Exuberance of stock market players

The Straits Times Index (STI) climbed too quickly in May.

Date STI Change (%)
28 Apr 3,175.44  
2 May 3,211.11  
3 May 3,237.81  
11 May 3,271.11 + 3.01%

The STI jumped to its highest on 11 May at 3,271.11 points. This is an increase of 3.01% in mere in 2 weeks.

The institutional players bought big into the 3 local banks based on data provided by SGX (for week of 8 May).

Counter Net Buy
OCBC $105.6 m
DBS $63.1 m
UOB $25.6 m

The net sellers of these counters were the retail investors.

Counter Net Sell
OCBC $(123.7 m)
DBS $(107.1 m)
UOB $(35.1 m)

Institutional players have the financial capacity to move the price of stocks. These players do not feel as much pain when making buy or sell decisions when compared with retail investors. So it is common to see share prices move up or down by more than 1% within a day. You can see this played out in the bank shares in the past week.

The STI is now trending downwards. Since the peak on 11 May, the STI is now at 3,218.13 points (at 1.28 pm). This is a drop of 1.6%.

I am still cautious with the equity markets. What I did for past week was to sell off the bank shares to take in profits. This reduced my overall exposure to the Singapore equity market. I intend to invest in STI Exchange Traded Fund so as to reduce exposure to a single sector of the market.

Copyright © 2017, limkimtong for Living Investment

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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