Wednesday, January 2, 2013

Market Summary -- 2nd Jan 13

FTSE STI closed 3,201.74, up 34.66 points or +1.09% with a total volume of 4.60b and a total value of S$1.63b.  Total number of advance vs decline was 442 vs 69.  Of the 30 component index stocks, 3 closed negative, 2 unchanged and 25 closed positive.  The top 5 gainer component stocks were :-

1. JSH 500US$  +0.590
2. JMH 400US$  +0.320
3. Jardine C&C  +0.290
4. Wilmar  +0.190
5. SIA  +0.170

The 3 loser component stocks were :-

1. DBS  -0.060
2. F&N  -0.030
3. GLP  -0.010

US markets rose at least 1% on the last day of 2012 as optimism of the fiscal cliff could be resolved.  Asian bourses started the year with a bang.  Nikkei and SSE were still closed for the New Year holiday and HSI +2.89%.  STI closed +1.09% just above the 3,200 level with very heavy volume of over 4 billion but total value still thin at only S$1.63b.  25 of the 30 index stocks registered positive closing.

Technically, US only agreed on the fiscal cliff deal after the deadline after both the Senate and House passed the deal on 1st and 2nd January 2013.  The deal was a patched up, simply kicking the can down the road and not the great bargain deal though.  In this patched up deal, income tax only raised for individual and couple having income of more than US$400k and US$450k respectively but the across-the-board spending cut was just merely delayed by 2 months.  Worst of all, the debt ceiling was totally not addressed at all.  Hence, US Congress will be revisiting the same issue again 2 months later.  Failure to resolve the debt ceiling and across-the-board spending cut will definitely send US into recession.  Global markets getting overjoyed with the patch-up deal and rallied on the 1st trading day for 2013.  Investors should look at the whole picture and not get carried away as the problem still remain, just delaying the time frame for another 2 months, a very typical US politicians way of solving problem though.

Singapore reported its first estimate of 4Q12 GDP coming in at +1.8%, better than expected of -1.0% thereby avoiding a technical recession.  However, 2012 GDP came in at +1.2% slight below the forecast of +1.5%.  Singapore economy does face cautious in 2013 economy.  STI across the board rallied but investors mostly focus on penny stocks.  Short-term wise, the positive sentiment might support the market to move up but the overall picture of US with its fiscal cliff will be refocused again 2 months later and might see market pulling back then.  No action in raising debt ceiling means US Government will face default and that is more serious that having tax hike for all Americans.

Do stay cautious, the overall picture changed nothing with the patch-up fiscal cliff deal.

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