STI set for firmer open

Analyst says the index looks over-due for a rebound.

OCBC Investment Research said:

The recovery on Wall Street Friday and the Nikkei’s strong start (now up 2.2%) are likely to give the local bourse a much-needed lift.

Technically, the index also looks over-due for a rebound, as the market has been quite heavily oversold recently.

However, we note that the STI has fallen below the key 2953 support (38.2% Fibonacci retracement of the rally from 2601-3110). The daily MACD has also fallen below the centre-line and is currently still looking quite negative.

As such, the index’s failure to clear the key 3000 hurdle could see it easing back towards the next key support around 2904.

IG Markets Singapore meanwhile noted:

In Singapore, the Fraser & Neave drama will enjoy another twist this week when a largely defunct 22 November deadline kicks in for the conglomerate to consider the $8.88 a share offer from the Thais.

After OUE’s $9.08 a share offer was launched last week it threw the ball back in Thai tycoon Charoen’s court to come up with an improved offer. The clock is now ticking as shareholders wait to see what he’ll come up as he looks reluctant to give up the fight for F&N.

But shareholders will definitely have to wait for any bumper payday. F&N has said it won’t distribute the $54 billion proceeds from its sale of Asia Pacific Breweries back to shareholders until the takeover tussle is over.

If Charoen has his way, there will be no such capital reduction.

The futures market is pointing to a firmer open for the STI this morning as it looks to start it push back to the promised land of 3000, after slipping back to 2945 last week.

Returns for the STI this year have dropped to 11% and are less than spectacular as the second half of the year fails to live up to a strong first six months.