Market in calmer waters as Syria fears subside

pub_date:THE receding worries over Syria enabled the Straits Times Index to gain 72 points, or 2.文件倉4 per cent, over the week at 3,120.30, though it was the frenetic activity in low-priced penny stocks that caught the eye.Such was the fever in low-priced speculatives this week that the slogan adopted by punters, day traders and various other players could very well have been "cheaper, better, faster", which was what the US space administration, Nasa, once chanted in its drive to cut costs.In fact, the parallel with Nasa does not stop there. The power of speculative energy managed to launch many low-priced counters to stratospheric heights. On Thursday, volume was a tad under 10 billion units but the average value was just 18 cents per unit. In yesterday's session, when the STI slipped 0.78 of a point, turnover was 5.9 billion units worth $1.42 billion for an average of 24 cents per unit.On the whole, penny stocks came under pressure yesterday with the broad market recording 182 rises versus 277 falls. This is perhaps understandable given that most players would be reluctant to hold on to their positions over the weekend.Blue chips spent the week trading in a pattern not unlike a holding orbit. The Straits Times Index looked at how Western markets might perform in the sessions ahead and those markets in turn pondered about the receding threat of a US military strike on Syria as well as the likelihood of the US Federal Reserve starting to taper its stimulus at next week's Federal Open Market Committee (FOMC) meeting.The US administration finds itself caught between a rock and a hard place with regard to Syria, with equal pressure from pro-intervention and anti-war groups存倉Among the news of interest was a Sept 12 Singapore Banks Sector report by Credit Suisse which said the first half of the year was marked by record profits for the three banks, driven by better-than-expected strength in non-interest income and loan growth."But the macro-economic environment in their core markets (mainly Singapore, Asean and India) has seen a visible deterioration over the past few months, thereby increasing earnings risks," said Credit Suisse."While we are unlikely to see significant impact in 2H13, there are material risks to 2014 consensus earnings expectations."It said it sees 5-22 per cent downside risk to 2014 earnings, with OCBC being the most exposed. DBS is its top pick for the sector: "In our view, DBS has the most potential for upside as P/B (price/book) multiples play catch-up with the improvement seen in ROEs and relatively low earnings downside under the risk scenarios through 2014E. On the other hand, we find OCBC to be richly valued (market-implied ROEs already higher than our expectations) with potential downside if one of our risk scenarios plays out."In its Sept 13 Global Daily Insight, ABN Amro looked at US unemployment since this rate is expected to influence the Fed's tapering policy and the timing of interest rates hikes."In conjunction with employment growth gradually increasing to 250,000 at the end of 2014, this bring the unemployment rate to 6.5 per cent in September of 2014, and to 6 per cent in January 2015," said the bank."Together with our view that the Fed will lower its unemployment rate threshold to 6 per cent during the September meeting, this suggests that we will see the first rate hike in the first quarter of 2015."迷你倉