STI corrected

The Straits Times Index (STI) could not break through the 2,400 points level. It came close to the level on 5 June (2,396) and 10 June (2,391). Today, STI saw a 60.51 points or 2.55% decline to 2,316.56. It stopped the recent rally seen in May and early June. The bears came out in force to put the bulls on their tracks.

 

There is no guessing where the STI will head as both bulls and bears are battling for supremacy. That is the nature of the uncertain state of affairs of the global economies. Realists see a longer period for recovery of the global economies. Optimists see “green shoots” will lead to recovery before the end of this year. So buying equities now is the right thing to do. One reason attributed to the recent rally was liquidity driven. In addition, traders fueled the rally for fear that they may have “missed the boat” if they did not catch the rally.

 

There was no major news on economic performances of major economies. Hence, we witness the tussle of the bulls and the bears. There are only speculations and that is how the stock markets are behaving now. We will have to wait for end of this month to assess the economic performances for the second quarter of the year.

 

In the meantime, the latest labour market report from the Ministry of Manpower (MOM) stated that the seasonally adjusted overall unemployment rate rose to 3.3% in March 2009 from 2.5% in December 2008. The resident unemployment rate increased to 4.8% in March 2009 from 3.6% in December 2008.  (MOM, Press release, 15 June 2009) This does not augur well. It will be worse for those who are unemployed. Hence, it will be wise to be careful on spending and be cautious in investment in shares.

 

Written on 6/15/2009 9:46 PM

 

Copyright © 2009, the author known as LKT in Singapore.

 

The material presented is intended to be general and written in layman’s language as much as it is possible. The author shall not be liable for any direct or consequential loss arising from any use of material written. Please seek professional advice from your financial advisor or financial institutions on material written covering financial matters.

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