Following the rebound by the Straits Times Index during the week of May 13-16, the 50- and 100-day moving averages at 3,822 and 3,829 respectively remain positively placed. Quarterly momentum is still in positive territory and stationed just above its equilibrium line, and the directional movement indicators veer towards the positive. At the close on May 16, the STI (3,898) is a mere 101 points away from the roundophobic psychological resistance of 4,000 and it will not take much for the STI to get to this level at which resistance is likely to appear.
The local market continues to inch higher despite many negatives. One of the negatives is around the spate of privatisations which may cause investors to gradually exit the local market. The reason why companies are being privatised is the low valuations they garner on the Singapore Exchange (SGX:S68
) . Low valuations - based on some on announcements made by these companies - is a result of low liquidity.
It could be that the focus on derivatives may have increased SGX’s earnings, but derivatives haven’t done anything for interest and liquidity in the Singapore market. Surely a thriving capital market is important for a financial hub. Some market observers believe the SGX should seize the bull by the horns in the new disrupted global economy, attract investors into the market and ensure sufficient liquidity for valuations to rise. A pipe dream?
