Singapore: STI Index (.STI) financial analysts have turned cautious on China stocks

Singapore: STI Index (.STI) financial analysts have turned cautious on China stocks

Singapore: STI Index (.STI) financial analysts have turned cautious on China stocks

Singapore companies have been on a global acquisition spree. Companies in Singapore have announced US$91 billion (S$125.7 billion) of overseas deals this year through September. The figure is more than double the US$41.9 billionrecorded in the corresponding period last year.

Total number of deals increased 7.8% from last year to 468. The higher number of deals in Singapore far outpaced global merger & acquisition, which only increased 2%. China continues to be a prime target for Singapore companies, as many Chinese companies sell off assets to strengthen their balance sheets. Firms from Singapore have been involved in 68 acquisitions of Chinese companies year-to-date. The volume of such transactions increased more than five-fold from US$3.8 billion to US$19.5 billion.

Aston Martin made its much-anticipated debut on the London stock market on Wednesday. The IPO price was £19, valuing the firm at £4.3 billion. Its shares ended the day at £18.10. The company has had a troubled past, despite the illustrious history and association with James Bond films. It has gone bust seven times in its 105-year history. The share sale raised around £1 billion for the firm, with 27% of the company now publicly traded. Aston Martin reported half-year profit of £42 million.

China’s manufacturing sector slowed in September. Purchasing Managers’ Index (PMI) stood at 50.8 (a reading above 50 signals growth) compared to 51.3 in August and lower than the median estimate of 51.2. The continued trade war between China and the United States has hindered growth. New export orders in the manufacturing PMI report fell to 48, the fourth straight month of contraction and its lowest reading in two years. The official non-manufacturing PMI was 54.9, reflecting still strong domestic demand for services and construction.

Meanwhile, private home prices in Singapore inched up 0.5% sequentially in the third quarter of the year. This was a sharp slowdown from the 3.4% and 3.9% rise recorded in the first and second quarters respectively. The slowdown was largely due to the new property cooling measures implemented in July. In total, private home prices are up 7.9% so far this year. Flash data showed that prices of condominiums and private apartments rose 1.2% in the core central region, while prices in the city fringe fell 0.8%. Prices in the suburbs edged up 0.1%.

And lastly, major financial analysts have turned cautious on China stocks, citing the likelihood of a full-blown trade war between the United States and China. Last week, the Trump administration imposed a 10% tariff on about US$200 billion of Chinese goods, while China responded with duties on US$60 billion of US products. JP Morgan has revised its forecast for economic growth in China to 6.1%from 6.2%, and slashed its earnings estimates for the MSCI China Index.

Overall, the bias in prices is: Sideways.

The projected upper bound is: 3,276.06.

The projected lower bound is: 3,138.77.

The projected closing price is: 3,207.41.

Candlesticks

A black body occurred (because prices closed lower than they opened).
During the past 10 bars, there have been 4 white candles and 6 black candles for a net of 2 black candles. During the past 50 bars, there have been 20 white candles and 28 black candles for a net of 8 black 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 31.9753. This is not an overbought or oversold reading. The last signal was a sell 6 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 48.62. This is not a topping or bottoming area. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a buy 17 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 -20. This is not a topping or bottoming area. The last signal was a sell 4 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 13 period(s) ago.

Rex Takasugi – TD Profile

STRAITS TIMES closed down -21.800 at 3,209.790. Volume was 24% below average (neutral) and Bollinger Bands were 13% wider than normal.

Open High Low Close Volume___
3,224.3503,230.0103,198.7203,209.790 180,419,392

Technical Outlook
Short Term: Neutral
Intermediate Term: Bullish
Long Term: Bearish

Moving Averages: 10-period 50-period 200-period
Close: 3,239.45 3,226.38 3,395.06
Volatility: 11 14 15
Volume: 203,396,480 221,567,040 244,316,368

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 5.5% below its 200-period moving average and is in an upward trend. Volatility is relatively normal as compared to the average volatility over the last 10 periods. Our volume indicators reflect volume flowing into and out of .STI at a relatively equal pace (neutral). Our trend forecasting oscillators are currently bullish on .STI and have had this outlook for the last 8 periods.

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