(latest updates) Singapore Economy evades contraction by 0.1% margins. (Market will rebound for share counters which are depressed due to recessionary fears) Till Q4
Sandwiched between US and China (Truce at the moment)
Compromises made between economic giants such as US and China can only be made possible by a few main factors
- Political Agenda (Applies to US only)
- Economic Agenda (To both US and China)
- Inverted Yield Curve
- 10 Year US T-bills yield less than shorter term T-Bills
Basically this truce is to cushion the blow of the next financial reports at the next quarter of the fiscal year. The common fear between the super powers is that the bleakness in addition to trade tensions will trigger a recession which will devastate the financial markets. Understanding how the main egos are reacting hints to the possibility of a possible recession.
How does this related to SG market
Singapore cautions slowing of market in early 2019
Such news about possible slowing of markets prepares the economy for a potential recession. This is to ensure that in the case of a recession (I.e. DGP growth become less than 0), the market would not be caught off guard, leading to excessive reaction. I believe the charts are already showing signs of pressure from larger companies that they are not willing to allow their share prices to rally too much.
STI – Near Term (Daily Chart)
The convergence as shown on the daily chart, extrapolated by the weekly chart shows that there is likelihood for the market to hit uptrend support or breaking the support entirely. However, since the market is closer to the support rather than the resistance, investors are currently less active in making long positions. Though accumulations are common at this stage, my recommendation in near term is to stay out for non-swing trade positions.
STI – Till end of 2019 (Weekly Chart)
Depending on the sincerity of the truce between US and China, I believe that there might be a mini rally for Singapore market if it rises about 3222 before the end of 2019. (Showing signs of temporal peace) In such case, I will recommend reentry in stocks if it has passed the fibonacci resistance as shown below.
Author Calls
- STI might be more reactive than usual to US and China news on trade
- STI is still cautious (Unable to recover in near term)
- Impending bad news from businesses when next Quarter reports are out
- No long positions recommended
- Good opportunities for light Swing Trades (SG banks)
Thank you all for spending your time, hope my perspective can help provide some support or refining of your original thoughts of the market. Cheers!
