by SIAS Research
It’s the Economy, Investors!
As expected, the US economy continued to disappoint the public as it announced more economic data last week. Initial benefit claims increased and yet we have seen neither the Obama administration nor the Federal Reserve take new steps to bring back jobs. Fearing about the debt level and taking austerity measures now could further dampen the already weak US economy, but this is what the Obama administration is apparently planning.
Fear has struck back into the hearts of equity investors. It is not the debt level they fear; it is the probability of a second “dip” that is in their minds. For the trading week ended 20 August, the S&P fell by 0.7 per cent while Singapore’s STI fell by 0.1 per cent. Most stock markets were not spared the correction last week.
The US economy will be releasing their existing and new home sales data and also the University of Michigan Consumer Senti- ment index this week. We are cautious for the week as we do not foresee much impactful good news unless there are further interventions by the US government. We suggest investors buy put warrants to hedge their exposure.
There are a few gems that we believe investors can hold on to for the long term. We continue to like UMS, C&O Pharmaceuti- cal and Marco Polo as these companies have been working hard to enhance shareholder value.
