Significant improvement unlikely for STI

On Friday the index traded sideways pretty much of the session before closing just 0.1% higher, says OCBC Investment Research.

OCBC Investment Research said:

The mixed reactions on Wall Street last Friday night and the weak Nikkei start (down 0.2% now) are unlikely to provide any positive cues for the local bourse this morning.

As a recap, the STI had a rather muted session last Friday; following a 0.2% lower opening, the index traded sideways pretty much of the session before closing just 0.1% higher.

And with today's tone unlikely to see any significant improvement, we could see the index continue its consolidation around current levels with the immediate obstacle still capped at the 3100 immediate resistance (upper limit of gap resistance).

Beyond that, the subsequent obstacle lies at the 3140-3172 gap resistance. On the downside, the immediate support can be found at the 3020 minor trough, followed by the next base at the 2980 recent troughs.

IG Markets Singapore meanwhile noted:

Singapore traders will be hoping to move on from last week’s mixed bag of local economic news to focus on a slew of data out of the world’s biggest economy this week.

The Singapore economy was very much in focus with revised GDP and export figures released last Friday.

The STI has powered ahead more than 15% this year, although this has not been in a straight line.

But much of this stellar performance, when the global economic recovery hangs in the balance, has been thanks to the confidence in the local economy. But Friday’s data showed some cracks starting to appear in the solid ship called the Singapore economy.

As growth shrank by 0.7% during the last quarter, exports also took a tumble dropping 3.3%, on a quarter-on-quarter basis. But it is not all bad news as in the first half of the year exports are actually up 5% compared to the same period last year.

While the economy and stock market stand head and shoulders above many other developed economies during this difficult period, we would be naïve to think there wouldn’t be some repercussions.

On a stock-specific level we were reminded of this by Genting which has long been the darling of the local traders with stellar gains from its Resorts World casino.

It saw Q2 net profits plummet 32% while its share price is down 15% so far this year.