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Straits Times 3,127.74 +5.17 +0.17%
Hang Seng 26,048.72 -221.32 -0.84%
Dow Jones 26,252.24 +49.51 +0.19%
Shanghai Composite 2,883.44 +3.10 +0.11%
In The Name Of Volatility And Board Lot Size Change
Singapore Market Commentary | 23 January 2015
By: Louis Kent Lee
Articles (199) Profile

Volatility was the key word we saw in trading sessions in Western bourses over the past few days. Despite witnessing rough trading sessions over 19 Jan-15 to 21 Jan-15, the US stock market still eked out 4 consecutive winning sessions.

Controversial happenings that got our attention were Standard & Poor’s suspension from rating bonds for a year by the US Securities and Exchange Commission (SEC). This has been the toughest action belted out by the SEC in an industry blamed for fuelling the 2008 financial crisis by assigning inflated grades to risky mortgage debt.

Chinese equities, especially A-shares got beaten down mercilessly after regulators stepped up measures to reign margin trading. The Shanghai Composite Index took a 7.7% beating on 19 Jan-15. This was the largest fall in 6 years and dragged the Hang Seng China Enterprises Index down by 5% as well. However, it was felt that the Shanghai Bull is still not dead and curbing margin financing alone is not likely to kill it.

Shifting the focus back to Singapore, the board lot size change from 1,000 shares to 100 shares has been officiated on 19 Jan-15. This was timely, considering the slew of earnings releases expected to kick in full swing in the next few weeks. Although market volume was seen finally breaking above the 2b unit mark on 21 Jan-15, the average value per unit traded was still low, at around $0.54.

Based on technical readings, possible profit-takings could happen should the Straits Times Index fail to clear the 3,375 points mark with great conviction. Measured downside is pegged to immediate support at 3,320, followed by the psychological support level at 3,300.

Louis is a qualified accountant with the ACCA, and is the Research Editor at Shares Investment magazine.

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