All eyes on Olam

It will find out what traders thought of the rebuttal against Muddy Waters.

OCBC Investment Research said:

The rebound on Wall Street overnight and the positive Nikkei start (up 0.6% now) are likely to boost local sentiments.

As a recap, the STI initiated a pullback yesterday but managed to bounce back from its intraday low to close just 0.1% lower.

And with today’s tone likely to improve steadily, we could see the index heading higher in the direction of the 3020 support-turned-resistance again.

Beyond that, the next obstacle lies at the 3060 hurdle (various peaks). On the downside, 3000 psychological level is still the initial support, followed by the subsequent base at the 2980 resistance-turned-support.

IG Markets Singapore meanwhile noted:

In Singapore, the Olam/Muddy Waters spat is rumbling on. The commodity player will find out today what traders made of its 45 page rebuttal against Carson Block’s allegations for those who could be bothered to read it.

Olam’s board will hope announcing the support of key shareholder Temasek will steady the share price, which dropped almost 4% yesterday. Having touched the $1.50 level, it could signal an entry point for bargain hunters who feel the stock has been oversold during this crisis of confidence.

And credit where credit is due. For every harsh accusation the headline-grabbing Block has made Olam has come back with an appropriate response. It said the Muddy Waters report showed a “shocking lack of understanding of basic accounting standards”.

Olam clearly wants to move on from this high-profile slanging match and get back to business. But sadly, contrary to what the not-so Sunny Verghese thinks, some mud has stuck.

Today the futures market points to a firmer open for the STI this morning.