As of Friday last week, 306 SGX-listed companies had released their third quarter ended 30 September financial results. 83 per cent of these companies registered net profits. The combined earnings of all 306 companies rose 10.2 per cent over the corresponding period last year to S$7.05 billion. The good showing is bolstered by the three local banks, Wilmar International and the rig builders. (Source: The Business Times Weekend, 14-15 November 2009)
With most listed companies having reported their third quarter results, the financial information had been factored into the recent share price rally of these stocks. The next major share price movement will be dictated by interest rates and currency rates of major economies. The removal of stimulus packages over time will have a huge impact on the economies and by extension cause an impact on the stock prices.
For now, it is “business as usual” because most economies have promised to keep to expansionary fiscal and monetary policies. Interest rates are still kept relatively low for the time being to boost economic growth and employment rates.
Most economies may have shown positive GDP growth in the third quarter of 2009, but this growth is still fragile. Cautious optimism is shown as IMF and some nations are not expecting a second dip in economic growth.
For the whole of 2009, my expectation that it will be better than 2008 since we see the worst in 2008 when the global financial crisis first hit, which carried on into the first quarter of 2009. The write-off of assets and investments by companies at end of 2009 will be less than in the last quarter of 2008 and the first quarter of 2009. This is some comfort and the recent rallies in share markets have already considered this aspect.
Written on 11/17/2009 5:11 PM
Copyright © 2009, the author known as LKT in Singapore.
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