Thursday, September 19, 2013

Market Summary -- 19th Sep 13

FTSE STI closed 3,251.78, up 57.93 points or +1.81% with a total volume of 5.55b and a total value of S$2.14b.  Total number of advance vs decline was 377 vs 144.  Of the 30 component index stocks all 30 closed positive.  The top 5 gainer component stocks were :-

1. JMH 400US$  +3.840
2. Jardine C&C  +3.360
3. JSH 500US$  +2.120
4. HKLand US$  +0.220
5. UOB  +0.160

US markets rose at least 1% yesterday after US Fed decision of not to taper for the time being.  Asian bourses cheered the news with rally.  Nikkei closed +1.80%, SSE was closed for mid-Autumn festival and HSI +1.67%.  STI in line with regional bourses rose 1.81% with moderate volume but value for the day was higher than past days.  All 30 index stocks registered positive closing.

US Fed delayed the tapering for the time being and that pieces of news shocked the markets but investors liked it.  The reason for not tapering now was the economic data was not strong enough according to US Fed to start tapering and also with US debt ceiling in the spotlight next, US going to default next month should nothing was to be done by Congress to address the debt ceiling, the current stimulus program by the Fed could in some where cushion the impact to certain extend.  Also, according to US Fed Chairman, the scaling back of the bond buying program is data based and not time scheduled based.  Short-term wise, the no tapering event is a good news but in longer term, it is never as this showing US economy still lacking in recovery (US Fed also cut the growth forecast this year and next).  So when the Fed will start to taper ? It is again something investors and analysts going to play cat and mouse game with the Fed to guess when will it be.  Next stop will be the debt ceiling and that problem if not handle properly is even more deadly than US Fed tapering.

STI like Asian bourses rallied as no Fed tapering means interest rate hike will not be soon.  Money outflow in the past months have no choice pour back in again.  The increase in value was due to more transaction in the blue chips and the rallied on STI was partly due to the Jardine group of shares.  It was also no surprise high-yield stocks like S-Reits gained the most today as investors coming back to search for yield.  Cautious, the optimism of US Fed no tapering at the moment is short-term as eventually US Fed will have to taper.  What to monitor is those funds who have cash out past months what will be their next move.  They could be in catch 22 situation in which coming back now could face with possible few months later US Fed will start to taper.  Sideline means they will be missing out of return.

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