Published September 4, 2010  | ||||
Genting dominates; STI unexpectedly tops 3,000 By R SIVANITHY
WHAT would traders do without the Genting stable to fall back on? It's a question many can quite legitimately ask after this week's trading drew to a close yesterday, a session in which Genting's shares dominated activity - largely to the exclusion of everything else.
Granted, there was some interest in counters connected to renowned businessman Peter Lim. But by and large, Genting's supremacy in the punting stakes, already unrivalled over the past month, was further cemented yesterday when Genting Hong Kong surged US$0.12 to US0.42 with 368 million shares traded and Genting Singapore added two cents to $1.78 with 133 million done. The combined volume of half a billion units accounted for about 27 per cent of the 1.82 billion units traded, including foreign currency counters. Of course, of the two, Genting Singapore is by far the most visible and familiar since its physical presence is on Sentosa, which probably explains why the stock has been rising in the week since the company announced surprisingly good results. For the five days just passed, the stock has risen 18 cents or 11 per cent. As for the Straits Times Index (STI), it would be fair to say there is some degree of bewilderment associated with its gains, even yesterday's late 15.9-point push to 3,002.56. The fact that it managed a 64-point or 2.2 per cent rise for the week has had many scratching their heads, given the dismal economic picture coming from the United States and China's under-performance. Less of a mystery is the under-performance of property stocks, given the government on Monday announced its third set of property curbs in 12 months to rein in runaway prices. Over the week, City Developments, for example, dropped 74 cents or 6.2 per cent to $11.22, though it did manage a four-cent gain yesterday. Banks, in the meantime, have been conspicuously absent from the front line for months now. The latest property moves, which logically should curb demand for loans, should have a negative effect on the banks' bottom lines - surely a factor behind the sector's recent lethargy. Yesterday, though, UOB managed a modest rise, OCBC was firm and DBS was unchanged. Two local houses issued strategy reports during the week - neither of them particularly encouraging. DMG & Partners said it thinks the weak US economy will lead the STI lower in the weeks ahead and it is not too late to sell, while OCBC Investment Research (OCBCIR) spoke of the under-performance of the China market as a precursor to the same here. 'We noted that the STI P/B (price/book) historically fell below one standard deviation from the mean when there was great uncertainty and economic growth slowed sharply,' DMG said. 'The first occasion was in December 1996, some six months before the start of devaluation of Asian currencies that led to the 1998 Asian Financial Crisis, the second during the 2001 dotcom bust, the third in November 2002, before Sars attracted significant public attention in February 2003, and the fourth around October 2008, just after the announcement of Lehman Brothers bankruptcy. 'Given the current uncertainty in the market, we believe the STI could test 2,530, or 1.3x P/B over the next three to six months, even if no shocks surface.' Both DMG and OCBCIR recommend investors switch to a defensive stance.
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