Week-on-week, the Straits Times Index actually rose four points to end at 3,084, on Sept 3, despite a rollercoaster week, which saw loss-making Sea making an appearance on the MSCI Singapore Index. This caused a rebalancing, with the banks having to fall to make room for Sea.
To date, the STI remains above its 200-day moving average at 3,054, but only just after touching a low of 3,055 on Aug 31. Unfortunately, ADX is rising, the DIs remain negatively placed, causing some volatility. But the rebalancing is likely to be done and dusted, unless Sea rises sharply. The Nasdaq-listed local gaming and ecommerce company’s share price is up almost 73% this year.
However, as Sea launches its digital bank, and gets regulated by the Monetary Authority of Singapore, it may start to trade at valuations similar to DBS Group Holdings, except that DBS is immensely profitable, and Sea is not.
The STI’s support stays at the 200-day moving average, and if this is breached, the signal is a negative one. Resistance for rebounds is likely to appear in the area between the 100-day moving average at 3,147 and the 50-day moving average at 3,134.
The Hang Seng Index broke below its 200-day moving average -currently at 27,978- in early July and remains entrenched beneath it. The 50- and 100-day moving averages have made a negative cross. On the flip side, ADX is falling, an indication of a sideways trend and hence this may leave the HSI rangebound. On Sept 2, the HSI rose to 26,090 before easing.
On Aug 27, it appeared that resistance should be set at 27,000, but this level could be lowered to 26,090 as this could turn out to be the top of a sideways range. Support is at 24,748 initially, a low made on July 27, and then at 24,581, a low made on Aug 20. A break below these levels would indicate a downside of 23,512.
