STI spends 2016 trying to stay above 2,882

Throughout this year, the 2,882 level has proven troublesome for the Straits Times Index (STI), that being the point the index ended last year.

After four or five failed attempts to stay above it during the past 12 months, a window-dressing push on Tuesday and Wednesday that took the index to almost 2,900 was thwarted yesterday after an overnight plunge on Wall Street brought the sellers out.

In thin volume, the index first dropped to an intraday low of 2,878 before either a bout of short-covering or yet another feeble window-dressing attempt enabled it to climb to 2,889.15, for a net loss of 9.15 points on the day - but more importantly, a gain of about seven points or 0.24 per cent for the year, with only one trading day left.

Turnover, however, was a poor 1.2 billion units worth $565 million, though this was very much par for the course at this time of the year. Excluding warrants, there were 186 rises versus 214 falls.

Banks were the main index movers for most of the year, and even more so during the past six to seven weeks, so it probably came as no surprise that the index owed most of its loss to falls in DBS, UOB and OCBC.

The actives list yielded few surprises - 14 of the top 20 were priced under $0.20, and the list was topped by year-long favourite Noble Group, which ended $0.004 higher at $0.173 on a volume of 222.4 million.

While markets increasingly look to be 'priced for perfection'... it is interesting that institutional investors
are more circumspect. Mr Lee Ferridge, head of macro strategy, North America

Korean movie firm Spackman Entertainment also featured regularly in the top volume list, ending $0.001 lower at $0.191 with 43.3 million traded to take third place.

Before trading started, Spackman announced that its crime-action film, Master, produced by its indirect wholly-owned subsidiary Zip Cinema, exceeded the film's breakeven point within eight days of its official release on Dec 21.

In the structured warrants segment, instruments on the Hang Seng Index proved the most popular, while in the futures market, the Dow futures slipped marginally, suggesting a soft opening for Wall Street yesterday. European markets opened mainly on the downside.

State Street Global Exchange said on Wednesday that its global investor confidence index (ICI) decreased to 94.2, down 3.4 points from last month's revised reading of 97.6.

"The decline in sentiment was driven by the 6.7 point decrease in the Asian ICI to 109.1 along with the 6.0 point decline in the North American ICI to 87.5. By contrast, the European ICI rose 13.7 points from 86.4 to 100.1," said State Street Global Exchange in a press statement.

"While markets increasingly look to be 'priced for perfection' over the US economic outlook for 2017, it is interesting that institutional investors are more circumspect," said Mr Lee Ferridge, head of macro strategy, North America.

"Most noteworthy for me is the decline in the North American index even as US equities and the US dollar continue to rise."

Fund managers Legg Mason in a Dec 20 press release asked if the US is entering a "Goldilocks" zone - where growth is not too hot and not too cold.

In the release, Mr Scott Glasser, co-chief investment officer of ClearBridge Investment, said Wall Street's recent rally to all-time highs is not the start of a new bull market but potentially the extension of an existing and mature bull market.

"How long do we extend that growth? There's going to be some very strong offsetting negatives that retard that growth, whether it be the dollar or higher rates," said Mr Glasser.

"Internationally, all the factors that had been in place are not going away. The market has rallied in anticipation. I do think you're going to get this growth, but I think it needs to be put in the context of a mature bull market."

This article appears in The Business Times today. For full listings of SGX prices, go to http://btd.sg/BTmkts