Singapore Stock Market Updates On 25/01/10

Morning Highlights

Singapore Shares fell kicked off the week on a weak note, with investors worried about the US economy following the worst three-day plunge of 552 points on Dow Industrials since Feb 2009. The STI gapped down 61.28 points to open at 2789.70. Support is seen at 2791.57 (Friday’s low).

• Lookout on Koon Holdings

There are 2 possible scenarios for index…

1st case :
Index might face a steep pullback to around 2740 before trending sideways for a moment which might last for at least 1 month. We would like to see a double bottom formation. Currently, there is a fairly strong support at 2800. After consolidation, we will see index heading for 3000.

2nd case
Index might face a steep pullback and then a throwback will occur the next few days with extreme thin volume. After which, the index will resume back its downward movement and retrace further. There could be a possible change in trend. If that happens, the next critical support is at 2700.

Our Analysis: We feel that 1st case scenario is more likely to occur. Reference to early 2009, we have experienced before a steep pullback of 200 points and market traded sideway for at least 1 month. Hence, there is a very high possibility of a double bottom formation.

Do  look out for a double bottom. Meanwhile, our market sentiment is shifted to neutral. Any new positions should be traded with cautious and to exit quick. Currently, we are only focusing on IPOs that are listed recently, mainly Tiger Airway and Hiap Tong.

There are also a few strong stocks that are performing well like Epure which make a high of $1 before pulling back and Hong Leong Asia. We hope to see pull back of these 2 stocks before entering. Nonetheless, Epure might be over-extended, thus, do be cautious when entering since this share has been trending for quite a while and consolidation might be on the way.

News Updates

1. General Electric earnings drop 19% to $2.94 billion in the 4Q
2. McDonald's profit & sales rise to cap off year of 'broad-based strength'‏
3. Dow industrials fall 200 points; American Express experienced its biggest decline, down 9%

Quick Picks: Here is a quick pick screen that we have designed to pick out potential stocks, both Bullish and Bearish. These are measured with emphasis on larger changes in price and volume. 

Stock Prices last updated at 9:00 (Singapore Time)

Afternoon Highlights

• Fraser Centrepoint Trust reports 15% rise in Q1, ended 31st Dec 2009, distributable income
• EDBI subscribes for 16 million new CWT shares at 78.80 cents per share.
• Liberty Global says it will sell its stake in Japanese broadband company Jupiter Telecommunications to Japanese wireless operator KDDI Corp for $4 billion in cash.
• Sin Heng Heavy Machinery, one of the leading heavy lifting service providers in Singapore, on Monday offered 168 million shares for main board listing at 26 cents each in its IPO.
• Ezra has inked a well-intervention contract on top of a maiden self-propelled contract to support an oil supermajor in Africa. Both contracts are worth approximately US$80 million.
• Ericsson AB reported a 92% drop in 4Q profit as sales fell for a third consecutive quarter amid lower equipment spending from operators and as its handset and chip joint ventures continued to struggle; Ericsson says to cut 1500 more jobs.

In Summary,

Market down 8 points to close at 2811.71, with 1.9753 billion traded.  Investors are on the sideline as they fret that interest hike is coming soon, along with the withdrawal of the stimulus package, hence, volume has dried up quite a lot.

The next few days of trading is pretty critical. We hope to see immediate recovery from last week steep loss after market sideway trading.

Worst Case Scenario: market experience throwbacks and volume traded even lower.  The weak stocks are Financial Stocks and China- Property Related.

Announcement This Week

U.S Existing Home Sales in Dec on 25/01/10, the month-on-month Home Price Index on 26/01/2010, and New Home Sales on 27/01/2010. Separately, figures relating to Consumer Confidence in January will also be out on Wednesday. The later part of the week sees any change in the FOMC Rate Decision announced on 28/01/2010 and the U.S fourth quarter GDP number on 29/01/2010.

The Bank of Japan’s monetary policy meeting this morning, followed by an announcement of any change in target rates on 26/01/2010 will be of interest. Other announcements concerning December’s Industrial Production and Jobless Rate, and the National CPI will be released on 29/01/2010.