Asian equities are probably due for a technical correction, according to Fibonacci ratios.
The Hang Seng Index is taking a pause after a long strike rally of more than 30 trading sessions, as are the Nikkei and Shanghai Composite. The Hang Seng Index has faced some selling pressure at around 32,870 - a 161.8% Fibonacci extension level that is a strong resistance from a technical point of view.
Volatility rises as the dollar index registered a big intraday swing last night following President Trump’s ‘strong dollar’ comment in Davos – an attempt to fix the public image that Washington is backing a weak dollar.
As the dollar falls, other G10 currencies alongside emerging market currencies are gaining strength, which will suppress the growth of export-oriented economies like Japan, China and Europe. Another implication of a weaker dollar is higher oil prices, which will translate into higher inflation readings. As a result, central banks across the globe will have more incentive to tighten monetary policy and accelerate the pace of rate normalisation. Yesterday, the Malaysian central bank raised the interest rate by 25 bps for the first time in 3.5 years, amid improved fundamental conditions and higher oil prices.
EUR/USD retraced back to 1.241 area this morning after touching three year high of 1.253 overnight. Its immediate support and resistance levels can be found at around 1.238 and 1.251 respectively, with the overall trend still biased upwards. USD/JPY swung back to 109 58 from intraday low of 108.5. Technically, 109.0 is an immediate support but the overall trend remains bearish, as both 10-Day SMA and SuperTrend (10, 1.5) are sloped downwards.
In Singapore, the Straits Times Index retraced alongside with Hong Kong due to profit-taking activities. The earnings from Keppel Corp, CCT and CT failed to deliver positive surprises and market sentiment is weakening. Next week there is nothing much on the earnings calendar and overseas market movement is likely to extend a bigger influence on local share market. A technical correction is possible but it is unlikely to change the broader picture of the bull market.
Hong Kong 50 – Cash
Singapore Earnings update:
CapitaLand Commercial Trust
- 4Q distributable income up 6% yoy to S$75 million
- Full year distributable income grew 7.4% yoy to S$288.9 million
- DPU for 4Q and full year at 2.08 cents and 8.66 cents respectively
- Distribution yield based on last closing price was 4.5%
- The portfolio maintains an above-market committed occupancy rate of 97.3%, back on high quality assets and improvement in economic condition
- Revenue up 13% yoy thanks to strong lift from CapitaGreen, and the future looks more promising after the acquisition of Asia Square Tower 2 and redevelopment of Golden Shoe Car Park.
- Net profit down 72% yoy to S$217 million, largely due to one-off Brazil fine related costs of S$619 million. Excluding the one-off item, net profit would be S$ 836 million.
- The sluggish performance in offshore & marine division was underpinned by high profits from Singapore property trading and fair value gains from assets.
- Free cashflow at S$1,802 million in 2017, comparing to S$540 million in 2016
- Final Dividend per share of 14 cents, total dividend of 22 cents for full year 2017
Source: Keppel Corp