How major benchmark indices performed for 1st half of 2011?

At Asian Pacific close today, all Asian/Pacific benchmark index finished higher. For the month of June, Australia, Hong Kong, New Zealand, Singapore, South Korea, and Taiwan closed a second month lower. Cheers swept through global markets after the Greek Parliament approved austerity measures to ensure the euro zone member would not default on its debt. Greek is waiting for the austerity to pass into law.

Benchmark	20111231	20110429	20110531	20110630
All Ordinaries	4,846.90	4,899.00	4,788.90	4,659.80
Shanghai Composite	2,808.08	2,912.14	2,743.72	2,762.08
Hang Seng	23,035.45	23,720.81	23,684.13	22,398.10
BSE 30	20,509.09	19,135.96	18,503.28	18,845.87
Jakarta Composite	3,703.51	3,819.62	3,836.97	3,888.57
KLSE Composite	1,518.91	1,534.95	1,558.29	1,579.07
Nikkei 225	10,228.92	9,849.74	9,693.73	9,816.09
NZSE 50	3,309.03	3,519.33	3,547.64	3,448.35
Straits Times	3,190.04	3,179.86	3,159.93	3,120.44
Seoul Composite	2,051.00	2,192.36	2,142.47	2,100.69
Taiwan Weighted	8,972.50	9,007.87	8,988.84	8,652.59

At European close, most European/UK indices are higher. For the month of June, Germany closed the month higher.

CAC 40	3,804.78	4,106.92	4,006.94	3,982.21
DAX	6,914.19	7,514.46	7,293.69	7,376.24
FTSE 100	5,899.94	6,069.90	5,989.99	5,945.71

For the week till date, the Greek parliament introduced 28B Euros of spending cuts, tax hikes and privatizations. In exchange, the IMF will release the second tranche, of its bailout fund to keep the Greek government running till late 3rd quarter.

What does the austerity plan means to the Greece? "It will bring over-taxation, shut down businesses, send workers away, reduce incomes, abolish social rights and health benefits and lower living standards." Costas Panagopoulos, head of pollsters ALCO, said Papandreou faced a huge challenge pushing through the austerity measures in the face of general public resistance. "The problem for Papandreou is not in parliament, it is what is happening outside parliament," he said.

In the US, the Purchase Manager's Index registered a 61.1 reading, up from May's 56.6 and ahead of expectations for a 53. That’s great. But the Labor Department reported 428,000 new jobless claims filing, more than the expected 420,000 and indicating continued weakness in the vital part of the economy. This is currently brushed aside amidst strong optimism in global markets.

For the moment, Greece is no longer in focus. The Volatility index, VIX tumbled below 17.

Elsewhere, Standard & Poor’s warned that it will slash America’s credit rating to selective default if Congress fails to reach agreement on the Budget deficit and debt ceiling and misses its debt payment on August 4.

As mentioned earlier, June 30^th marks the end of the Federal Reserve's QE2, with the Fed ending its $600 billion bond-buying program; the central bank gave no information as to whether there would be more monetary easing in the future. For the record, The Dow and S&P had risen slightly over 20% since the launch of QE2.

Will Greece default? What do you think? A must-read!

News flash: Greek vote moved to 2 pm Athens time tomorrow!

In my opinion, the certainty is very high. Correct me if I am wrong. Let me explain, there are two major hurdles for Greece NOT to default.

·         Parliament has to approve and implement the austerity plan (amidst protests and violence in the street of Athens)

·         Could Greece live up to the austerity plan after implementation? (Did Greece live up to the austerity plan implemented in 2010?)

What do you think? Please read on.

Have you read the post Story of a boy named Grease? (Could Grease change his lifestyle, lower the standard of living, live through budget until debts are cleared)

While Greece has to follow the austerity measures, do you think she has the ability to be competitive with Germany, France, the rest of the EU or globally? What do you think? The answer is not impossible but the long and winding road is definitely not a bed of roses!

What is also happening? Do you think if any members of the EU, ECB or IMF think that Greece is unlikely to default? The following might help (links not provided):

·         French debt rollover for Greece (Why the rollover?)

·         German Banks back French Debt rollover for Greece (What’s the German and French exposure?)

·         German banks moved closer to participating in a Greek bailout ahead of Thursday's summit called by the German government to discuss private-sector involvement. (Why prep a Greek bailout?)

·         European Banks scrambling to prevent default by Greece (Why the preparation?)

·         China invests in Europe?

Why all the publicity? Why all the preparation if Greek were to default? (Are they not confident the austerity will pass through Parliament?) Why are they so concerned?

What is going to happen from current till the announcement? Read Speak now or forever hold your peace

The default is an almost certainty. It need not be this week and I do not really know when? (Anyone has a crystal ball?)

Could it be this coming Thursday? If it does, the week will end bad, very bad. After which I am sure ALL (EU, ECB, IMF) will meet somewhere and come up with a drastic solution over the weekend. By Monday morning, a solution will be unveiled to calm the markets. (The Asian financial crisis was triggered July 1st 1997, deja vu! European financial crisis?)

If the austerity plan is passed (this is a no brainer) Asian equity markets will rally, followed by Europe and then US. Whatever the US data is to be announced on Friday, the Greek result will blanket any news – bad or good!

Having laid down the scenario, what do you think? Risk on or risk off? The decision is entirely yours!

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All eyes will be focused on the Parliament results of Greek austerity proposal

Last week, it was the Greek vote of confidence. The Parliament results of the austerity plan will be in the focus this week. As you probably know, there were several important events last week. It came but was overshadowed by the Greek events.

I like to summarize and add a few opinions to the (six-weekly) Fed monetary policy meeting, the International Energy Agency announcement and a new concern, the Italian banks. The week began with the Greek vote of confidence followed by:

Ben Bernanke’s press conference was crucial as it displayed;

·         an acknowledgment that the economic recovery was unfolding more slowly than previously expected,

·         the slowdown is likely to be temporary

·         Commodity-based inflation pressures are expected to dissipate

·         QE2 will be complete at the end of June and

·        Economic conditions are likely to warrant exceptionally low levels for the federal funds rate for an extended period (2-3 quarters).

What worries me is that Ben Bernanke

·         acknowledged that ‘the Fed does not have a precise read on why the slow pace of economic growth is persisting’

·         The Fed's central tendency projections for real GDP growth in 2011 and 2012 were lowered from their April projections.

As discussed earlier, Ben Bernanke is not someone who might be ahead of the curve amidst the European debt crisis and global slowdown concerns. Hence, I was not surprised he did not give any hint to the prospect of QE3. However, it does not mean he would not continue to buy bonds! Read There are no hints on QE3 but

On a separate report on the US economy, Republicans walked out of budget deficit negotiations with talks reaching an impasse.  The dateline of the debt ceiling being raised by August 2 is too close for comfort.

Oil prices went sharply down with the news that the IEA is releasing 60 million barrels from strategic petroleum reserves (30 million from the U.S.). Crude oil futures for August delivery, which sat above $114 per barrel at the start of May, settled the week just under $91 per barrel.

I smell a rat when the reported ‘catalyst’ that Greece reached an agreement with the EU & IMF on a new five-year austerity plan. I wouldn’t have cheered as this wasn’t a real hurdle. I don’t think the ECB, EU nor does the IMF want a credit default. There are two real hurdles the Greeks have to pass to avoid a credit default

1.    Getting the austerity passed through Parliament and

2.    Building confidence that the Greeks can live through the austerity plan

US economic data. The positive Q1 GDP and durable orders report stood at 1.9% was overshadowed by concerns of weak reports from Italian banks and that the austerity plan may not pass through Parliament this coming Thursday (approx Friday 0500am).

There are no hints on QE3 but

There are no hints on QE3 but Fed may buy US$ 300 Billion in Treasuries after QE2. This is half the size of QE2. If this is the case

·         Do we need QE3?

·         Where is the money coming from?

·         Would this keep Fed funds rate low?

·         How does this affect quarterly (US) GDP data?

·         What effect does this have on unemployment figures?

·         Would it add on to inflationary concerns globally?

I found this article very appropriate. It got published in Bloomberg, dated 20110627. To follow the article, click here. I suggest you take notes of these events and compile them for your analysis or speculating future market trends.

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Don’t fall into bull traps

Ongoing uncertainties in Europe are still lingering on global investors’ mindset. Greece news dominates the headlines sending global benchmark indices swinging wildly day to day.

Earlier in the week, the pre ‘vote of confidence’ set global investors in focus. Bulls dominated when Greece overcome the vote of confidence hurdle. With news that the EU and IMF consents to Greece austerity plan, bulls sent the market much higher.

This created a bull trap! Late in the week, speculators worry if the austerity plan were to pass through Greek Parliament scheduled next week? Europe and US stock markets were hit harder when new concerns surfaced within Europe crisis when some Italian bank shares halted trading.

There had been several occasions where bull traps had been laid for the past month or two. Be patient. Be very patient. If you are a “middle or long term” trader, please visit Comparison of major benchmark indices year to date. You decide.

My assumption is that most of the bloggers/audiences are focused on technical analysis, shares and derivatives of Singapore shares. I notice a couple of areas that bloggers do not post. I hope to fill in the vacuum. I like to contribute that investors need to have a global mindset of inter market analysis that sets the market trend in Singapore and Asia.

While some fellow bloggers wonder why markets trends on certain days, I try to fill up the hole. My passion lies in what makes the market trend in a particular pattern. Having found the solution, my next passion is to speculate what contributes to the next trend? This is synchronous to understanding the financial climate.

This brings me back to the title of this post. Many a times, I had mentioned that Europe debt crisis is in focus, primarily on the ‘almost certainty’ of a Greek default. While this had overshadowed other major events, the expiration of QE2 will have an effect on global markets. To familiar with the event, please visit my posts under the ‘Global Financial Crisis’ category. I found the following article notable. Dollar On the Verge of a Market-Wide Rally as QE2 Set to Expiring It discusses on the US dollar, QE2, forex and commodities. Would this have an effect on your investment portfolio?

The following are possible scenarios: Unfolding of QE2 had already begun. It is a quiet signal or an indicator that an ‘earthquake’ is about to happen. The trigger could be an event from the Europe crisis. I would not write off if US or China could trigger a similar event. The potential damage is currently unknown but it’s definitely worth speculating.

The last two paragraphs contribute to my speculation. Market has a tendency to potentially drive southwards. As such, any rebound within this period is a bull trap.

As you all probably know that Greece is very much in focus, there are endless hurdles for Greece to overcome. Over this weekend, if time permits I would blog on the two most important hurdles that really matter. When it is posted, you should be able to click here. I hope this would enlighten you, thus you can strategize on which hurdle to focus on and not get trapped by wild swings.

If you like the post, please feel free to twitter, share on facebook, Google or email to your friends such that it could reach a larger audience. Thanking you in advance. If you wish to receive my timely posts, follow by email and Feed burner will do the rest. Should you have any queries relating to my posts, feel free to drop me an email.

Comparison of major benchmark indices year to date

At the end of Asia closing today, most Asia/Pacific indices closed on a positive note with the exception of New Zealand and Taiwan. Asian stocks ended higher today where Greece is in focus. Investors cheered on news that the five year austerity program won the consent of the EU and the IMF. This boosted sentiment across the Asia Pacific region.

As for the week, most Asia/Pacific indices closed up with the exception of New Zealand and Taiwan.

Benchmark	20101231	20110429	20110531	20110617	20110624
All Ordinaries	4,846.90	4,899.00	4,788.90	4,551.10	4,565.00
Shanghai Composite	2,808.08	2,912.14	2,743.72	2,643.65	2,746.21
Hang Seng	23,035.45	23,720.81	23,684.13:	21,695.26	22,171.95
BSE 30	20,509.09	19,135.96	18,503.28	17,870.53	18,240.68
Jakarta Composite	3,703.51	3,819.62	3,836.97	3,722.30	3,848.56
KLSE Composite	1,518.91	1,534.95	1,558.29	1,563.43	1,564.66
Nikkei 225	10,228.92	9,849.74	9,693.73	9,351.40	9,678.71
NZSE 50	3,309.03	3,519.33	3,547.64	3,469.59	3,455.60
Straits Times	3,190.04	3,179.86	3,159.93	3,005.28	3,066.85
Seoul Composite	2,051.00	2,192.36	2,142.47	2,031.93	2,090.81
Taiwan Weighted	8,972.50	9,007.87	8,988.84	8,636.10	8,532.83

At point of writing, Singapore time, Saturday 0025am, ALL European indices closed lower for the day. As reported by CNBC, European shares extended their losing streaks for eight consecutive weeks. Though news of the Greek austerity plan won the consent of the EU and the IMF earlier on the Asian session, the new concern or the next hurdle is getting it through the Greece parliament next week. Capital positions in Italian banks and more worries of EZ crisis contributed to the weak closing for the day and week.

CAC 40	3,804.78	4,106.92	4,006.94	3,823.74	3,784.80
DAX	6,914.19	7,514.46	7,293.69	7,164.05	7,121.38
FTSE 100	5,899.94	6,069.90	5,989.99	5,714.94	5,697.72

At point of writing US futures turned higher after economic data came in better than expected. However, US stocks turned lower at opening, following new concerns on Europe debt crisis. Durable goods increased 1.9% and GDP rose at an annual rate of 1.9%. US stocks closed down for the day. The NASDAQ closed up for the week while the Dow and S&P closed lower for the week.

This post will again be updated after US closing. (Completed.) Do remember to come back to this post for the timely updates (This minimizes several posts on similar topics). If time permits, I would provide a table of data for performance of benchmark indices for the week, month and year end closing of 2010. (Done!) Have a great weekend ahead!

If you like the post, please feel free to twitter, share on facebook, Google or email to your friends such that it could reach a larger audience. Thanking you in advance.

If you wish to receive my timely posts, follow by email and Feed burner will do the rest. Should you have any queries relating to my posts, feel free to drop me an email.