STI suffers 'window-undressing'

Most analysts expect a difficult year ahead with much uncertainty shrouding the economic outlook

IN YESTERDAY'S report on the penultimate session for the year we pondered the possibility that the Straits Times Index (STI) might be 'window-undressed' instead of enjoy the widely-expected 'window-dressing' on its final day.

One reason for considering such a possibility was that the index had already moved up sharply on Monday; another was based on the argument that if window-dressing is aimed at making the books look better, then maybe the smart money would take the opportunity to dump bad assets, or sell into strength.

Whatever the case, the STI yesterday stood 16 points higher at 12.30pm probably because some in the market anticipated a final-second push, but after completion of the post-closing adjustments, it recorded a nett loss of 9.09 points at 1,761.56 probably as the smart money quickly sold into strength.

The final reading means that the STI lost just under 50 per cent for the year, both in local currency and US dollars. At the risk of understating the obvious, it was a disappointing performance, given that the bulk of analysts had this time last year predicted the index would rise above 4,000 by year-end.

It was also a disappointment to those who bought in response to Wall Street's Tuesday rally, though the latter was in all likelihood also due to window-dressing since it came in the wake of the release of awful consumer confidence and housing numbers.

Turnover yesterday excluding foreign currency issues was 457 million units worth $493 million, high by recent standards for a half-day session.

Excluding warrants and the index's advance-decline score of 7-20, there were 148 gains versus 118 falls in the broader market, suggesting that many players had no time to react to the late selloff in the index.

Not surprisingly, stocks which had led the STI up in 10 minutes between 12.20-12.30pm all ended weaker at 12.35pm. SingTel, for example, rose to $2.63 but ended unchanged at $2.55, DBS sold for $8.60 but ended a nett one cent weaker at $8.42 and UOB was ramped up to $13.18 before finishing at $12.92 for a nett loss of eight cents.

Unlike the over-optimism which marked predictions 12 months ago, analysts this time round are under no illusions about the market's prospects in 2009, especially in light of a worsening economy and a deteriorating earnings outlook. Most expect a difficult year ahead with much uncertainty shrouding the economic outlook.

Speaking of earnings, China shipyard Cosco Corp on Tuesday issued a profit warning because of doubtful debts and higher shipbuilding costs. It said its subsidiaries have received requests to delay payment from customers in view of the adverse global economic climate and the deteriorating shipping industry outlook. It warned that 2008 profits will be lower than 2007's. It saw net profit attributable to equity-holders of about $337 million for 2007.

'This guidance deviates significantly from FY08 consensus estimate of $425 million and our own forecast of $465 million,' said Kim Eng Research. 'We are downgrading Cosco to a 'hold' and cutting our price target to $1.35.'

The local broker said it now expects Cosco to report $321 million for 2008 and cut its FY09 forecast by 30 per cent to $408 million to account for further contract delays and cost overruns.

It also warned that there is risk of further downgrades because it is unable to determine the full extent of provisioning needed. Cosco's shares yesterday fell eight cents to 95 cents with almost 30 million shares done.

Source: Singapore Business Times - 01 Jan 2009

This morning STI seemed to be immune from Dow Jones' overnight plunge to 6-year low. STI only fell by 12 points as I write, staying above 1,600 points

Calm before the storm?

Mr Market anticipates Dow Jones to rally tonight?

Midas must maintain above 42c in order to finish its bottoming process.

If it trades below 42c, its previous low at 25c might be re-tested.

The immediate resistance is at 50.5c.

Millionaires come, millionaires go, markets go up, markets go down, wealth is being transferred around, changes are ongoing, BUT one thing NEVER CHANGES ======>

HUMAN NATURE

Dow and S&P 500 fall on profit worry, GE's outlool

NEW YORK - Stocks fell on Wednesday as a big rally faltered in the last minutes of trading on worry about the weakening corporate profit picture after a news report raised questions about General Electric's earnings outlook.

In a move that has been the trademark of the market's volatility ever since Lehman Brothers' bankruptcy filing in mid-September, the Dow plunged more than 300 points in the last 12 minutes, dashing prospects for the first back-to-back gains in a month.

Aside from the GE news, reported by Dow Jones with less than 15 minutes left in the session, traders said hedge funds and mutual funds were dumping stocks to raise cash to repay clients and lenders, while other investors were eager to lock in some profit from Tuesday's huge rally.

General Electric's stock fell 4 per cent in the last minutes of trading, only to end down 1.5 per cent at US$19.20.

Dow Jones reported that General Electric's Chief Executive Jeffrey Immelt said GE aims at keeping 2009 profits at the same level as this year, even if revenue drops 10 per cent to 15 per cent.

But after the closing bell, GE told CNBC that the CEO's comments were taken out of context and that Mr Immelt gave no new forecast. GE owns CNBC.

Trading was volatile after the Federal Reserve slashed interest rates by half a percentage point, the latest in the series of moves to keep the credit crisis from triggering a deep recession. Some traders had been speculating there would be a deeper cut.

The Dow Jones industrial average fell 74.16 points, or 0.82 per cent, to close at 8,990.96. The Standard & Poor's 500 Index declined 10.42 points, or 1.11 per cent, to 930.09. But the Nasdaq Composite Index rose 7.74 points, or 0.47 per cent, to 1,657.21.

In contrast, at about 3:30pm EDT, all three indexes were rallying near session highs: The Dow was up over 230 points, or about 2.6 per cent, at 9,299 and the S&P 500 was up over 20 points, or about 2.6 per cent, at 964, while the Nasdaq was up about 46 points, or about 2.8 per cent, at 1,695.

By 3:58pm, the rally was over, with both the Dow and the S&P turning negative.

Source: Singapore Business Times - 30 Oct 2008

Professor Yang Chen Ning, who won a Nobel Prize for Physics with Professor Lee Tsung-dao thinks a world depression like that seen in the 1930s would not happen for 2 reasons.

1, the productivity of the world is now on a completely different footing from the past, as countries are more interdependent and their economies tied more closely together.

2, he believed that China – with its population of 1.3 billions and an economy which has been growing at about 10% annually for the past 20 years – would be a main growth area which would help everybody else.

Wilmar is still in the downtrend, but its downward momentum seems to be slowing down with crucial support at 1.76, a level if broken will mean continuation of downtrend.

The immediate support is at 2.02 though, which was nearly broken today, signaling its determination to stay up. If Wilmar can stay above the 20-day SMA and subsequently break the resistance at 2.75, the signs of bottoming will be more apparent.

From technical point of view, it will be much safer to go long after it breaks above 2.75.