Monday, December 23, 2013

Market Summary -- 23rd Dec 13

FTSE STI closed 3,116.22, up 21.74 points or +0.70% with a total volume of 2.34b and a total value of S$711M.  Total number of advance vs decline was 220 vs 206.  Of the 30 component index stocks, 25 closed positive, 2 unchanged and 3 in the red.  The top 5 gainer component stocks were :-

1. Jardine C&C  +0.710
2. JMH 400US$  +0.620
3. JSH 500US$  +0.290
4. UOB  +0.180
5. OCBC  +0.100

The 3 loser component stocks were :-

1. SIA Engg  -0.040
2. GLP  -0.010
3. CityDev  -0.010

US markets rose at least 0.2% last Friday after a strong 3Q GDP data.  Asian bourses were mostly positive for the day taking cue from US markets last Friday.  Nikkei was closed for holiday, SSE +0.24% and HSI +0.48%.  STI continued to move up from last Friday with +0.70% closing in slightly heavier volume but thin value day.  xx of the 30 index stocks posted gain.

US 3Q GDP came in at +4.1% better than expected thereby justified that US Fed's stance to start tapering given the economy is gaining traction.  Asian bourses after last week mixed reaction to US Fed tapering have stabilized with mostly recording gain for the day given that the bigger picture for US Fed tapering is a positive note while the short-term concerning of funds outflow in Asia is nothing but noises.

STI was having another up day but with very thin value as investors starting to punt on penny stocks and given the festive season is just round the corner, few willing to take positions.  Singapore also released its November inflation this afternoon coming in at +2.6% vs +2.0% in October.  Without any surprise, inflation is slowly moving up and with US economy also recovering, can expect global inflation (including Singapore) to slowly moving up next.  Here is an interesting point, recently almost all the analysts were very negative on S-Reits, some even claimed wait for another further price drop (equivalent to a 0.5% up in dividend yield) then consider buying into it.  While you can wait for that to come but meanwhile as inflation is moving up, what can you do to hedge against it ? Still putting money in bank to get that average 0.1% interest rate or holding to cash which does nothing but destroy the value of your money.  They were wrong on S-Reits in the beginning of the year with their bullish call, they are now wrong on being bearish with on the  S-Reits with US Fed tapering and they will be wrong again in the future.  After all, it is all expected that analysts will always get it wrong.

Singapore inflation +2.6%, average bank interest rate 0.1%, CPF special account rate 4% (risk free), average S-Reits yield 6.5%.

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