PUBLISHED JANUARY 20, 2014
STOCKS
Fundamentals to replace liquidity?
BY R SIVANITHY [email protected] SENIOR CORRESPONDENTPRINT |EMAIL THIS ARTICLE
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Low rates also meant money seeking higher returns flowed elsewhere, mostly to emerging markets (EMs) in 2012, for example, the Straits Times Index (STI) managed to rise to several five-year highs - PHOTO: REUTERS
FOR most of the past few years, stock markets were driven by liquidity considerations born of developed market (DM) central bank policy, with little regard for whether economic fundamentals were improving,
In fact, the worse the economic numbers, the better for markets everywhere, since a bleak outlook suggested the monetary support would keep coming.
So, it was that the investment equation was relatively straightforward for most of last year - the weaker the US economy, the higher the stock market because it meant the US Federal Reserve would keep buying housing market bonds, thus keeping a tight lid on interest rates and ensuring plentiful liquidity in the system.
Low rates also meant money seeking higher returns flowed elsewhere, mostly to emerging markets (EMs) in 2012, for example, the Straits Times Index (STI) managed to rise to several five-year highs. Those with memories that stretch back that far would recall urgings to buy Asia because of its superior growth actually, the basis for the recommendation was more because Asia was where money from Western DMs looking for higher returns was flowing.

20 January 2014

IG Morning Brief


STI (60 MIN)

One scenario: as long as 3131 is a support, a rise towards 3155 and even 3176 seems likely.

Alternative scenario: a break below 3131 would invalidate our bullish scenario. The index could then decline to 3115.




HANG SENG (60 MIN)

One scenario: as long as 23100 is a resistance, we are bearish with a target at 22565.

Alternative scenario: a break above 23100 would call for a bounce to 23255.



DOW JONES (60 MIN)

One scenario: as long as 16371 is support, we are bullish. In this case, the upside breakout of 16555 will trigger a bullish acceleration towards 16590.

Alternative scenario: a downside breakout of 16371 would open the way to 16315.



NIKKEI 225 (60 MIN)

One scenario: as long as 15630 is a support, we are bullish with a target at 16120.

Alternative scenario: only the downside breakout of 15630 will invalidate our bullish scenario. In this case, a decline should shape towards 15380.




SINGAPORE
The Straits Times index rose 0.22% or 6.89pts to 3147.33 (day range: 3147.33 - 3116.67) on Friday. The index is above its 20d MA (@ 3135) and above its 50d MA (@ 3143). 27% of the index constituents are above their 20D MA (vs 33% the previous session) and 33% of the shares are above their 50D MA (vs 40%). Appx. 17% of the stocks are 'overbought' based on the RSI14 indicator.

Singapore's non-oil exports gained 6.0% YoY in December (vs +1.0% expected, -8.9% in November), according to trade promotion agency International Enterprise Singapore. Electronics exports were down 3.1% (vs -1.3% expected, -8.9% in November).

Food & Beverage: Thai Beverage (THBEV: +1.85% to S$0.55) closed at a 3-month relative high against the Straits Times Index.

Industrial Goods & Services: Jardine Matheson (JM: +1.99% to $56.92) and Jardine Strategic (JS: +1.79% to $34.61) closed at a 3-month relative high against the Straits Times Index.

Real Estate: Hongkong Land Holdings (HKL: +1.91% to $6.4) closed at a 3-month relative high against the Straits Times Index.

Stock/Benchmark ratio(s) 50D MA cross under: Comfortdelgro Corp (CD: -1.02% to S$1.95), Genting Singapore (GENS: -1.34% to S$1.47).

HONG KONG
The HSI index rose 0.64% or 146.94pts to 23133.35 (day range: 23263.42 - 22849.1) on Friday. The index is above its 20d MA (@ 22981) and below its 50d MA (@ 23244). 49% of the index constituents are above their 20D MA (vs 40% the previous session) and 30% of the shares are above their 50D MA (vs 21%). In China, the CSI300 index fell 1.51% or 33.356pts to 2178.49 (day range: 2205.97 - 2175.88) on Friday. The index is below its 20d MA (@ 2256) and below its 50d MA (@ 2339). 14% of the index constituents are above their 20D MA (vs 20% the previous session) and 13% of the shares are above their 50D MA (vs 15%). Appx. 29% of the stocks are 'oversold' based on the RSI14 indicator.

COMMODITIES
WTI Crude Future (FEB 14) is up $0.6 to $94.57 this morning. The contract is below its 20D MA (@ $98.29) and below its 50D MA (@ $96.59).

Gold is about flat to $1242.1. The precious metal is above its 20D MA (@ $1225) and above its 50D MA (@ $1237).

Copper Future (MAR 14) on Comex is about flat to 333.55c/lb. The contract is above its 20D MA (@ 330.62c) and above its 50D MA (@ 326.76c). In Europe, the London Metal Exchange reported today its copper inventories decreased 1050 tons to 335775 tons