Singapore: STI Index (.STI) belief that consumer prices will rise by 3.1% over next 12 months

Singapore: STI Index (.STI) belief that consumer prices will rise by 3.1% over next 12 months

Singapore: STI Index (.STI) belief that consumer prices will rise by 3.1% over next 12 months

Singaporeans expect consumer prices to remain stable in the year ahead, believing prices will rise by around 3.1 per cent over the next 12 months.

This is a little over the 2.9 per cent expected inflation rate polled in the previous quarter for the Singapore Index of Inflation Expectations, which was relaunched yesterday at the Singapore Management University (SMU) School of Accounting.

The respondents also predict core inflation to come in at 3.1 per cent, slightly more than the 3 per cent polled in December. Core inflation excludes private road transport and accommodation costs.

The latest poll, conducted last month, was not a steep uptick in inflation expectations and could be cyclical, considering that the six-year average for the first quarter is 3.4 per cent, said SMU assistant professor of finance Aurobindo Ghosh.

Prof Ghosh, who is the study’s principal investigator, said “overall inflation has been largely benign” since the Monetary Authority of Singapore tightened its monetary policy twice last year and chose to make no changes in its latest policy review last week.

While global oil prices increased slightly, this was countered by downward price pressures due to deregulation in Singapore’s open electricity market, he added.

First started in 2011, the online quarterly survey polled some 500 randomly selected individuals who represent a cross-section of Singapore’s households.

But survey respondents have continued to overestimate the published level of inflation in the survey since 2014. The latest estimate of 3.1 per cent comes despite the fact that full-year inflation rates have not surpassed the 1 per cent mark since 2014.

In contrast, economists forecast inflation to come in at 1 per cent this year, and 1.5 per cent next year, according to a Bloomberg consensus poll.

Speaking at the event, Dr Taimur Baig, DBS’ chief economist and managing director of group research, said what matters is how Singaporeans change in their interpretation of inflation, even though the level of estimated inflation is not necessarily accurate.

As consumers’ expectations of inflation influence how they purchase goods or make long-term investment decisions, such an index could be useful from the market perspective as businesses can better understand the thinking of consumers, he added.

To this end, DBS has partnered the researchers at SMU’s Sim Kee Boon Institute for Financial Economics to refine the survey even further, coming in as a co-sponsor with $46,000 in funding.

Professor Timothy Clark, who was appointed provost of SMU in February, said such household surveys can be useful in gauging the credibility of central banks and offer a different perspective on the economy. They can also be used to improve public communication about inflation.

“Firms also take into account inflation expectations, harnessing the information as a guide for understanding investment decisions, longer-term business planning, price-setting behaviour and labour market hiring,” he added.

Overall, the bias in prices is: Upwards.

By the way, prices are vulnerable to a correction towards 3,261.50.

The projected upper bound is: 3,401.40.

The projected lower bound is: 3,302.45.

The projected closing price is: 3,351.92.

Candlesticks

A white body occurred (because prices closed higher than they opened).
During the past 10 bars, there have been 8 white candles and 2 black candles for a net of 6 white candles. During the past 50 bars, there have been 32 white candles and 18 black candles for a net of 14 white candles.

Momentum Indicators

Momentum is a general term used to describe the speed at which prices move over a given time period. Generally, changes in momentum tend to lead to changes in prices. This expert shows the current values of four popular momentum indicators.

Stochastic Oscillator

One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 57.4693. This is not an overbought or oversold reading. The last signal was a sell 5 period(s) ago.

Relative Strength Index (RSI)

The RSI shows overbought (above 70) and oversold (below 30) areas. The current value of the RSI is 73.80. This is where it usually tops. The RSI usually forms tops and bottoms before the underlying security. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a sell 2 period(s) ago.

Commodity Channel Index (CCI)

The CCI shows overbought (above 100) and oversold (below -100) areas. The current value of the CCI is 90. This is not a topping or bottoming area. The last signal was a sell 6 period(s) ago.

MACD

The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a buy 12 period(s) ago.

Rex Takasugi – TD Profile

STRAITS TIMES closed up 16.600 at 3,348.640. Volume was 1% below average (neutral) and Bollinger Bands were 50% wider than normal.

Open High Low Close Volume___
3,334.8403,353.0803,333.8803,348.640 201,255,200

Technical Outlook
Short Term: Overbought
Intermediate Term: Bullish
Long Term: Bullish

Moving Averages: 10-period 50-period 200-period
Close: 3,327.69 3,248.63 3,181.32
Volatility: 4 10 15
Volume: 230,873,744 216,027,648 218,257,856

Short-term traders should pay closer attention to buy/sell arrows while intermediate/long-term traders should place greater emphasis on the Bullish or Bearish trend reflected in the lower ribbon.

Summary

STRAITS TIMES is currently 5.3% above its 200-period moving average and is in an upward trend. Volatility is low as compared to the average volatility over the last 10 periods. Our volume indicators reflect very strong flows of volume into .STI (bullish). Our trend forecasting oscillators are currently bullish on .STI and have had this outlook for the last 10 periods. Our momentum oscillator is currently indicating that .STI is currently in an overbought condition.

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