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Lacklustre start to year for Asia-Pacific bourses
Publication Date : 03-01-2014
Asia Pacific bourses started the New Year with a whimper rather than a festive bang, though the local market still kept up its long winning streak.
Disappointing manufacturing figures from China left markets across the region mixed on relatively soft trading levels.
Investors tended to focus more on Western bourses given the downbeat China data and the increased bullishness over developed markets.
Singapore's benchmark Straits Times Index (STI) added 0.23 per cent and Hong Kong's market inched up 0.14 per cent, but several markets headed south.
South Korean shares lost 2.2 per cent while Thai stocks led the decliners with a 5.23 per cent tumble due to the political uncertainty in Bangkok.
"We have seen rather mixed results across the markets," said Desmond Chua, an analyst at CMC Markets. "This is common going into the second day of the year. You have people still looking at their portfolios, still re-positioning their portfolios."
The biggest news of the day was the soft Chinese manufacturing figures. The official Purchasing Managers' Index (PMI) dropped to 51.0 last month, from 51.4 in November. A reading above 50 indicates an expansion.
"The falling December PMI points to growth moderation," said a note by Barclays Research.
"We expect growth momentum to soften... We think elevated interest rates across the money, bond and credit markets have led to higher funding costs and hurt corporate sentiment, and is thus weighing on economic growth."
Volumes were not helped by a market holiday in Japan, the best-performing regional market last year with a 56.7 per cent leap.
"With Japan out of the picture, we were looking at thin liquidity," said Chua from CMC Markets.
In Singapore the turnover was a paltry S$789.5 million (US$623 million) - less than the S$1.2 billion (US$947 million) that changed hands on Tuesday when the bourse opened for only half a day.
Chua noted that some market professionals could still be on holiday. "We may have some people out of the market," he said.
"Starting next week, more volume will be added on to markets as more fund managers come back to the markets," he said.
Thursday's market performance stands in sharp contrast to the strong regional rises over the past two weeks.
Singapore's STI is on a nine-session winning streak, including Thursday's gain.
The local market was "soft compared to earlier this week", said remisier Desmond Leong.
"It's still not too bad, it still went up. It's been going up for the past two weeks already so I think a correction or a rest period is about due."
Market watchers said the rises late last year could have been the result of some "window dressing" - certain market professionals propping up share prices by buying index heavyweights to make themselves look good in annual reviews.
The strong market showing leading into the new year has led to talk of the Capricorn or January effect. This refers to the tendency for stocks to rise in January.
"The market still feels bullish," said Leong.
He said that November and the earlier part of December had been quiet for the market.
"We had not-so-good months, so it's possible that in January, we may pick up some volume and things may start moving," he said. "I won't be surprised if there was a bit of a Capricorn effect."