Signs of strain as 'idea fatigue' sets in
Published February 10, 2006
The dominant and recurrent themes of China and oil stocks
are starting to wear thin
BT
By R SIVANITHY
SENIOR CORRESPONDENT
GO WITH the flow and hope for the best' seems to be the preferred theme these days, judging by the rapid-fire rotational interest and high volume the market is currently enjoying. Such was the case again yesterday, when the actives list was again peppered with new names as traders continued their switching in and out of various second-liners and penny stocks.
It wasn't entirely random though - for many of the new entries that sprang into the picture, there was either some corporate development to stir interest or a fresh broking recommendation.
However, although the overall mood appeared firm, there were signs of strain that emerged as the session wore on, resulting in prices closing off their highs - the Straits Times Index first gained 15 points but closed only a net 3.37 up at 2,431.62.
Turnover excluding foreign currency issues was 1.7 billion units worth $1.3 billion and excluding loans and warrants, there were 210 rises versus 169 falls.
Despite the relatively firm advance-decline score, brokers noted widespread pressure throughout the market. 'Idea fatigue' probably described the session best, the phrase referring to the fact that China and oil have been the dominant themes for all of the year to date, and by now, both are starting to wear thin.
'It might be much harder to make money from here onwards,' noted a dealer. 'Everything that deserves to move has moved.'
In order to keep interest alive, prices moving and business flowing, brokers have gone into overdrive in issuing 'buy' recommendations this week, most with spectacular results. Recent beneficiaries have been K1 Ventures, Utac, China Hongxing and China Sky, and among the latest was Datacraft Asia which yesterday jumped US$0.06 to US$1.21 following an 'outperform' issued by Credit Suisse, which set a target price of US$1.35. 'We value the shares at a PE of 18 times (10 per cent discount to last six month multiple) and a price/book value of 2.5 times (in line with the last two-year average multiple). Based on this, we upgrade the share from neutral to outperform,' said Credit Suisse.
Casino firm Genting International added two cents at 37 cents with 71 million units done, thanks in main part to a 'buy' from Merrill Lynch, which set a 12-month price target of 43 cents. 'Our price objective is the sum of our NAV estimate of 24 cents per share and our assessed option value of 19 cents.'Yet another foreign broker, however, yesterday issued a bearish report on the semiconductor sector. Morgan Stanley said that inventories have been building up over the past few months and this is expected to worsen in the first half. 'We believe this time the inventory build-up has been spread over the entire food chain,' said MS. The US broker recommended 'trimming exposure to Asian semiconductor stocks'.
The dominant and recurrent themes of China and oil stocks
are starting to wear thin
BT
By R SIVANITHY
SENIOR CORRESPONDENT
GO WITH the flow and hope for the best' seems to be the preferred theme these days, judging by the rapid-fire rotational interest and high volume the market is currently enjoying. Such was the case again yesterday, when the actives list was again peppered with new names as traders continued their switching in and out of various second-liners and penny stocks.
It wasn't entirely random though - for many of the new entries that sprang into the picture, there was either some corporate development to stir interest or a fresh broking recommendation.
However, although the overall mood appeared firm, there were signs of strain that emerged as the session wore on, resulting in prices closing off their highs - the Straits Times Index first gained 15 points but closed only a net 3.37 up at 2,431.62.
Turnover excluding foreign currency issues was 1.7 billion units worth $1.3 billion and excluding loans and warrants, there were 210 rises versus 169 falls.
Despite the relatively firm advance-decline score, brokers noted widespread pressure throughout the market. 'Idea fatigue' probably described the session best, the phrase referring to the fact that China and oil have been the dominant themes for all of the year to date, and by now, both are starting to wear thin.
'It might be much harder to make money from here onwards,' noted a dealer. 'Everything that deserves to move has moved.'
In order to keep interest alive, prices moving and business flowing, brokers have gone into overdrive in issuing 'buy' recommendations this week, most with spectacular results. Recent beneficiaries have been K1 Ventures, Utac, China Hongxing and China Sky, and among the latest was Datacraft Asia which yesterday jumped US$0.06 to US$1.21 following an 'outperform' issued by Credit Suisse, which set a target price of US$1.35. 'We value the shares at a PE of 18 times (10 per cent discount to last six month multiple) and a price/book value of 2.5 times (in line with the last two-year average multiple). Based on this, we upgrade the share from neutral to outperform,' said Credit Suisse.
Casino firm Genting International added two cents at 37 cents with 71 million units done, thanks in main part to a 'buy' from Merrill Lynch, which set a 12-month price target of 43 cents. 'Our price objective is the sum of our NAV estimate of 24 cents per share and our assessed option value of 19 cents.'Yet another foreign broker, however, yesterday issued a bearish report on the semiconductor sector. Morgan Stanley said that inventories have been building up over the past few months and this is expected to worsen in the first half. 'We believe this time the inventory build-up has been spread over the entire food chain,' said MS. The US broker recommended 'trimming exposure to Asian semiconductor stocks'.
posted by SmartYInvestor at 5:57 AM
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