Joey was interviewed on 938 Live after the trading session ended on Friday, 5 February 2016. Do check out his quick views on the market as on the back of a strong rally seen today. Are there any counters one can consider to bargain hunt after the recent weakness? Or can the STI continues the rally next week?
The full transcript of the interview can be seen below too.
Why is the stock market moving sharply higher today?
Singapore market opened up 11 points today taking the cue from Wall Street with DOW Jones closing up 80 points. We then started to see market strengthen further with banks and a broad rally of blue chips, with counters like SPH and SGX rebounding by more than 2%.
This was mainly due to news of the Bank of England signaling that interest rates will continue to stay at historic lows until 2018. In the US, there were also hints that the Fed won’t raise interest rates in March which is a boost on liquidity and sentiment.
So today was one of the few bullish days we have seen so far this year, with the STI rallying throughout the day and even closing up by 65 points at the day’s high.
The STI rebounded so strongly while the regional markets were more lackluster, what do you think?
Well indeed today was quite a surprise rally for the Singapore market compared to regional peers like Hong Kong and Japan, with the Nikkei even dipping down by 1.3%.
I guess it is mainly led by some of the key index component stocks like SingTel which surged up by more than 6% due to move above key a technical level. We have also seen SIA surging by close to 4% with the release of its 3rd Quarter results, where net profit was up by 36% yoy which is above expectations.
So I think these are some of the reasons why we are outperforming the other markets today.
Going forward for the rest of the month, how do you actually expect the local bourse to perform?
Well, this year had one of the worst starts in more than a decade for the US and Singapore markets with the STI falling by more than 10% last month before stabilizing a little.
Essentially, there are still lingering worries over the slowdown in China and the global economy. Oil still continues to be the main driver of concern. Just 2 weeks ago, we have seen crude oil tanked below the US$28 multiyear low before recovering to about US$32 now.
The huge declines seen in oil and gas counters last month has kind of abated for now, but the trend is still down for most in this sector.
On the whole, STI has been supported above the 2530 level for more than 2 weeks where we saw some bargain hunting taking place and it seems like a good support for now. With the rally seen today, we can expect more strength in the near term back to 2700 if the STI is able to cross above its key resistance at 2650 for now.
Let’s get your picks, are there stocks that are worth looking at?
Well, given the current market uncertainty, one can consider accumulating defensive counters that have dipped and pay good dividends. One of them is Singtel which has a dividend yield of more than 4.5%.
Fundamentally, Singtel has the least exposure to Singapore telcom sector with regards to a potential 4th entrant as it has been aggressively expanding overseas and has a well diversified operation across Asia.
Technically, Singtel has been supported above the 3.40 for more than month. We have seen a move above the key 3.60 resistance today which can potentially lead to a reversal. One can consider bargain hunting again if it dips to near 3.60 or if it heads back to the 3.40 support for any rebound back up.
So it’s back to you Daniel.