US Debt Crisis & Singapore Stock Market

As of 11:48pm 26 July 2011, US Dow Jones industrial average is down by about 0.5% or 60+ points. US market is still trying to digest the uncertainties surrounding the US debt crisis. Weirdest thing is that Asian markets closed generally positive today. The markets have started to build in possibilities of US debt default and frankly, many of the Asian companies have stronger fundamentals that should be able to tide these companies against tsunami effect of a US debt default.

Sure, if there is indeed a default, many companies will be hit badly (it is indeed a financial tsunami) but the growth story is already in Asia, not US. Past the effect of the financial tsunami, business will still go on in Asia. Of course, many are confident that the Washington will arrive at a solution, and 2 August is not the final deadline for the debt default. Thus Washington does have more than a week to sort out the issue.

Focusing on Singapore market, the counters have performed fairly well this week. India's hiking of interest rate by 50 basis points, and the debt crisis seemed not to have any major effect on the Straits Times Index. It closed at 3,186.57, near the closing of 2010. Jardine ($49.91), UOB ($20.50), SembMarine ($5.44) and SingTel ($3.33) have all gained. 

So would the Singapore market performs tomorrow? My guess is that should US DJIA sustain above 12,500 tonight, things should turn out normal (if quiet) on 27 July 2011.

Full Day Trading on SGX from 1 Aug 2011

It is no longer news to many in the stocks market that SGX will be introducing full day trading from 1 August 2011.  There goes the 90 minutes lunch break which serves as much needed rest for the traders / remisiers. There are two clear advantages:

a) Investors can react faster to news, especially for news in Asia that can impact their stocks. Thus they can trade during the original lunch break to take advantage of market reactions.

b) More trading can happen since the number of hours for trading per day has effectively increased by 90 minutes. This benefits both SGX as well as the brokerage houses.

However, I don't see much advantage for the remisiers. The availability of lunch hours for direct trading, means more clients will switch to online trading at their own computers, essentially cutting down the number of clients for remisiers. Currently, clients who are only free during their lunch breaks, will be more comfortable to call their remisiers and place orders. In furture, they will just click at their computers.

I guess other than technology (online trading platforms), remisiers are now hit by developments of stock exchanges as well.

See related:
- SGX's 1st Full Day Trading - 1st Aug 2011

YangZiJiang - Coast is not clear (yet)

YangZiJiang has recovered from its recent low. However, the recovery is due in part from the macro developments (clarity from Greek debt and US stock market), as well as the company's clarification that it is not issuing any convertible bonds.

The outlook for YZJ is still not clear, i.e. not a rally in any sense. The general price is still trending within a downward channel, while the price may get stuck in the price range of $1.40-$1.42. This price range seems to be a resistance / support as previously noted.

YangZiJiang will need to break this trading range of $1.40-$1.42 over the next few days in order to trigger more confidence, from a trading perspective.

SGX - Bid Size Changes

From the 1st trading Monday of July (4th July), the bid size for SGX listed stocks will be changed. Thus it was with a bit of a surprise when I saw the prices of stocks this morning, i.e. not the usual price figures that I expected.

SGX website has done up a good summary of the changes, including an illustration. For a quick glance of the changes, here's an extracted table:

I'm not sure how this will affect the market. Not likely to have significant changes in my opinion.