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Editorial Desk
Editorial Desk | 11 May 2012
By: Xavier Lim
Articles (51) Profile

The Nikkei 225, the Hang Seng Index and the Straits Times Index recorded their biggest daily fall this year on 7 May after taking cue from a weak US jobs report and the changes in leadership in France and Greece.

According to the US Labor Department, only 115,000 jobs were added in April as hiring slacked off for a second straight month. The figure was well below expectations and was sharply lower than March’s downwardly-revised gain of 201,000 jobs.

In France, Francois Hollande won the election to become the first Socialist in 17 years to head Europe’s second-biggest economy. On the other hand, a political gridlock looms in Greece where leaders are struggling to form a government after the elections.

Meanwhile, the Euro tanked below US$1.30 against the US dollar after Greek and French elections’ results stoked fears of a further Eurozone crisis. At the same time, crude oil price fell below US$100 per barrel to around US$96 per barrel on the back of Saudi Arabian Oil Minister Ali al-Naimi’s comment that oil prices should come down. In addition, oil investors are worried that the growing political uncertainty in Europe as well as slowing economic growth in the US will lead to lower demand for oil.

Yields on US Treasury 10-year notes fell to 1.83 percent, their lowest level since early February as investors seek safe haven amid renewed fears over Eurozone debt crisis. Investors are worried that a shift in political power in Greece could derail recent efforts to stem the debt-ridden country’s fiscal crisis.

Back home, our state-investment firm Temasek Holdings has reduced its stakes in two of China’s largest banks, China Construction Bank and Bank of China after it purchased 1.1 percent stake in Industrial & Commercial Bank in mid-April. Details are available in our cover story on page 6.

Next, we explored and examined the prospects of Trek 2000 International. In an exclusive interview with the company, the company’s management shared with us the prospect of their FluCard – a WiFi-enabled SD card that they believe will replace the dummy SD card in three years’ time.

Over the past three months, our local bourse has been hovering between 2950 and 3030 levels. Investors should stay cautious as the recent dipped below 2950 level may signal the start of a correction.

Armed with an arsenal of investment knowledge, Xavier is the Senior Research Editor at Shares Investment.

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