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Is This The Calm Before The Storm?
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Quiescent – that summed up the local equities market showing for the month of August. The Straits Times Index was trading range-bound with volumes gradually disappearing compared to the previous month.

For the past fortnight, markets were more interested in what Ben Bernanke had to say at Jackson Hole than data in economic reports. For one, there was barely any reaction to the release of the US economic growth data. Post adjustment, gross domestic product figures indicated a 1.7% growth quarter-on-quarter underpinned by higher consumer spending.

It was not as radiant in other parts of the world. A preliminary August Purchasing Managers Index reading by HSBC showed China’s manufacturing activities contracted for 10 consecutive months. In Japan, there was an onslaught of weak numbers. Industrial output contracted while consumer demand turned softer than expected. The reports came hot on the heels of the government’s downgrade of its economic assessment.

Back home, industrial production data was a disappointment. The 1.9% climb year-on-year in July failed to even come anywhere near the 6.8% estimate by a Bloomberg survey. Meanwhile, inflation eased to 4% year on year in July – down from 5.3% in June.

M&A was the theme for the local market recently. The latest target was Sakari Resources. After news broke out that its largest shareholder PTT Mining made a $1.2b takeover offer, Sakari saw its shares jump 26.8% on 27 Aug. On the same day, shares of the city-state’s largest initial public offering this year, Far East Hospitality Trust, advanced 2.2% on its debut to $0.95, up 2 cents from its $0.93 issue price.

As we approach the end of the third quarter, things are certainly not going the way we hoped for. For now, it does seem like markets are positioning themselves for upsets ahead of ECB and Fed meeting on 6 and 13 Sep respectively.

Far East Hospitality Trust  0.635 -- --   
Business: Invests in a diversified portfolio of income-producing hospitality-related real estate in Singapore. [FY18 Turnover] Hotels & services residences (80.6%), retails & offices (19.4%).

Insight: May-19, 1Q19 gross revenue increased 8% to $27.8m ... Read More

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