Joey was interviewed on 938 Live after the trading session ended on Friday, 18 August 2017.
After hitting a new high about 3 weeks back led by banks and property plays, we started to see some profit taking with STI pushing to a new low this week. Want to find out the reasons behind the weakness?
More importantly, can the recent weakness still continue or can the bulls come back to regain control like we have experienced in the 1st half? Also, what are some of the key levels we should keep an eye on for the STI and what are the stocks that one can consider bargain hunting now in light of this weakness?
The full transcript of the interview can be seen below too.
Joey, how did the markets fare today after a heavy sell down over a Wall Street overnight?
The Singapore market opened down 12 points today, following Wall Street’s sell down with DOW Jones closing down 274 points.
This was mainly due to rising doubts on Donald Trump’s ability to push through with his economic policies and also uncertainty over a terrorist attack in Spain.
Back at home, the STI sold down by close to 20 points in the morning led by weakness in banks like OCBC, and DBS and also heavyweight property counters like Citydev.
We started to see buyers coming back in the afternoon with most of the blue chips rebounding from their day lows but still not enough to bring STI into positive territory.
So STI was mostly negative throughout the day with occasional bargain hunting and finally we saw STI closing down 17 points at 3252.
Yet the STI hit record highs last month and like you said saw heavy selling over the past 1 week. Is there any specific reason for this and how do you think the STI will fare going forward?
Well indeed, the STI has hit a new recent high at 3354 about 3 weeks back in July before we started to see some profiting taking with STI falling by about 100 points since then.
The reason for the weakness is due to US markets pulling back on fears that the market was moving ahead of valuations and also worries over geopolitical tension involving North Korea.
We have also seen crude oil prices tumbling by more than 6% over the past week leading to a sell down in oil and gas heavy weights like Keppel Corp thereby pulling the STI index down further.
From a technical perspective, though it might seem a little gloomy lately, some long opportunities may start to emerge on this recent sell down.
To recap, STI has been supported above the key 3200 level since May and we can still see more upside with this level holding with some bargain hunting expected near it.
Let’s talk about that bargain hunting then before we let you go Joey. Are there any good bargains from your point of view for investors right now?
One can consider bargain hunting on some of the blue chips like banks, DBS and OCBC which have sold down on recent market weakness.
They have recently released their 2nd quarter results beating market expectations.
Fundamentally, both DBS and OCBC have achieved broad-based loan growth of 1.5% and 1.8% QOQ respectively and also fee income growth. Valuations are still looking attractive at current price levels after the dips seen.
Technically, we are seeing both of them approach their key support levels which is 20.20 for DBS and 11.00 for OCBC. So we may start to see buying coming back soon leading to a potential rebound on a specific price action.
Back to you.