STI starting to show signs of fatigue, says OCBC

The index failed to sustain itself above 2950 after closing just 0.1% higher at 2948.77.

OCBC Investment Research said:

With Wall Street shut for a holiday last night, the local bourse is likely to take its cue from the muted showing in Europe yesterday as well as the weak Nikkei start (now down 0.2%)

As mentioned earlier, we already noted that the STI is starting to show signs of fatigue; and looks ripe for profit-taking, especially after the recent strong gains of >5% since 27 Jun (>9% since 4 Jun).

With the STI having already covered the 2950-2987 gap yesterday, and also failing to sustain itself above 2950 after closing just 0.1% higher at 2948.77, the index could stage a pullback towards 2905.

Main hurdle remains at 3000; key support at 2850.

IG Markets Singapore meanwhile noted:

As the Libor scandal rumbles on and fingers point at more banks, Asia is asking how it may affect investors here. Firstly it should come as no surprise that Barclays is capable of such underhand tactics. British banks have an appalling record for mis-selling products and ripping off customers.

Thankfully the fallout from Barclays Libor tampering is likely to be minimal here unless you had a British tracker mortgage linked to Libor, during the period between 2005 and 2009. The scandal may spread to more banks as more details emerge.

Many Singaporeans have bought London properties which have been financed by UK lenders. If so check the small print to see what rate the home loan was fixed to.

The key here is that Barclays only attempted to influence Libor rates. There is no evidence it was actually successful, yet.

The other question is whether Singaporean banks could do the same here with Sibor. Unlikely. The bigger question is why would they bother, given how small the mortgage market is here while Sibor is not recognised as an international benchmark rate.