start to build up and if unemployment rate still on the high, US economy could enter a stagflation stage which US Fed will be hand-tied as no measures can help to resolve stagflation.  Stimulus is something one only need to apply appropriately in term of quantity and timing else will offset the balance and more problems will emerge later.

STI closed at new 52-week high but do note that volume has been shrinking for past days.  Investors should look at where at such level can the fundamental sustain it.  As such, there were large transaction on close to funds stocks and should be the act of fund managers closing of books for the year.

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