Why SingTel is a double-edged sword ?
SingTel, probably the "national and officially" Singapore Telco like all telco stocks in other countries has another political role other than just a service provider and a listed company. If you notice, not a single country allows foreign investors to invest big stake in their national telco and have a board decision in it due to the political reason which need not me to further elaborate. Due to this political reason, SingTel has become a very defensive nature stock. Can you imagine SingTel bankrupt ? It is the same reason that you can't imagine SIA or POSB ( note I mean only POSB and not DBS ) or SPH closed down and bankrupt.
SingTel is also the heaviest weighage component stock in STI, on its crazy day, it can sprint STI at least 10 to 20 points, on a normal day it can maintain STI while other stocks are dropping and on a bad day it can shave 10 to 20 points off STI too.
Apart from being STI index stock, it is also MSCI index stock ( note most funds track this index rather than STI ) so whenever there is an inflow of funds, SingTel will be the prime target to park into, no doubt about it, that is why from March 09 1.90 can sprint all the way back to almost 3.80 within half-a-year when funds flow in. You might say from 1.90 -> 3.80 is nothing much if I compare with other stock that can jump more. You have to remember the market cap of SingTel is the heaviest among any other counters in STI, to lift a 2-bid jump is not easy. I once heard a fund said, itself alone, can only managed to move SingTel up 2-bid and after that no more capital to push up further.
SingTel business nature is "aggressive" as it has ventured into many overseas investments in countries like Australia, India, Indonesia, Thailand, etc etc etc etc..... Good and bad about that. When global economy is good, all will fly and they get to reward with all those investments. However, when economy is bad, it will be badly hit. Imagine when you are at the weakest point, and yet you still being hit from all corners with all these investment. One has to note also with the investment in foreign countries, Fx swing can cost revenue to get hit if it goes the other way. Remember the story of SembMar when it was hit by Fx loss ?
When hot monies flow in, you can rest assure SingTel is stable and not even shave a bit when rest of the counters being hit for profit taking, like bank stocks can drop 20-50 cents due to profit taking whereas SingTel probably drop 1 or 2 bid that all.
Now when hot monies flow out like fund redemption in the case of Oct 08 - Mar 09, you can imagine what happen 10 million of people trying to squeeze themselves out from a small exit door and that is why SingTel can drop from 3.20 to 1.90 during that period.
SingTel is never a good stock to trade for short-term, contra or even intra as the risk to reward is never justify and it doesn't really move according to chart or TA. It is a squeeze-squeeze stock for people who try to do short-term/contra/intra play. For mid to long term investing yes you can buy into it probably playing the trend to trend method; oversold -> overbought and to do so, you need ultimate holding power, patience to collect ( collect slowly ) and patience to wait for the day to cash out your profit.
