FTSE STI closed 3,078.72, up 8.30 points or +0.27% with a total volume of 2.70b and a total value of S$1.54b. Total number of advance vs decline was 295 vs 139. Of the 30 component index stocks, 17 closed positive, 3 unchanged and 10 negative. The top 5 gainer component stocks were :-
1. Jardine C&C +0.370
2. CityDev +0.270
3. JSH 500US$ +0.270
4. UOB +0.100
5. SembCorp +0.090
The top 5 loser component stocks were :-
1. JMH 400US$ -0.200
2. DBS -0.090
3. HKLand US$ -0.070
4. GLP -0.060
5. SIA Engg -0.050
US markets closed positive last Friday continuing the post QE3 movement. Asian bourses however were mixed for the day. Nikkei closed +1.83%, SSE -2.14% and HSI +0.14%. STI managed to edge out a +0.27% closing with heavy volume of over 2 billion but the total value of the day was just S$1.54b. 17 of the 30 index stocks posted gain.
Post QE3 rally ? Believe that what most people would say about current market. The open-ended QE3 policy by US Fed provided the "feel good" sentiment of "unlimited cheap money" in which under low interest rate environment will have no where to go but stock markets.
Singapore this morning reported its August non-oil export came in -10.6% on year worse than expected. That perhaps starting to bring back the question of technical recession possibility.
Read from various sources and comments on QE3 but very little can provide a long term and bigger picture of the impact of QE3. There is a big question mark hanging over QE3 investors should know. Can QE3 really help US economy when the previous 2 failed and despite the current one there is no time frame to it ? The "unlimited" is a very dangerous strategy. Should the US economy and the job markets fail to rebound, US Fed will continue doing QE3 and the side effect of QE we all know that bring the risk of high inflation (perhaps not to US but to rest of the world in particular Asia). Asian nations have just managed to suppress the high inflation and yet now are facing the potential of another one coming the way. Hong Kong is quick to implement housing curb to prevent bubble forming in its housing market immediately after US Fed announced QE3. China recent inflation data also showing sign of slowing moving up.
One should ask if QE3 really still cannot work for US, US might face a situation in which high unemployment rate, economy growth stall and a rising inflation. That scenario is none other than stagflation and that is the most difficult problem to solve in any economy. Investors should not get overly excited about QE3 but rather still maintain cautious.
Singapore market might hit the high volume never seen for past months but most interest is in the penny stocks and laggards as investors with the "cheap money" playing catch up. Be careful, once everything cool down and the effect of QE3 becomes clearer, the story will be different.
The view of market will hit another bottom between October and December with concern of US fiscal cliff and rebound from there forming the last leg of the bull since 2009 still remain valid. Current global situation is not something for one to be overly optimistic or pessimistic but rather cautiously optimistic only. The go for bloke QE3 can provide the highest risk ever and when bubble bursts, US will back to recession in no time.
