Friday, August 23, 2013

Market Summary -- 23rd Aug 13

FTSE STI closed 3,088.85, down 0.55 points or -0.02% with a total volume of 2.97b and a total value of S$1.57b.  Total number of advance vs decline was 223 vs 217.  Of the 30 component index stocks, 14 closed positive, 1 unchanged and 15 in the red.  The top 5 gainer component stocks were :-

1. JMH 400US$  +0.650
2. JSH 500US$  +0.600
3. DBS  +0.100
4. OCBC  +0.090
5. SIA Engg  +0.040

The top 5 loser component stocks were :-

1. Jardine C&C  -0.850
2. HKLand US$  -0.090
3. SGX  -0.070
4. Wilmar  -0.050
5. Kep Corp  -0.040

US markets rebounded yesterday after strong set of economic data from China and Europe.  Asian bourses were mixed for the day with Nikkei +2.21%, SSE -0.47% and HSI -0.15%.  STI swinging between positive and negative, closing -0.02% in a slightly light volume with 14 of the 30 index stocks posted gain.

A technical rebound, a rebound due to oversold or whatsoever reason, one fact remained unchanged was that US Fed will have to taper one day and the global economy is improving despite some slow down in Asia.  Nasdaq met with a technical glitch yesterday which caused its to halt for several hours.  From TA point of view, the rebound is opportunity to get out or short but from fundamental and valuation point of view, it is otherwise.  Selling and shorting now has a much much higher risk as markets will hit a bottom and rebounded strongly within next few weeks.  Note this is not applicable to US markets.  Fundamentally, US stock markets still far far over valuation despite the fact that its economy is improving.  There will be a Jackson Holes meeting for global Central Bankers this weekend and again investors will be focused on when the taper will start.  Indonesia President will also be announcing policies to tackle the recent economic woes like slow growth, rising inflation and currency drop.

STI was traded in narrow range for the day swinging between gain and loss as traders took the opportunity of a rebound to sell and close position for the weekend.  Singapore reported its July CPI coming in at +1.9% in line with expectation.  Though inflation has fallen lately but a fact remains that average bank interest rate is 0.2% and it will need it to hike 10 folds in order to be able to hedge against inflation.  Risk-free CPF ordinary account rate is at 2.5% and with the recent selling off of high-yield stocks like S-Reits causing its average yield to be 6.4%, the answer is pretty much obvious.  There are at the moment couple of negative on S-Reits from analysts but from long-term perspective, those worries are not that serious at all.  Very soon, next month you will see analysts one by one coming in screaming to buy those S-Reits again.  

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