Market Analysis -- 25th Aug 11

STI up at least 1.50% as of now after yesterday night another up day from US markets ( with a better than expected durable goods order data ).  What interesting today as of now and from past days observation was that, despite the volatile market ( one day up and next day down ), the defensive stocks in STI in particular S-Reits are actually gaining strength in general.  Most expect market will fall again if US Fed did not announce any QE3 this Friday.  Well the fact is it will not announce.  The gaining in strength in S-Reit like A-Reit, CapitaMall Trust, Plife, CDL HTrust, etc is something cannot be ignored.  If expectation of market drop, defensive counters will not spare the selling down too.  The buying up could be indicating funds are still in stocks and parking their money with defensive stocks and wait till clearer outlook from economic front before committing to higher beta stocks.  Moreover, the battle down price of the S-Reits lately has made them very attractive in term of dividend yield.  With Singapore CPI at +5.4% for July and under low interest rate environment from Singapore banks, S-Reits would be an ideal strategy to hedge against high inflation.