Singapore Markets closed

STI up 1.1%

However there could be a technical correction soon.

OCBC Investment Research said:

The strong surge overnight on Wall Street could continue to lift local sentiment; but we do not rule out a technical correction in the coming days after the recent strong gains (STI +9% since 16 Nov).

Although the STI jumped 1.1% yesterday to close above 3200, we note that the bulk of the interest was in small caps – average value per unit traded was only S$0.32 each.

We also note that the daily MACD is close to initiating a negative cross-over; stochastic indicator suggests that the market is not only heavily overbought but has also just cut down.

As such, failure to clear 3259 (May 08 high) could precipitate some profit-taking.

Nevertheless, we could still continue to see some switching into high-beta plays (cyclical commodities etc) and other situational small-cap plays, as risk appetite returns.

IG Markets Singapore meanwhile noted:

On the local front the STI rocketed 1.1% as it finally broke through the 3200 threshold and scored a 17-month high. Coupled with GDP data posting a 1.1% gain for GDP the year has begun with a bang.

Sadly the same cannot be said for the long-running saga for control of Fraser & Neave after the Thais continue their frustrating game of cat and mouse with OUE.

Yesterday TCC simply extended its deadline yet again without improving its $8.88 a share offer disappointing market watchers. With OUE’s own deadline today it seems highly unlikely it will improve its own $9.08 a share offering.

F&N’s share price edged down yesterday on the lack of news out of the Charoen camp and could see some fizz taken out of it again if no improved offer materialises this week. A severe lack of conviction for rival bidders now has F&N shareholders questioning their real motives.

Today in Singapore we’ll look to push further above the 3200 level, which had been a looming barrier at the end of 2012. At the open we are pricing a further 0.5% gain for the STI.

More From Singapore Business Review