US and Asia Regional Market Summary

Asia Regional Market Summary

Singapore shares closed lower on Wednesday with the blue-chip Straits Times Index down 45.93 points to 2,887.46. Volume was 1.65 billion shares worth $1.85 billion. Losers led gainers 377 to 142.

Hong Kong stocks closed 0.63 per cent lower on Wednesday on profit-taking, snapping three consecutive gains. The benchmark Hang Seng Index gave up 135.44 points to 21,239.35. Turnover was HK$67.06 billion (US$8.35 billion).

Malaysia stocks ended slightly higher on Wednesday following profit-taking in key heavyweights like Maybank and Sime Darby. The benchmark FTSE-Bursa Malaysia Kuala Lumpur Composite Index finished at 1,320.57, up a nett 1.22 points or 0.09 per cent. Turnover was at 961.369 million shares valued at RM1.540 billion (US$470.925 million). Losers led gainers by 441 to 275.

Japan ' s Nikkei average hit an 18-month intraday high before paring gains on Wednesday, the final day of the financial year, but further gains were expected in the new quarter as a global economic recovery picks up strength. The benchmark Nikkei inched down 0.1 per cent or 7.20 points to 11,089.94 after rising as far as 11,147.62, its highest intraday level in about 18 months. The Nikkei climbed 5.2 per cent in the January-March quarter. The broader Topix dipped 0.1 per cent to 978.81.

Source: BT Online


US Market Summary

Stocks fell on Wednesday as a report showing a surprising drop in private-sector employment stoked concerns about the health of the laboUr market two days before the government's key jobs data.

Wall Street took a one-two punch from ADP Employer Services data showing US private-sector employers unexpectedly cut jobs in March and a separate report that showed US Midwest business activity expanded less than expected last month.

The Dow Jones industrial average dropped 50.79 points, or 0.47 per cent, to close at 10,856.63. The Standard & Poor's 500 Index shed 3.84 points, or 0.33 per cent, to 1,169.43. The Nasdaq Composite Index fell 12.73 points, or 0.53 per cent, to end at 2,397.96.

Source: Reuters

Market News for this week

US

§ US consumer sentiment ended unchanged in March from February. The final March reading for the surveys' overall index on consumer sentiment was 73.6, the same as February's, but slightly above the 73 forecast by analysts polled by Reuters. (Source: BT Online)

§ The US economy expanded at 5.6 per cent in the fourth quarter, the government said on Friday, revising downward an earlier estimate of 5.9 per cent gross domestic product growth. (Source: BT Online)

§ President Barack Obama's administration on Friday announced new plans to help up to four million US homeowners. The measures will tap into US$50 billion worth of funding already set aside to help the housing sector. The administration has already spent hundreds of billions of dollars trying to stabilise the housing market and reduce foreclosures. (Source: BT Online)

Singapore

§ Singapore's factory output came in better than expected for a third straight month in February, surging 19.1 per cent year on year as global electronics demand strengthened further. On a seasonally adjusted basis, February's industrial production grew 5.9 per cent from January, the Economic Development Board said yesterday. (Source: BT Online)

§ Visitor arrivals to Singapore jumped 24.2 per cent year-on-year to 857,000 last month, the highest ever recorded in the month of February. Visitor days came in at 3.3 million days, up 16.3 per cent compared to the corresponding month in 2009. (Source: BT Online)

§ Leasing market for non-landed homes showed signs of recovery in the final quarter of 2009. Median rents saw their first quarter-on-quarter growth of 0.5 per cent following five quarters of continued decline from a peak in Q2 2008. The monthly median rent in Q4 2009 was $3.02 per sq ft. Occupancy rates also jumped, achieving 94.5 per cent in Q4 2009. (Source: BT Online)

Greater China Region

· An adviser to the People's Bank of China, Fan Gang, says the mainland could adopt a more flexible exchange rate policy once the global economy is back on a sure footing. In an opinion piece, Mr Fan warned that a revaluation of the yuan would not by itself resolve economic problems in the US such as high unemployment and a massive trade deficit. He said China 's politicians have a domestic agenda just like the Americans. The key element of that agenda is to maintain employment growth. (Source: PBOC)

· A residential site in Tung Chung will become the first site to be auctioned in the coming financial year. A developer triggered the sale by agreeing to submit a minimum bid of almost HK$2.9 billion. The size of the site is 26,200 square metres. The auction will take place in mid-May. It follows successful auctions of sites in Tai Po. (Sources: RTHK)

· Authorities revealed that the growth of new loans supplied by commercial banks remained relatively rapid in March. The new loans supplied by Industrial and Commercial Bank of China, Agricultural Bank, Bank of China, Construction Bank had reached nearly 2,000 billion yuan in the first two weeks of March, which is slightly higher than the same period of last month. - The new loans supplied by the whole banking sector are estimated at about 800 billion to 1 trillion yuan in March. Taking into account the quarter-end performance evaluation of commercial banks and strong corporate credit demand, the impulse of banks to lend is still evident in March.(Source: China Security News)

· On 25 March, the governor of Central bank Zhou Xiaochuan said when attending annual meeting of Inter-American Development Bank, that some of the special incentives can be gradually faded out only if convinced of the economic recovery. The necessary conditions for implementing exit policies also include "make certain that W-shaped economic recovery won’t appear, that is slowdown in economic growth again after experiencing a rebound." - Taking a gradual implementation of exit policies is easier to communicate and can be understood easily by market participants. (Source: PBOC)

· The deputy director of National Development and Reform Commission Xu Xianping revealed that the relevant departments were coming up with a guidance to speed up the development of Yangtze River shipping, aiming at fostering regional economy of Yangtze River as new economic growth of Shanghai shipping economy to drive the economic development of inland rivers. -On A-share market, the listed companies related to transport of Yangtze River area include such 4 port corporations as Shanghai Port Group, Chongqing Gangjiu,Wuhu Port, Hong Kong, Nanjing Port, and Chang Jiang Shipping Group Phoenix whose business focuses on water transport on Yangtze River.(Source: NDRC)

· ICBC announced its intention to issue convertible bonds of not more than 25 billion yuan in A-share market to supplement the capital funds. After this financing, ICBC's capital adequacy ratio will be 12% or more, indicating that in principle it will no longer seek new financing through capital market in the next three years. - Re-financing is needed to further improve capital structure, raise capital quality, and to meet credit needs. However, now ICBC's capital adequacy ratio is still better than the national average, so the specific time of issuing the bonds is still to be selected.(Source: ICBC)

Thailand

· Foreign investors remained net buyers of Thai shares for a 24th consecutive session worth Bt1,007b last Fri. (Source: Bisnews)

· The Finance Ministry is ready to raise Thailand’s GDP growth forecast for 2010 to at least 4% from a previous estimate of at least 3.5% but the figures were still below actual fundamentals as ongoing political chaos would drag growth down below 5%, a source at the ministry said. (Source: Post Today)

· Thai political update: (1) The government and core leaders of the United Front for Democracy against Dictatorship (UDD) will hold a second round of talks in a bid to defuse political tensions today after failure thrash out their differences over conditions leading to a house dissolution yesterday as the red shirts put forward a timeframe of 15 days for PM Abhisit Vejjajiva to dissolve the parliament; and (2) a series of explosions hit Bangkok with the latest bomb exploding near a residence of former PM and veteran politician Banharn Silapa-archa at Soi Charan Sanitwong 57 Sunday night. (Source: Krungthep Turakij)

· PM Abhisit Vejjajiva may decide to impose the International Security Act (ISA) in the resort town of Hua Hin to maintain law and order during the Mekong River Commission (MRC) Summit to be held from Apr 2-5, 2010. (Source: Bisnews)

· Finance Minister Korn Chatikavanji sent a signal of interest rate increases once the political situation returned to normal and the economy recovered. He also saw hot money flowing into stock markets but cited that the ongoing baht’s strength did not erode Thailand ’s export competitiveness as the currency appreciation was in line with currencies of its regional competitors. (Source: Krungthep Turakij)

Regional Market Focus for this week

Singapore

§ On Friday (26Mar10), shares in Singapore closed higher, with the STI up by 17.91 points to 2,906.28. Gainers led losers 309 to 167. In the US , stocks initially rose after European Union leaders said they had agreed on a standby aid package for Greece , and after better-than- expected March consumer sentiment data. However, they sold off later during the day to close mostly flat, with the S&P 500 marginally higher by 0.86 point (0.07%) at 1,166.59.

§ Technicals for the STI seem to be leaning harder on the Shanghai Composite at this point in time. The STI continued higher on Friday despite a very obvious rejection of key resistance in the S&P 500 the day before (Thursday, 25Mar10). The Shanghai Composite on the other hand, rallied 50 points from its low on Friday.

§ Price action wise, the technical outlook is currently somewhat unclear due to the conflicting direction given by Shanghai and the S&P 500, as well as the STI’s seeming inability to decide which side to bank on more. We go back to watching key support & resistance levels for clues on the STI’s direction. Resistance is at 2,910 and 2,932 respectively. Support is in the 2,885 to 2,880 region, then 2,870 to 2,865. A breach of support/resistance will give us a directional bias for the STI.

Hong Kong

§ Hong Kong market rallied and the benchmark indexes upped by the most in a week; on the speculation European leaders will form an agreement to ease Greece ’s debt problems. The HSI and the HSCEI gained 274.56pts and 147.84pts respectively settled at 21053.51 and 12050.33. Market turnover was 60.28 billion.

§ We expected that the recent low last week, which closes to 20700 would be, a critical support for the HSI. The US market may consolidate at recent high level and swing within a relatively narrow range before non-farm payrolls announcement this Friday, which limits the upside potential of benchmark indexes. Besides, the volatility of benchmark indexes would be higher resulting from the tightening measures to cool the mainland properties markets. Expected support and resistance today are 20900 and 21258 respectively.

Thailand

§ Thai stocks were extremely volatile throughout the session last Fri before succumbing to a heavy bout of profit taking in late market trading on risk aversion ahead of the red-shirt’s rally over the weekend. The composite SET Index ended the session down 5.5 points in lighter volume while foreign investors remained net buyers of local equities.

§ Even though foreign investors continued to buy local shares for a 24th consecutive session, pushing the main index higher by as much as 11%, net foreign buying was however showing signs of abating in some regional markets, leading to heightened speculation on when foreign fund flows would reverse. Such speculation also led to rising market volatility during the session. In the near term, we still give more weight to the political factor as a second round of talks between the government and the red shirts will take center stage today after failure to reach any common ground on parliament dissolution proposed by anti-government protesters to end the ongoing political stalemate yesterday. On the external front, concerns over Greece ’s debt problems appear to be abating somewhat. In a big picture, we believe the overall Thai market is likely to see a choppy session with a positive bias today.

§ For today’s strategy, we advise investors to look for laggard plays relative to peers or the broad market.

§ Today, resistance on the main index is expected at 793-800 and support at 772-763.

Stocks fall after agency cuts Portugal debt rating

NEW YORK (AP) -- Major stock indexes fell from their 2010 highs Wednesday as weakness in the housing market and rising European debt loads revived investors' pessimistic view of the economy.

The Dow Jones industrial average fell about 53 points. It was only the Dow's second drop in 12 days. Broader stock indexes also slid.

Treasury prices tumbled after a government debt auction drew only modest demand for a second straight day. That raised concerns that the government will have to pay higher interest rates to attract buyers for its debt. Washington has been issuing record amounts of debt to help revive the economy.

The drop in stocks came after Fitch Ratings lowered Portugal's credit rating. The agency said the country's recovery will be slower than others that use the euro. Fitch contends that could hurt Portugal's ability to repay its debt.

Deficit problems in Europe have been one of the few drags on stocks this year. Rising debt in Greece, Portugal and other nations that use the euro have investors worried that troubles there could upend a nascent global recovery.

I'm sure this has been one of the major weakness in the market, which it would not recover so fast. Anyway just stay alert for the time being for slow recovery.

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Stock Picks: Lottvis, Oculus, Mediaring

As mentioned in the previous post, I have been monitoring the small caps recently and seen a spike in the volume for most small caps.
Normally this signals a start of the pennies rally as we should be able to see the top 10 active stocks to be dominated by them in the coming week ahead.
Below are the recommendations:

1. Lottvis


As you can see from the chart, accumulation can be seen distinctly as the volume spiked up on last Friday. We shall expect it to breakout if it crosses 0.17, support at 0.14.

2. Oculus


This stock has been the talk for quite a while as it plans to diversify its business by acquiring Aretae which is doing the carbon credit business. Recently on Feb 6, it announced that it was acquiring ophthalmic solutions patents and licensing contracts from Advanced Ocular Systems (AOS) for $29.9 million in cash and shares.

The accumulation portion is the same with Lottvis, except we may hear some news regarding their results of the RTO. This stock can go either way, thus before the news is out, I advise all to go in fast and sell off fast for a quick profit.

3. Mediaring


This stock has similar accumulation pattern to the previous 2 stocks, but the volume of accumulation is in much larger quantities.
It is always one of the targets for pennies breakout and the pattern is clear again.
Go in fast and sell off fast for a quick profit as you would not expect it to go up in value in times to come.

Every time we go into penny stocks rally, it is always clear that we are encountering a downturn soon. This is due to the fact that the blue chips prices are not attractive anymore and investors would like to cash in to load something which is much profitable in intra day situations.
Therefore, do take note of signals whereby the market is coming down again.
I'm on the bearish side for the time being.

Don't lose your head (or your shirt) in market turmoil

IN A few heart-stopping moments on Jan 22, marketing manager Henry Foo, 30, saw the value of his stock portfolio plunge from $100,000 to $82,100.

When he did an online check of his $150,000 unit trust portfolio, there was more bad news - it had dipped by about $10,000 in value.

He and many other Singapore investors have witnessed a large portion of their investment values wiped out in a matter of days.

The culprit, of course, is the United States sub-prime mortgage crisis where thousands of high-risk borrowers have defaulted on loans. This sparked global credit worries that cascaded through to equity markets.

As investors braced themselves for a battering, Asian stock markets took a beating on Jan 21, with Singapore suffering its worst one-day fall since Black Monday in October 1987, plunging by 6 per cent to 2,917.15 points.

Blue chips were not spared, with counters such as bourse operator Singapore Exchange crashing to $8.10 on Jan 22. Its price on Oct 8 was $17.20.

Fearing the worst, investors had to decide if they should hold their positions or cut their losses. Many regretted not cashing out when the market peaked in November.

Why investors panic

MOST people like to imagine they are rational and logical when it comes to serious matters such as investment - but human nature dictates otherwise.

The chief executive of ipac Wealth Management Asia, Mr Gary Harvey, says it is easy to understand how the ups and downs of the stock market create emotional responses.

"We fear that when markets go down, they will fall further and we will lose money. During a market decline, most investors sell their portfolio as they are motivated by a fear that the market will not recover," he says.

IPP Financial Advisers investment director Albert Lam says investors usually panic for one or more of the following reasons:

> A weak level of confidence in their investments as they did not do their research properly before buying them.

> Overexposure to certain investments due to inappropriate asset allocation or not diversifying adequately.

> The influences of market sentiment - such as fear and panic - instead of weighing up facts about the economy and investments.

> Forced selling kicking in when shares hit margin calls. This would be an issue for investors who borrow money to buy these shares but do not have the cash to top up their loans.

> "Shorting" of securities where investors sell shares they do not own as they believe the market will fall and they can later buy the shares at lower prices. However, if they are wrong and the market rises instead, they are forced to buy the shares at higher prices to cover their short positions.

Mr Lam says that investors should firstly ascertain whether there is a valid reason to sell quickly. "If the reason is invalid and he had previously done his research appropriately and engaged the services of a competent financial planner to draw up his asset allocation, chances of him panicking would be reduced greatly."

If the foundation for the investment decision is still intact, there is no valid reason to sell quickly - regardless of what is happening in the market.

How to stay calm

THIS tricky topic of dealing with market volatility was of vital interest to the 1,800 participants who attended an investment seminar organised by online unit trust distributor Fundsupermart recently.

Fundsupermart general manager and seminar speaker Wong Sui Jau has one important piece of advice: Remember that markets always recover.

"Markets cannot drop 5 to 10 per cent every day. Have faith that markets and economies are self-correcting, they won't go down forever," he says.

In fact, Mr Lam advises that quite often, market selldowns present buying opportunities for the calm investor. This means that if there is an investment which you believe is fundamentally good, then you have an opportunity to buy in at a lower price.

Here are some tips on staying calm regardless of market conditions:

> Diversification

Spreading your investment across many assets helps to eliminate some risk. This is because as we add more securities to a portfolio, the exposure to any particular source of risk becomes smaller.

This is why most financial experts typically recommend unit trusts as an investment tool as each fund comprises large numbers of securities across different asset classes such as bonds, property, resources and equity. Different classes get different weightages, depending on their prospects.

> Keep investing

A speaker at the Fundsupermart seminar, Aberdeen Asset Management Asia's senior investment manager of Asian equities, Ms Flavia Cheong, says she believes in the advantages of investing consistently. In fact, she plans to be "more aggressive" in her investing now that the markets are more volatile, and look for value buys.

Mr Harvey notes that the markets are difficult to predict and can move quickly. Also people generally lack a sensible framework for going into and out of the market - so fear and greed play out.

A case in point was the market selldown in the May to June period last year when the benchmark Straits Times Index (STI) slid by about 14.5 per cent, spooked by fears over interest rate hikes. However, the STI ended at 2,991 at year-end, up 12 per cent from the May to June period.

Says Mr Lam: "There were some clients who liquidated their investments totally during the correction. Very few who did so know when to re-enter the market. For clients who decided to ride out the volatility, the value of their investments would have been higher by the end of the year."

This shows that timing the market is difficult and dealing with market sentiment is tough. Usually, investors reason that prices will fall further when markets look low, which prevents them from taking up buying opportunities. Most investors will re-enter the market only when prices move back up. But by then, they could have missed the best prices.

Says Mr Lam: "Therefore, a more practical strategy is to stay invested if an investor thinks it is only a correction and not a change in trend.

"However, if he ascertains it is a change in trend from a bull to a bear market, he must review and re-strategise his portfolio to go defensive, such as having more fixed income assets."

> Maintain a long-term perspective

Research over many years has shown that equities rise over time and will outperform cash and bonds and give some protection against inflation.

By investing in and remaining invested in equities, investors can benefit from this trend, says Mr Harvey.

"To survive volatility and prosper during the inevitable recovery, a good investor should have a portfolio that has three strong elements - quality, value and diversity. And then, given a period of time, he would be able to reap better than average returns."

> Talk to your financial adviser

Speaking to your adviser during market volatility will help you avoid making potential mistakes resulting from emotions such as fear and greed.

Tackling Current Market Strategy

As the bloodshed spilled on the Asian market yesterday, you can see that more downside can be seen as both STI and HSI broke their support point.

Today, I expected Asian market to go down more as US market will factor in the drop tonight. Thus buy some index put warrant when market seems to rebound today e.g. HSI put warrant with expiry date in February with considerably high volume transacted. Although I don't encourage holding on to any stocks or warrants in this volatile period, I guess it should be safe to sell tomorrow for some profits.
Cut loss if the trend is reversing.

A sea of red

Today must be a sad day for traders and investors alike as they see a sea of red on the portfolio and the world market.
I have already pre-warned a volatile week ahead and urge those who do not have the capital to hold to stay sidelined for the time being.

If tonight US stay green, tomorrow we might see STI and HSI have a short rebound.
But then again, do not hastily jump into the wagon.
Preserve your capital and stay alive until stronger signals appear to indicate the market trend and direction.

Live values of the revamped Straits Times Index (STI)

INVESTORS take note: Live values of the revamped Straits Times Index (STI), along with the 18 new FTSE ST indexes, will be available free on five websites once they are launched tomorrow.

This was announced jointly by Singapore Press Holdings, the Singapore Exchange and Britain's FTSE Group yesterday.

Market watchers will be able to obtain real-time index values of the revamped Straits Times Index (STI), along with the 18 new FTSE ST indexes at the following websites:

* Singapore Press Holdings:
btstocks.asiaone.com/keyIndices.html
* Singapore Exchange:
www.sgx.com
* NextView:
www.investasiaonline.com
* ShareInvestor:
www.shareinvestor.com and www.listedcompany.com
* FTSE will display the end-of-day index values on its website at www.ftse.com/st

International data vendors Reuters, Bloomberg, Telekurs, IDC, Thomson Financial and Factset will also carry values of the revamped STI and the new indexes.