Joey was interviewed on 938 Live after the trading session ended on Friday, 4 March 2016. This week has undeniably been the best week we have seen so far this year given the rally experienced. Are there still more upside with STI breaking above the 2800 level? What about Oil and Gas counters, is the worst really over? Do check out his quick views on the market to get an idea on the levels to watch and what to look out for.
The full transcript of the interview can be seen below too.
Joey how did the market fared today?
Singapore market opened up 5 points today taking the cue from Wall Street with DOW Jones closing up 45 points. The Singapore market then strengthened quickly and surged by another 30 points within the first hour.
This was led by banks where we saw DBS surged by more than 4% and OCBC by more than 2%. Even both oil and gas heavy weights like Keppel Corp and Semb Marine also surged by more than 5%. This was mainly due to strength in crude oil prices as it attempted to find a new high above the key US$35 yesterday.
So STI was positive throughout the day with occasional profit taking. At the final part of the trading session, buyers were out again in full force pushing up the index and finally we have STI closing up 49 points at the day’s high and at the week’s high at 2837.
Do you think the strength we have seen in the Singapore market this week will continue?
Well, this week is undeniably the best week we have seen so far this year where we have seen STI rebounded by about 9% from last week’s low. I think one of the key reasons for this week’s rally is due to expectations of more monetary easing after China cut its reserve requirement ratio for banks this week.
The other reason is that sentiment is now more bullish with crude oil prices rallying by more than 30% in the past 3 weeks to about US$35 now. This is due to developments that major producers may come to an agreement to reduce oversupply.
I think that if the STI were to maintain above the support at 2800 now, sentiments are still bullish. And if oil prices were to eventually cross above US$35 mark, we can potentially see renewed strength in oil and gas counters, like we are seeing now, which can further bolster the market and we are looking at a near term target at 2900 for the STI.
What are some of the stocks that we should look out for?
One can consider ST Engineering for potential upside. It has just released its results earlier in the week with FY 2015 net income of $529m which is above consensus.
Fundamentally, valuations are undemanding with it trading at the lower end of the P/E range at 16x currently. We are also looking at an attractive dividend yield of about 5%.
Technically, ST Engineering has cleared above the 3.05 key resistance level over the past few days which is a short term bullish. This level has held since Nov so any move up can potentially see more upside towards 3.20 in the near term. One can consider entry as long as the 3.05 level holds for now.