Tuesday, January 14, 2014

Market Summary -- 14th Jan 14

FTSE STI closed 3,123.75, down 11.74 points or -0.37% with a total volume of 2.75b and a total value of S$991M.  Total number of advance vs decline was 169 vs 234.  Of the 30 component index stocks, 5 closed positive, 5 unchanged and 20 in the red.  The 5 gainer component stocks were :-

1. Jardine C&C  +0.950
2. JMH 400US$  +0.390
3. JSH 500US$  +0.220
4. Semb Corp  +0.070
5. GLP  +0.030

The top 5 loser component stocks were :-

1. UOB  -0.230
2. Kep Corp  -0.120
3. Wilmar  -0.060
4. SIA  -0.060
5. SembMar  -0.050
5. CapMallsAsia  -0.050

US markets closed at least -1% yesterday after one of the Fed member's comment.  Asian bourses taking the cue were mostly in the red.  Nikkei reopened after yesterday holiday sank 3.08%, SSE +0.86% and HSI -0.43%.  STI tracking regional bourses closed -0.37% in a relatively thin volume and value days with only 5 of the index stocks managed to register positive closing.

The Fed's comment was not something unexpected but rather the status quo stance of US Fed will continue to taper if everything go as expected.  However, with the recent release of weak job data, the fear factor resurfaced again.  Investors also worried of weak corporate earning (coming out the next few days).  In general, nothing has changed except the fact last month investors were too overly optimistic and drove the markets to record high.  The pull back is nothing but a correction, a correction to the rightly so fundamental and valuation of US stocks.  Asian bourses as usually were overruled by sentiment and ignore the bigger picture of fundamental and valuation, which was largely expected.  This is where when opportunity arises for Asian markets (but not so for US markets).

STI with originally not much of buying interest except for punters punting for the micro-penny and penny stocks was easily shot down with the negative sentiment.  The micro-penny and penny stocks which were being speculated up past weeks were slowly doing distribution and when interested parties all left, those who chased them up will have to carry the baby alone.  As fund managers still awaiting for corporate earnings to take their position, current blue chips were seen lacking of interest.  One should know how to separate the noises and solely focus on the fundamental and valuation.  Looking and financial ratios and technical analysis is never the way to do it.

Singapore transport fare should be going up this coming Thursday, thereby causing inflation to go up next.  Should one's income is not able adjust for that inflation and with bank interest rate practically at 0, how one able to hedge against inflation ?  Singapore has one of the worst Gini index among the developed nations and the widest income gap among those too.  This is something one need to seriously ponder about and search for something that is able to hedge against inflation.  S-Reits with the current so negative views, will be one of the best choice.

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