STI fell 4% on the week 7th - 11th Feb 2011 with reason citing outflow of funds from emerging markets. STI did a technical rebound on 14th Feb 2011 but failed to hold on to 3,100 level. With an immediate support at 3,050, STI appeared to enter a consolidation phase. Most of the blue chips were being sold down on the week of 7th - 11th Feb 2011 while S-Reits and defensive stocks were under selling pressure on 14th - 15th Feb 2011. Normally, the selling out of defensive stocks would be the last leg of selling out from funds. Thereafter, market will enter a consolidation phase before a full rebound could occur. The duration would probably take about 1 month at least.
For past 2 days, blue chips which were being sold down the week before, were mostly in range bound mode indicting higher chance of consolidation phase occurring now.
Putting technical aspect aside, from fundamental aspect, the recent pull back has made STI appears more attractive in term of valuation. With GDP 2011 expected to be around 5% and inflation on the higher end, these 2 could be the factor fundamentally prevented STI from moving higher. Inflation cooling should be the main focus for the Government in 1H2011 ( not only in Singapore but also in other Asian countries ), as such, STI could be in a range bound mode for 1H2011.
This week will be an interesting week for STI with Government due to release inflation data and FY2010 GDP on Thursday and Budget day on Friday. Majority believe Government will hang out goodies to aid mid and lower income group to cope with rising inflation and being General Election coming, a pre-election goodies is also possible.
There are 5 stocks investors probably need to keep close watch on. KepCorp, SIA, ST Engg, SembCorp and SembMar. These are the 5 stocks which are holding a net positive cash holding among the 30 index stocks. Traditionally these companies will return to shareholders the excessive cash as form of better dividend. So far, KepCorp has declared 26cents/share dividend plus bonus share of 1 for 10 as compared with last year dividend of 21cents/share for the same period. ST Engg declared a dividend of 11.55cents/share as compared with 10.28cents/share for last year. SIA will only declare its final dividend in the next quarter earning and with a net cash position that translate to $4.20 - $4.40/share, it could resume its full year dividend of $1/share policy. SembCorp and SembMar will be announcing their full year earnings next week and should be expecting a better dividend payout as compared with last year. SembCorp paid 15cents/share last year while SembMar paid 10cents/share in the same period.
