Straits Times Index   

STI

STI is only a play-field for investors and traders...

So you are saying those playing in STI do not have a mind of their own? Hee...

 

Fairygal,

I would do the same as to stay sideline...

But too bad, me kena stuck big time more than a month already...haha...

So sleepy at work now...yawn...

 

STI don't really have a mind of its own.

Must take cue from other index.

 

The words of Bernanke on Friday will be reflected in tonight's US markets when it opens. I a bit kiasi, so shall wait on the sideline.

 

HSI recovered after a bad opening.

If only STI can do like-wise.

 

QUOTES:

Singapore shares are expected to open lower Tuesday with no strong leads to spur activity after Wall Street was closed Monday for the Labor Day holiday.

Yesterday, the Straits Times index closed down 6.69 points, or 0.2 percent, at 3,386.22, after moving between 3,371.61 and 3,398.83 points.

Gainers beat losers 382 to 357, with 961 stocks unchanged.

Traded volume was 1.59 billion shares, valued at 1.45 billion Singapore dollars.

Without a lead from Wall Street, investors are expected to remain cautious with concerns about the subprime mortgage crisis continuing to weigh, even as President George W Bush announced plans last week to provide relief to some home loan borrowers facing difficulty in meeting payments.

The proposals are seen as a step in the right direction, but not enough to fully resolve the problems in the troubled sector.

CIMB-GK Research said even after recent declines, overall sentiment in the broad market looks gloomy given the backdrop of tighter credit, and with many investors still risk averse.

"It may be wise for long-term players to continue to unwind some of their shareholdings on rallies. This consolidation is expected to last for another 1-5 months," the brokerage said.

 

Singapore stocks traded on a weak bias after rising some 2% last Friday. With the weakness seen in the Hong Kong and Tokyo bourses and the US market closed today, market sentiment was subdued. The STI closed 6 points lower at 3386.22. Market volume was a lower 1.58b shares worth S$1.45b, with 368 gainers and 306 losers.

Penny stocks were among the most actively traded. The top volumes were Chip Eng Seng (S$0.905, +0.5cent, 61.0m), Sapphire Corp (S$0.025, +0.5cent, 55.1m), Genting International (S$0.615, -2.0cents, 51.7m), Yongnam Holdings (S$0.44, +0.5cent, 44.8m) and Penguin Boat International (S$0.285, +6.0cents, 43.0m).

The Jardine companies led the gainers- Jardine Matheson (US$26.50, +50cents) and Jardine Strategic (US$14.30, +40cents). Singapore Airlines rose to a high of S$19.50 but close unchanged at S$19.00. The company and Temasek Holdings are taking a combined 24% stake in China Eastern Airlines for US$918m. Other top gainers were Ezra Holdings (S$6.20, +30cents), Bukit Sembawang (S$10.20, +20cents), SPC (S$6.05, +15cents) and SIA Engineering (S$4.64, +14cents).

Banks and property stocks fell the most: Singapore Land (S$9.50, -40cents), DBS (S$19.70, -30cents), GuocoLand (S$4.62, -14cents), UOB (S$20.70, -10cents) and Venture Corp (S$15.40, -20cents).

 

when market is bullish, good news increase momentum, eg june rally

when market is bullish, bad news will only slow its movement temporarily, eg, London bombing

when market is bearish, bad news will accelerate plunge, eg, 911

when market is bearish, good news will only stop its plunge temporarily, eg. speech by bush

 

A sudden cut of 0.5% of fed funds rate will cause a rise of 200+ points on wall street

Feldstein advises acut to 4.25% 

 

Immediate outlook: The Straits Times Index?s managed to recoup most of its weekon-week losses towards the end of last week as bargains hunters stepped in. The STI added 23pts or 0.6% week-on-week to close at 3,392.91. For the upcoming week, the STI could continue to climb to retest last week?s high of 3,441. If it surpasses this high, the STI could head towards the 3,500-3,545. Nevertheless, we expect this rebound to be short term in nature. Hence, it may be wise for traders who bought earlier to unload on strength.

Medium-term outlook (2-6 months): The new MT consolidation started when the index fell below the 3,450. Indicators have also confirmed that a new medium term downtrend is already on its way. Indicators are still in a negative mode, suggesting that any rebound would likely be weak. It may be wise for LT players to continue to unwind some of the shareholdings on rallies. This consolidation is expected to last for another 1-5 months. The next strong support for the index can be found around the psychological 3,000 support followed by the bottom support channel at 2,730-2,800. The 38% Fibonacci support is also at 2,740.

 

Article on Li Ka Shing really a timely reminder

Less we get carried away on Monday onwards

 

ChannelNewsAsia - 24th Aug (old news but Words of Wisdom from Mr Li Ka Shing)

HONG KONG : Hong Kong tycoon Li Ka-shing Thursday warned investors of the high risks involved in the volatile markets sparked by the US sub-prime mortgage loan problems which sent stocks plummeting last week.

He cautioned investors to stay alert while dealing in shares although any negative economic development in the United States would not only affect Hong Kong but the whole world.

"Investors should be careful...when the market reaches this high, there are higher risks involved whether it is in Hong Kong or in China. When the stocks have risen so high, this can create problems too," he told reporters.

If the loan problems in the US escalates, he expects the US government will cut interest rates further - two to three times.

When this happens, Hong Kong banks will follow suit, he added.

Li, Asia's richest man, was speaking at a press conference announcing the interim results for ports-to-telecom conglomerate Hutchison Whampoa and property giant Cheung Kong.

Hong Kong has seen panic-selling last week, plunging the market by as much as 6.0 percent amid uncertainty over global markets in the aftermath of US mortgage sector problems.

But it has rebounded after the Federal Reserve cut its discount rate by half a percentage point helping soothe credit worries, at least in the short term. - AFP/ch

 

Well, even a rate cut may not help the sub prime issue not the least the US economy. It requires a concerted efforts between FED and the financial sectors to legislate it. They talked about free economy and will allow the free economy normalise.

A recession seems a plausible solution for the FED and government to correct years of easy credit. It is a time to realign the financial system. Not a bad thing after all rather than hide all the rubbish under the carpet.

Cheers and a happy week of trading. I am not sure whether to go into the market next week. Not even sure what is the full impact of Friday's announcement.

Happy trading for all. 

 

Reading between the lines of Bernanke's statement that he wll do anything to save( himself) and the  American economy in the FT. do not be surprised if a series of rate cuts is announced when you least expect it.

It is obvious as to what he has to do as opposed to doing nothing and allowing the economy to go into recession a year before the presidential election.

Bernanke is known to be an expert on what caused the great depression in 1929 and it would be an irony that America goes into a recession while he is in office. 

 

CNN :

BUSH - His new plan offers relief for only a small fraction of those in trouble, but it is more about a message of reassurance, with consumer confidence shaky and investors jittery that housing problems will drag down the rest of the economy.

-help only 80,000 (and not all the 3 million)

-the rest, CNN mentioned is true picture : you can't help everyone who go to Les Vegas

 

CNN :

BUSH : Congress Should Pass FHA Modernization Legislation.

- By the time it is passed may be 3 months down the road

 

Bush will announce measures to help subprime borrowers from losing their homes tonight(Bloomberg news)


Political suicide if he and Bernanke do norhing .

Dow futures up. 

 

Suprising, how come STI is holding on so strong today. Positive expectation on Bernanke's speech tomo??

 

i am buliish at least till mid October :)

 

Quotes:

News from Bloomberg.

U.S. Stocks Retreat, Led By Banks; Goldman, Merrill Shares Fall


By Michael Patterson

Aug. 30 (Bloomberg) -- U.S. stocks resumed their summer sell-off after Lehman Brothers Holdings Inc. said rising credit costs may reduce bank profits and Freddie Mac predicted the housing market will keep languishing.

Goldman Sachs Group Inc., Morgan Stanley and Merrill Lynch & Co., Wall Street's biggest securities firms, led the Standard & Poor's 500 Index to its third decline this week. Freddie Mac fell the most in four years after the second-biggest U.S. mortgage finance company said the housing slump cut profit by 45 percent.

The S&P 500 decreased 6.12, or 0.4 percent, to 1,457.64. The Dow Jones Industrial Average declined 50.56, or 0.4 percent, to 13,238.73. The Nasdaq Composite Index rose 2.14, or 0.1 percent, to 2,565.3, extending its gain after the biggest rally in a year.

Lehman reduced its earnings estimates for investment banks two days after Merrill Lynch analysts slashed their projections. Financial shares in the S&P 500, which comprise about one-fifth of the index's value, are headed for their worst quarter in five years amid concern that higher borrowing costs spurred by mortgage defaults by the riskiest borrowers will erode earnings.

``We don't have a perfect idea of how deep or widespread the subprime issue will be,'' said John Forelli, who helps oversee $7 billion at Independence Investment LLC in Boston. ``Investment banks are caught in the crosshairs of this financial crisis.''

The Commerce Department said today that the U.S. economy expanded in the second quarter at the fastest pace in more than a year as exports surged and business spending accelerated.

Gross domestic product growth may slow for the rest of the year because the cost of borrowing grew this month, economists said. The Federal Reserve has said that risks to growth have ``increased appreciably.''

`Closely Monitoring'

Growth was revised up to a 4 percent annual rate. The median forecast of economists polled by Bloomberg News was 4.1 percent. The Fed's preferred inflation measure, which is tied to consumer spending and strips out food and energy costs, rose at a 1.3 percent annual rate, the smallest gain in four years.

Investors will look for further clues on the outlook for monetary policy tomorrow when Fed Chairman Ben S. Bernanke gives the opening speech at the Kansas City Fed Bank's annual symposium in Jackson Hole, Wyoming.

Almost two stocks fell for every one that gained on the New York Stock Exchange. Some 1.3 billion shares changed hands on the Big Board, 26 percent less than the three-month daily average.

The S&P 500 climbed 2.2 percent yesterday after dropping 2.4 percent the previous day. A back-to-back gain and loss of 2 percent or more has occurred only 35 times since 1945, according to Bespoke Investment Group LLC. Since June 21, the S&P 500 has fallen 4.2 percent.

Goldman, Morgan Stanley

Goldman, the largest securities firm by market value, dropped $2.34 to $171.38 today. Morgan Stanley, the second biggest, fell $1.05 to $60.16. Merrill, the No. 3 securities firm, declined 93 cents to $72.18. Lehman, the biggest U.S. underwriter of mortgage bonds, slipped 66 cents to $53.77.

``Third-quarter earnings will be significantly impacted by the dislocation in the credit and asset-backed and mortgage markets,'' Roger Freeman, an analyst at Lehman in New York, wrote in a report published today. The brokerage has ``limited conviction about 2008 ourselves sitting here at the end of August with a wall of worry to climb between now and October.''

Freddie Mac retreated $3.18, or 5 percent, to $60.07 after saying second-quarter profit declined as the company set aside $320 million for losses as the housing slump deepens. Freddie Mac, which owns or guarantees about one in every five U.S. residential mortgages, anticipates the slump may last for 18 months, Chief Executive Officer Richard Syron said on a conference call with analysts.

Fannie Mae

Fannie Mae, the largest source of money for U.S. home loans, dropped $2.36 to $63.40.

The Office of Federal Housing Enterprise said today that U.S. house prices in the second quarter rose at the slowest pace in a decade as lenders tightened requirements to get mortgages.

Financial shares in the S&P 500 fell 1.1 percent as a group and contributed the most to the broader index's decline. The measure has tumbled 8.2 percent since the end of June.

Wal-Mart Stores Inc. dropped 87 cents, or 2 percent, to $43.32 for the biggest retreat in the Dow industrials. Merrill said ``erosion'' in the profitability of the world's largest retailer's U.S. stores may accelerate over the next few years as the domestic economy slows. Merrill cut Wal-Mart's rating, becoming the first among analysts tracked by Bloomberg to advise investors to sell the stock.

Technology Shares Gain

Technology companies in the S&P 500 advanced 0.4 percent as a group for the only gain among 10 industries.

Cisco Systems Inc., the world's largest maker of networking equipment, gained 43 cents to $31.43. Sanford C. Bernstein & Co. wrote in a note today that Cisco is poised to grow at a faster rate than other large technology companies. The brokerage expects the shares to climb to $39 in the next 12 months.

Novell Inc. increased 54 cents, or 8 percent, to $7.33 for the top gain in the S&P 500. Third-quarter revenue grew 2.9 percent to $243.1 million, the second straight quarter of sales growth, beating the $233.6 million average estimate compiled by Bloomberg.

Research In Motion Ltd. climbed $1.05 to $82.87 on speculation the maker of the BlackBerry e-mail device may be acquired by Microsoft Corp., traders said.

``We're hearing the same rumor everyone else is, the Microsoft and RIM rumor,'' said Steve Sachs, head of trading at Rydex Investments in Rockville, Maryland. ``I can't even count the number of times we've heard that over the last three years.''

Courtney Flaherty, a spokeswoman for Waterloo, Ontario-based Research In Motion, wasn't available. Microsoft spokesman Bill Cox declined to comment.

Motorola Rises

Motorola Inc. rose 28 cents to $16.75 after Lehman analysts recommended shares of the world's second-biggest maker of mobile phones, saying handset sales will increase in the third quarter.

``Everyone's looking for technology to be the positive driver for the remainder of the year and take the market forward,'' said Clarence Woods Jr., chief equity trader with Baltimore-based MTB Investment Advisors, which manages $12 billion.

The Russell 2000 Index, a benchmark for companies with a median market value of $639 million, declined 0.5 percent to 783.11. The Dow Jones Wilshire 5000 Index, the broadest measure of U.S. shares, lost 0.4 percent to 14,677.24. Based on its drop, the value of stocks decreased by $71.3 billion.

Cisco Systems Inc. (CSCO US)
Fannie Mae (FNM US)
Freddie Mac (FRE US)
Goldman Sachs Group Inc. (GS US)
Lehman Brothers Holdings Inc. (LEH US)
Merrill Lynch & Co. (MER US)
Morgan Stanley (MS US)
Motorola Inc. (MOT US)
Novell Inc. (NOVL US)
Research In Motion Ltd. (RIMM US)
Wal-Mart Stores Inc. (WMT US)

To contact the reporter on this story: Michael Patterson in New York at mpatterson10@bloomberg.net .

Last Updated: August 30, 2007 17:30 EDT