Market Summary 13 July 2012

Singapore shares ended higher Friday as news that China's economy grew in line with expectations in the second quarter eased fears of a sharp slowdown in the world's second-largest economy.

China reported Friday that its economy expanded 7.6% on year in the previous three months, the lowest rate since the first quarter of 2009, but matching the median estimate of 15 economists polled by Dow Jones Newswires. "The day started out as a bad one for risk, with Italy downgraded by Moody's and Singapore's [gross domestic product] surprising to the downside," Deutsche Bank said in a note. But the China economic data "has helped the Asian equity markets to generally be in positive territory."

The 30-share Straits Times Index rose 0.8%, or 23.52 points, to 2,995.56, reversing from a 0.6% decline on Thursday. Intraday, the benchmark touched a high of 2,999.34, very close to piercing the psychological resistance level of 3,000. For the week, the index closed 0.6% higher.

Even so, "traders are still overwhelmingly favoring lower-risk assets with so much concern still circulating over the rate of global growth for the remainder of 2012," Tim Waterer, senior trader at CMC Markets, said in a note. In a sign of still-fragile sentiment, volume declined to 1.75 billion shares from 2.36 billion shares on Thursday. Gainers outnumbered decliners 225 to 133.

Food and beverage company Fraser & Neave rose 5.3% to S$7.79, buoyed by the Chinese data that may help ease concerns about sales.

Telecommunications firms were also among major gainers as their relative safety and higher yield potential prompted several analysts to make buy recommendations. Singapore Telecommunications gained 3% to S$3.47 while StarHub was up 2% at S$3.58.

City Developments added 2% to close at S$11.36, Global Logistic Properties gained 1.9% to close at S$2.19 while CapitaLand was up 1% at S$2.95, as investors interpreted GDP data may be less of a dampener on real estate sentiment.

Just to share.

STI so close to 3000 points! The overall sentiment is positive but investor cannot neglect the macro economic condition likes US and Europe economic data. My feeling is next week STI may protrude 3000 points with some excited investor bets their money on penny stocks. I have 70% confident this condition will happen, hence if STI penetrated 3000 points without any good basic; do not be excited.

Anyway, STI at uptrend now, what STI needs is good news from macroeconomic to firm up the 3000 points otherwise do not be excited for the penetration because its not going to stay long without any improvement from macroeconomic condition. Stay tune!