Normal trading should resume, but what’s ‘normal’?
It’s a worrying situation that encapsulates the new “normal” the local stock market finds itself in.
Remisier kings
The cousins who have taken over Peter Lim’s throne View PDF
Popular posts from this blog
Ex-bank owner Agus Anwar declared bankrupt
Prominent former bank owner Agus Anwar was yesterday declared bankrupt by the High Court.
Two ex-UOBKH staff charged with lying to MAS over due diligence reports on a Catalist aspirant
TWO former senior employees of UOB Kay Hian Private Limited (UOBKH) were charged on Wednesday for allegedly lying to the Monetary Authority of Singapore (MAS) in relation to reports on a then Catalist aspirant. Lan Kang Ming, 38, and Wee Toon Lee, 34, each face three charges of providing MAS with false information in October 2018 in relation to due diligence reports on an unidentified company applying to list on the Catalist board of the Singapore Exchange. MAS said in a media statement on Wednesday that it was performing an onsite inspection of UOBKH between June and August 2018, to assess the latter's controls, policies and procedures in relation to its role as an issue manager for Initial Public Offering (IPOs). During the examination, Lan and Wee were said to have provided different versions of a due diligence report relating to background checks on a company applying to be listed on the Catalist board of the Singapore Exchange. UOBKH had acted as the issue manager
Comments
R Sivanithysivan
08 December 2014
Now that the dust has settled on last week’s trading system glitch which disrupted trading on Wednesday, the market here can get back to normal. Or at least everyone hopes so, because what exactly “normal” means for the local market is difficult to say. By itself, the word implies a market with activity and interest where people go to trade and there’s plenty exchange ideas but in recent months “normal” has come to represent rather dull trading marked by low volatility, low volume with most of the action focused on only a handful of stocks at any one time.
So what does “normal” really mean for the Singapore stock market? As it stands today, it encompasses many other meanings, one of the more noticeable being a decoupling from regional leaders Tokyo and Hong Kong most of the time, and from global leader Wall Street some of the time.
This disconnection from overseas leaders may be dismaying to those who would have liked to trade on the volatility that spills over here from those markets but, for those players with less risk tolerance, it would probably come as a relief.
However, even though swings in those markets appear to have very little impact here, it does look as if the launch of the Shanghai-Hong Kong connect a fortnight ago may actually have hurt the already weak business done on Singapore Exchange (SGX) - it probably hasn’t escaped the notice of close market watchers that Shanghai and Shenzhen stocks have leapt skywards in massive volume over the past month, possibly at the expense of the local market.
One dealer summed up this thinking when he said “quite often in the past two weeks, our index rises in the morning but weakens in the afternoon. I have a feeling people are selling into strength to raise cash to go and play in China”.
As for Wall Street, its dozens of all-time highs this year have hardly had an impact here. The decoupling’s roots can be traced to May 2013 when the US Federal Reserve announced it would start “tapering” its QE (quantitative easing) monetary support for the economy, an announcement that prompted a flight of money out of Asian markets back to the US. For those who recall it, the fashionable theme which evolved was “sell EMs, buy DMs”, with EMs being emerging markets and DMs being developed markets, mainly the US.
That play appears to be still very much in vogue - Wall Street’s indices on Friday closed at new all-time highs again. The relentless rise of equities there over the past 18 months only confirms what we’ve said many times before here - the US market is the world’s default “safe haven”, even if its domestic economy is still struggling.
Of more relevance to players here is whether that new record will have any impact here this week, a question which is best answered by pointing out that the Straits Times Index had already shot up on Friday ahead of that all-time high.
Meanwhile closer to home, concerns over China’s economy are still very prominent, although this doesn’t seem to have deterred punters, who, as noted earlier in this column, are piling into its stock markets.
“Normal” for the local market now also means weakness in the offshore oil sector, though fortunately for shareholders of the companies concerned, there are signs of stability which emerged late last week. One suspects that the selling has been overdone and that, as always, prices have overshot on the downside.
Last but not least is that “normal” here means the prolonged absence of retail investors. Some are believed to have shifted their trading from remisiers to private banks and other platforms while others have yet to return since last year’s penny stock crash.
It’s a worrying situation that encapsulates the new “normal” the local stock market finds itself in.