(By Roger Tan, SIAS Research)
Last week was not a good week for US equities as the S&P 500 closed 3.6 per cent lower. The index experienced two significant drops in the week caused mainly by fears that the US economic recovery may not be as strong as expected.
On the other hand, the STI bucked the trend of the US equity markets, closing 0.6 per cent higher for the week. The local stock market started the week gaining 1.8 per cent as inves- tors welcomed China’s announcement that they will strengthen the Yuan. However, the index was unable to hold on to the momentum as investors started to take profit as US equities fell.
This week is going to be another “bouncy” week as the US will announce Personal Income, Consumer Confidence and the Chicago Purchasing Managers Index in the first half of the week. We do believe that there will be some support for the STI as the window dressing effort will continue until at least Wednesday but investors should consider taking some profit near the end of that day.
For individual stocks, we have recently initiated coverage on Osim with a valuation of S$1.30. We believe Osim is undervalued and it will not be long before investors realise this. We strongly suggest investors take a close look at this counter.
