Business

STI drops, has thin turnover as Christmas and New Year beckon

Index following pattern of annual year-end virtual standstill

The penultimate week of 2016 was not particularly memorable as the Trump-inspired rally of the previous five weeks lost momentum and liquidity drained rapidly away.

Yesterday, the day before Christmas Eve, the Straits Times Index (STI) dropped 10.99 points to 2,871.05, bringing its loss for the week to 66 points or 2.2 per cent.

Turnover was a thin 1.5 billion units worth $593.1 million. Excluding warrants, there were 174 rises versus 216 falls.

To be honest, this is not surprising - the Christmas/New Year holiday period traditionally sees trading wind down to a virtual standstill as traders close their books and depart for their vacations.

There are also uncanny similarities between trading this month and a year ago - daily volume in the final weeks of December 2015 was below $1 billion; the STI traded between 2,815 and 2,880; Noble Group, Ezra and Ezion were regulars in the daily actives lists as they are now; and in mid-December, the US Federal Reserve raised interest rates by 25 basis points as it did 10 days ago.

All these suggest that not much has changed in 12 months, which is perhaps also within expectations, given the weak economic outlook.

Still, despite the lack of performance by blue chips, some small caps have shone.

Together, they averaged a 128.4 per cent total return over the period.” SGX investor education portal My Gateway on the five best-performing FTSE ST Small Cap Index constituents

The Singapore Exchange's (SGX) investor education portal on Thursday reported that for the year to date, the five best-performing constituents of the FTSE ST Small Cap Index were Best World International (+377.5 per cent), Japfa (+96.1 per cent), Geo Energy Resources (+60.7 per cent), Super Group (+56.4 per cent) and PEC (+51.2 per cent).

"These five stocks have a combined market capitalisation of $3.8 billion, and represent 6.3 per cent of the Index. Together, they averaged a 128.4 per cent total return over the period," said My Gateway.

'BEST PERFORMERS'

"Three of the five best performers - Best World International, Japfa and Super Group - belong to the Consumer Staples sector, while the other two - Geo Energy Resources and PEC - are from the Energy and Industrial sectors respectively."

Over on Wall Street, observers are pondering the chance that the Dow Jones Industrial Average can close above 20,000 for the first time in history in the remaining days of this year.

US newspaper Barron's on Thursday quoted economic research firm Cornerstone Macro as saying the odds are good.

"The statistics relating to final-five-days-of-the-year performance are as follows for the S&P 500 since 1928 - average return for the last 5 trading sessions of year: 114 basis points, with a standard deviation of 186 bps," it said.

"Average return for all 5-day periods 1928 to 2016: 14.3 bps, with a standard deviation of 262 bps. So… not only is there a higher-than-average return during the last five days (8-fold average return of 114 bps versus 14 bps), there is less variability around the average.

"In addition, the probability of the last five days of the year being positive is 77.3 per cent, compared to a probability of 55.7 per cent for any five-day return."

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