FTSE STI closed 3,070.42, up 40.28 points or +1.33% with a total volume of 2.33b and a total value of S$1.92b. Total number of advance vs decline was 356 vs 108. Of the 30 component index stocks, 27 closed positive, 2 unchanged and 1 negative. The top 5 gainer component stocks were :-
1. Jardine C&C +1.310
2. JMH 400US$ +1.120
3. UOB +0.300
4. Wilmar +0.240
5. CityDev +0.220
The only loser component stock was :-
1. GLP -0.070
US markets rose at least 1.3% yesterday night after US Fed announced QE3. Asian bourses were all positive on the cue of QE3 with Nikkei +1.83%, SSE +0.64%, HSI +2.90%. STI rose 1.33% in the heaviest volume ever seen for months of over 2 billion and 27 of the 30 index stocks posted positive closing.
US Fed extended low interest rate till mid-2015 and at the same time did an open QE3. It will every month uses S$40b to purchase bonds until the economy getting to its goal in particular the job market. While global markets cheered on that with the "feeling good" sentiment but one have to look really deeply into the implication of such a measures. It provides the excessive money but at the same time also providing a higher risk than the previous 2 QEs. An open-ended QE which only terminates upon meeting economic conditions mean "unlimited" excessive easy money. Should the economy takes another prolong period to recover to its goal then this will ultimately building up an asset bubble risk higher than the 2 previous QEs. Asian nations have been hit with rising inflation from the previous 2 QEs and with Asian Central Bankers starting to cut interest rate to spur growth now they are facing with the risk of letting inflation moving back up again. This is something which at the end might not benefit globally.
Singapore has been facing with relatively high inflation of over 4% and with the recent QE, Singapore inflation will have problem moving down. With bank interest rate at virtually good to none, putting money inside bank basically destroys the value of the money. Singapore investors would be best investing in high-yield stock to hedge against rising inflation. Another news was IHH will be replacing NOL as STI index component stocks come 24th September 2012. With end of 3Q just days away from that, fund managers would have to rebuild their portfolio.
QE3 short-term impact might be there but on a bigger picture and longer time frame, this could be the trigger of the last leg of bull which started since 2009. The fall out from QE3 would cause global recession again. US economy needs lawmakers with fiscal policies to combat it and not monetary policies.
