SG Market Analysis -- 20th Oct 08

STI closed 1,878.51 for the week ended 17th Oct 08, down 69.82 points or 3.58% from previous week. The week started of with a strong rebound from a very oversold position the week before after European governments all move in to guarantee their respective banks' deposit over the weekend and a similar move by US and Asia countries days after that. However, the rebound soon faded off in the middle of the week when US markets were trading in a very volatile sessions after sessions that still cause nervous to investors. Without any fresh lead, Singapore investors turn their focus to a possible recession next year whereby corporate earnings drop, job-cut and salary-cut kick in. Towards the end of the week, people were concern on the Lehman Brothers' minibond, DBS High 5 notes and other structured investment products that the 3 local banks sold to their respective customers. These worries coupled with possible funds liquidating for redemption put a very heavy selling pressure on the bank stocks that eventually caused STI to close below the 1,900 psychological level, the lowest since 2004.

Technically, mid and long term for STI were down. Short-term wise might be seeing some bottoming. The DI+ and DI- are negatively spaced and with ADX maintaing at the 40 level indicating the strength in the downtrend still strong. MACD fell into deeply negative region and no sign of reversal yet. RSI though managed to recover from the lowest level, it is still below the 30% level. This could signal a short-term bottom forming. Stochastic signals also failed to rebound from the rally in the begining of the week and cut back down to below 20% towards the end of the week. If the coming week, STI is unable to regain the 1,900 level, short-term support would be at the 1,800 level and any strong rebound will probably cap around the 2,200 level; the resistance of the rally in the early part of last week. If the market weakness persists further, potentially STI could drop till the 1,300 - 1,500 level in few months time. Current market trend is in the wave C of the Eliott Wave and final destination of that wave could be 1,300 - 1,500 level.



Last week the second blue chip reported its quarterly earning that is SGX and it net profit fell 35% as compared with the same period the year before, missing analysts' expectation. Ascendasreits also reported its 2Q09 earnings, even though the net profit and DPU were better than the previous quarter but the concern for the company going into next year will be refinancing of their current debt and any potential further growth following. The following is date of the list companies that will be announcing its earnings within this and next month

1. CitySpring -- 11/11/08
2. CapitaMall Trust -- 21/10/08
3. Cambridge -- 30/10/08
4. CapitaComm Trust -- 23/10/08
5. Mapletreelog -- 22/10/08
6. CDL H Trust -- 29/10/08
7. UOB -- 31/10/08
8. FSL -- 21/10/08
9. MIIF -- 12/11/08
10. CapitaRChina -- 29/10/08
11. ST Engg -- 4/11/08
12. Capitaland -- 31/10/08
13. AscendasIndia reits -- 30/10/08
14. SMRT -- 31/10/08
15. Keppel T&T -- 21/10/08
16. SPC -- 21/10/08
17. Keppel Land -- 22/10/08
18. KepCorp -- 23/10/08
19. Noble -- 10/11/08
20. SIA Engg -- 3/11/08
21. DBS -- 7/11/08
22. SembMar -- 4/11/08
23. Cosco -- 30/10/08


For the coming week, corporate earnings ( from US and locally ), global financial news and crude oil price should be dictating the movement of STI and will be another volatile week again. Bank stocks should be in focus as MAS is carrying out investigation of possible breached of laws by the banks on the strutured investment products and also the outcome of the Lehman Brothers' minibonds and DBS High Notes 5. Sectors like commodity and Offshore/Marine could face fresh selling pressure if crude oil price continues the slide towards US$50/barrel. All the penny S-Shares may continue the slide as investors still very concern about the companies' financial status

For short-term traders, advice is to remain cautious as market is till too volatile and any rebound is a chance to take profit or cut-loss.

For long-term investors with 10 years investment time frame, should be looking from fundamental point of view of a counter and decide on various entry prices to slowly collect, spread out the purchase and that could minimize the downside risk quite an amount.