Sunday, February 28, 2010

February in review

February was a quiet month of consolidation for most financial markets, which took a breather from the more significant correction in January. After hitting a low during 5-6 Feb, most markets bounced back and have been inching up steadily for the remainder of the month. Despite mixed economic news from the US such as jobless claims rising 12% in a few weeks to 496k and existing home sales declining by some 23% in 2 months, the markets shrugged it off and continued trading in a narrow range. Trading volumes in February were also noticeably lower than January. The STI ended flat, up only 5.5 points to 2750.8

Many experts are divided in their outlook over the next few months, however it seems to me that more people are bullish than bearish. For me, I am of the opinion that the markets will go lower first before heading higher. I do not reckon that the STI high of 2947 will be surpassed anytime soon. However a correction of 5-10% would present a good opportunity to increase one's positions in blue chip and other strong dividend-yielding stocks, such as SPH, Suntec Reit, SATS, Starhub, Noble, Olam, CDL Hospitality etc.
Over the longer term (1-3 years), I am more bearish, as there are several problems that have not been sorted out.

Take a look at the table below to see how some of the global markets performed this year.

NameJan changeFeb changeYTD change
Hang Seng-8.0%+2.4%-5.8%

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