by R SIVANITHY (15 Nov)
Despite the volatility and notwithstanding Wall Street's generous Thursday bounce, the general trend appears to be down
THERE was no let-up in volatility this week, particularly for the major indices. Benchmarks in the US, Japan and Hong Kong rose and fell as much as 5 per cent per day, confounding anyone who thought markets would have settled down by now to the business of earnings and the economy.
Then again, maybe the volatility is conveying a message - to the effect that things are shockingly bad, and that the extraordinary bailout efforts by governments won't fix them overnight.
Adding to an already-confused state of affairs, the US Treasury said this week that it was abandoning the US$700 billion Toxic Assets Rescue Plan (TARP) or Bank Assets Rescue Fund (BARF) announced last month to help clean up banks' balance sheets and return them to solvency. Instead, it is looking at direct capital injections.
You don't need to be a genius to realise how negative a signal this is.
In effect, the US government has admitted that its best plan to save the financial system - one that was conceived after months of study - is flawed and has to be scrapped.
Predictably, this sort of signal sent the US stock market - and others with it - into a tailspin on Wednesday, although for some inexplicable reason, Thursday brought an equally large rebound.
As for local trading, a familiar bipolar pattern emerged during the week, with attention focused on a handful of big-caps on the one hand, penny stocks on the other - and little else in between.
This split - into the very big and very small - is a common occurrence in the local market and regular traders would easily recognise it. Hedge funds and institutions desperate to shore up flagging performance concentrate on blue chips, while syndicates and house traders gravitate to the pennies whenever there is any sign of strength.
Small-caps in focus this week included battered China plays China Hongxing Sports, Cosco Corp and Yangzijiang - apparently because they have been sold down hugely. Indonesian commodity plays Indofood Agri and Golden Agri also saw action after they released results.
Having just reported their Q3 earnings, the three local banks were in focus throughout the week, though the resulting downward revisions meant they all traded to the downside. DBS started the week at $11.40 but ended it at $10.34 yesterday, for a loss of $1.06 or 9.3 per cent. UOB's fall was $1.02 or 7.8 per cent, while OCBC's was 34 cents or 6.5 per cent.
SingTel was another big-cap to release its results - a 12 per cent drop in Q2 profit to $868 million. The stock fell 12 cents or 4.8 per cent over the week to $2.40.
Despite the volatility and notwithstanding Wall Street's generous Thursday bounce, the general trend appears to be down. The Straits Times Index yesterday ran up to an intraday high of 1,817 but ended at 1,759.14 for a net gain of a paltry 3.67 points.
Over the week, the index narrowly avoided a triple-digit loss, falling 98 points or 5.3 per cent. Every day, it tailed Hong Kong's Hang Seng Index closely, providing investors with a first-rate advance indicator of how Wall Street might perform later each day
-Editorial Report by R SIVANITHY (15 Nov)
Despite the volatility and notwithstanding Wall Street's generous Thursday bounce, the general trend appears to be down
THERE was no let-up in volatility this week, particularly for the major indices. Benchmarks in the US, Japan and Hong Kong rose and fell as much as 5 per cent per day, confounding anyone who thought markets would have settled down by now to the business of earnings and the economy.
Then again, maybe the volatility is conveying a message - to the effect that things are shockingly bad, and that the extraordinary bailout efforts by governments won't fix them overnight.
Adding to an already-confused state of affairs, the US Treasury said this week that it was abandoning the US$700 billion Toxic Assets Rescue Plan (TARP) or Bank Assets Rescue Fund (BARF) announced last month to help clean up banks' balance sheets and return them to solvency. Instead, it is looking at direct capital injections.
You don't need to be a genius to realise how negative a signal this is.
In effect, the US government has admitted that its best plan to save the financial system - one that was conceived after months of study - is flawed and has to be scrapped.
Predictably, this sort of signal sent the US stock market - and others with it - into a tailspin on Wednesday, although for some inexplicable reason, Thursday brought an equally large rebound.
As for local trading, a familiar bipolar pattern emerged during the week, with attention focused on a handful of big-caps on the one hand, penny stocks on the other - and little else in between.
This split - into the very big and very small - is a common occurrence in the local market and regular traders would easily recognise it. Hedge funds and institutions desperate to shore up flagging performance concentrate on blue chips, while syndicates and house traders gravitate to the pennies whenever there is any sign of strength.
Small-caps in focus this week included battered China plays China Hongxing Sports, Cosco Corp and Yangzijiang - apparently because they have been sold down hugely. Indonesian commodity plays Indofood Agri and Golden Agri also saw action after they released results.
Having just reported their Q3 earnings, the three local banks were in focus throughout the week, though the resulting downward revisions meant they all traded to the downside. DBS started the week at $11.40 but ended it at $10.34 yesterday, for a loss of $1.06 or 9.3 per cent. UOB's fall was $1.02 or 7.8 per cent, while OCBC's was 34 cents or 6.5 per cent.
SingTel was another big-cap to release its results - a 12 per cent drop in Q2 profit to $868 million. The stock fell 12 cents or 4.8 per cent over the week to $2.40.
Despite the volatility and notwithstanding Wall Street's generous Thursday bounce, the general trend appears to be down. The Straits Times Index yesterday ran up to an intraday high of 1,817 but ended at 1,759.14 for a net gain of a paltry 3.67 points.
Over the week, the index narrowly avoided a triple-digit loss, falling 98 points or 5.3 per cent. Every day, it tailed Hong Kong's Hang Seng Index closely, providing investors with a first-rate advance indicator of how Wall Street might perform later each day
-Editorial Report by R SIVANITHY (15 Nov)
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