It was relatively downcast for Singapore’s stock market today as the Straits Times Index (SGX: ^STI) slipped by 0.5% to 3,155. Last Friday, the United States released a better-than-expected job report, signalling that the country’s economy might be improving and thus fuelling concern that the Federal Reserve might start pulling back its stimulus efforts this year. That’s being used as the general theme for today’s market declines across Asia by news sources like Bloomberg. But, if investors were to sit down and think calmly about it, it seems almost twisted that an improving economy in the USA – the…
It was relatively downcast for Singapore’s stock market today as the Straits Times Index (SGX: ^STI) slipped by 0.5% to 3,155.
Last Friday, the United States released a better-than-expected job report, signalling that the country’s economy might be improving and thus fuelling concern that the Federal Reserve might start pulling back its stimulus efforts this year. That’s being used as the general theme for today’s market declines across Asia by news sources like Bloomberg.
But, if investors were to sit down and think calmly about it, it seems almost twisted that an improving economy in the USA – the world’s largest economy – can cause the stock market to fall.
A business that does well (which is what happens when the economy improves) will generally see its stock following suit, but apparently that’s not what the market is thinking about in the short-term. That’s perhaps a good reason why investors should not focus on daily share price movements and instead look at business fundamentals, which is what is ultimately important.
In any case, the STI’s slip-up does not seem to have concerned the following shares, which logged big intra-day gains. Let’s take a look at them.
Viz Branz (SGX: L5J) jumped by 9.1% to $0.78. Last Friday, the instant beverage and snacks manufacturer announced that it was the subject of an acquisition-offer by Mercury Rising, a special purpose vehicle setup for the purpose of Viz Branz’s acquisition, at a price of $0.78 a share. Viz Branz’s Deputy Chairman and Managing Director Ben Chng Beng Beng is also the sole director of Mercury Rising.
Prior to the acquisition announcement, Mercury Rising acquired 38.3% of Viz Branz’s shares from Chng Khoon Peng (Executive Director of Viz Branz), bringing the total number of shares the acquirer had in Viz Branz to 58.1%. That level of ownership triggered an obligation by Mercury Rising to make an offer for to acquire the rest of Viz Branz’s shares that it did not yet own.
Cleanroom and healthcare glove manufacturer Riverstone Holdings (SGX: AP4) is next on the list with its shares up by 10.5% to $0.58 on no news. The last time anything notable happened with the company was its first quarter earnings release on 13 May 2013 where its quartlery earnings-per-share grew by 10.5% year-on-year to RM0.0337.
In any case, Riverstone’s big move would likely trigger market participants’ curiosity, who might be seeking a cause for the movement. But sometimes, share prices just move for no reason other than the fact that share prices are volatile and move daily. It might be hard to stomach such a conclusion, but that’s what life in the stock markets is like. And that’s also why – pardon the repeat – it might serve investors better to be focusing on a company’s business fundamentals, instead of being fixated with intra-day share price movements.
Rounding up the trio is STX Pan Ocean (SGX: GZ9), a shipping company. STX’s shares jumped by 27.9% today to $1.79 on what appears to be an attempt by market participants to try and catch a ‘falling knife’.
The company has been in trouble lately and defaulted on its corporate bonds, listed in the Korean Exchange, on June 2013. In addition, the company also applied for a Commencement of Company Reorganisation on 7 June 2013 to help stabilise the company during this trying period.
STX had filed for a trading half on its shares on 5 June 2013 that was lifted on 17 June 2013. Following the resumption of trading, its shares tanked by 57.9% to $1.40 on last Friday’s close. Today’s jump though, happened on no notable news. It might seem lucrative for other market participants to pile on the shares’ bounce, but trying to catch a “falling knife” is a hit-and-miss affair. After all, the bounce might just be foreshadowing another big fall, thereby ‘cutting’ investors who had betted on this ‘falling knife’.
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