Friday, March 14, 2014

Market Summary -- 14th Mar 14

FTSE STI closed 3,073.72, down 7.67 points or -0.25% with a total volume of 2.02b and a total value of S$1.22b.  Total number of advance vs decline was 183 vs 251.  Of the 30 component index stocks, 5 closed positive, 3 unchanged and 22 in the red.  The 5 gainer component stocks were :-

1. Jardine C&C  +3.610
2. JMH 400US$  +0.530
3. Olam  +0.235
4. Kep Corp  +0.010
5. Noble Grp  +0.010

The top 5 loser component stocks were :-

1. JSH 500US$  -0.450
2. UOB  -0.200
3. CityDev  -0.190
4. SIA  -0.080
5. DBS  -0.070

US markets dropped at least 1% yesterday despite some upbeat economic data in jobless claims and retail sales.  Asian bourses taking the cue were all in the sea of red.  Nikkei -3.30%, SSE -0.73% and HSI -1.00%.  STI was not spared off the selling, dropping another 0.25% from yesterday in moderate volume and value.  Only 5 of the 30 index stocks posted gain.

It was the nervous towards this Sunday on Crimea's referendum that triggered profit taking.  US economic data yesterday were on the positive side while China slow growth is not something new either.  Should no fruitful outcome coming out this Sunday on Crimea referendum, could expect short-term or knee-jerk reaction to the global markets.  US and EU already threaten to economic sanctions on Russia should Russia decides to absorb Crimea.  The Ukraine issue if not resolved peacefully will do no good to either EU or Russia in term of economy.  The political leaders from both sides know jolly well about that.  It is not to see who will blink first and neither will not want to admit "defeat" in order to save face.  The best solution is none other than compromising.

STI tracking regional bourses was on a selling mode.  Across the broad was profit taking and cut loss from short-term traders.  This is not surprising as recently market volatility is making one different to trade on short-term.  The only bright spot for the day was Olam, in which Temasek Holdings offer a price of $2.23/share for the remaining of Olam's shares.  That news might be good for retail investors to part way from Olam but the question of whether Temasek's move make any sense is questionable.  Muddy's Waters once said should Temasek Holdings pulled out Olam will collapse and the present action pretty much more or less confirm Muddy's Waters claim.  Olam is known of its high debt level and negative cash flow.  Temasek Holdings acquisition is basically buying up all the debts of Olam.  For the growth prospect, might not be the right move.  Good or no good move, something to ponder about.

Do not get distracted by the short-term volatility, focus on the macro bigger and still to the game plan.

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