4 TOP STORIES The Business Times, Monday, June 29, 2009

WALL STREET INSIGHT

See-sawing US stocks
smell of self-doubt
Market hitting the
half-year mark,
but investors
are holding back
By ANDREW MARKS
in New York
STOCKS battled their way
to a near-draw last week af-
ter starting off with a big
sell-off, leaving bulls and
bears arguing over which
camp has the market’s mo-
mentum leaning their way.
“On the one hand, we fin-
ished the second half of the
week strong, with encourag-
ing economic data and sur-
prisingly good earnings
news leading the way, but
on the other hand even the
good news, which included
a big dollop of reassurance
from the Fed, wasn’t
gloom and doom mood that
had made words like de-
pression, deflation and fail-
ure the predominant vocab-
ulary on Wall Street.
The drift to lower and
narrow trading range
stocks have fallen into in re-
cent weeks has disappoint-
ed some bullish analysts,
who had been expecting to
see the sideline cash in the
hands of institutional inves-
tors start to be deployed as
the second quarter drew to
a close.
“We’ve been unable to
break out of these levels as
the focus has turned from
optimism that we are in
fact going to get a recovery
to worries that the econo-
my’s recovery is going to be
a very tepid one well into
2010,” observed Hugh
Johnson, chief investment
place and the catalyst for
the next move upward isn’t
really clear,” Mr Johnson
said.
Talk of a summer fade
for stocks has been gaining
currency in the last week or
two, with some analysts,
such as the equity team at
JP Morgan Securities, fore-
casting that the S&P 500
will sink as low as 830
come September, a dip of
89 points, or 10 per cent
from last Friday’s close.
But bullish analysts
maintain that improved
third quarter outlooks from
corporate America in the
upcoming earnings season,
and signs of growth in the
economy will get stocks
back into rally mode by
mid-July.
On Friday, stocks ended
due in the coming holiday
shortened week, which will
see the stock market closed
on Friday in honour of Inde-
pendence Day.
The most anticipated
piece of data is the June em-
ployment report, due out
on Thursday, but many
economists will be looking
closely at Wednesday’s re-
lease of the national survey
of manufacturing by the In-
stitute of Supply Manage-
ment for June.
Economists were pleas-
antly surprised last month
that the May industrial pro-
duction numbers showed
new orders above the key
50 level, despite the auto in-
dustry cuts. Last week’s es- ALBERT SIM/THE STRAITS TIMES
timate beating durable All lit up: PM Lee was the Asian Youth Games’ first torch-bearer for the Central District yesterday after
goods number was another
receiving the torch from chef-de-mission James Wong (left) at Yio Chu Kang Stadium
harbinger of economic re-
covery, rather than just a

AYG flame begins

enough to overcome a one
day sell-off,” said Michael
Murphy a technical analyst
at Equities Research Advi-
mixed, reflecting the mixed
strategist at Johnson Illing- “less-bad” scenario.
message on the economy
ton Advisors. “So far the A repeat for the ISM da-
delivered by the two most
economic data is only show- ta this month will be a
important data releases
ing us that conditions are strong indicator that the re-

journey across Singapore

sors.
“It’s not decisive to one
side or the other, but I’d
say the bears have the
short-term momentum in
their favour right now, with
caution being the primary
directive for investors,” he
said.
In truth, though, stocks
appear to have arrived at a
standstill as the second
quarter draws to a close
this week, with few inves-
tors willing to make big
bets on which direction
stocks are most likely to
head following a 40 per
cent comeback from the
first quarter’s March lows,
and more significantly the
worsening at a slower
pace, and that’s no longer
enough for the stock mar-
ket. We need to see signs of
a turnaround,” he said.
Indeed, the main topic
of discussion on Wall Street
is dominated by three let-
ters – L, V, and W – as in
which shape the economic
recovery will most resem-
ble. And the prevailing
view is that an L-shaped, or
flat-recovery is the most
likely scenario. Not exactly
the stuff of which bull mar-
kets are made.
“It’s hard to get too en-
thusiastic about the overall
market after a 40 per cent
rise off the bottom’s taken
that day. An unexpected
surge in consumer confi-
dence was countered by
word that Americans are
keeping their money in
their pockets, as the sav-
ings rate climbed to 6.9 per
cent , the highest level in 15
years.
The Dow Jones Industri-
al Average lost 34.01, or
0.4 per cent, to close at
8,438.39 points. The S&P
500 fell 1.36 points, or 0.16
per cent, ending the week
at 918.9, while the
tech-heavy Nasdaq gained
8.7 points, or 0.5 per cent,
to 1,838.2.
For the week, blue chips
turned in a loss of 1.19 per
cent, the second straight los-
ing week for the Dow, while
the S&P 500 slipped a mere
0.25 per cent, and the Nas-
daq Composite managed a
0.59 per cent gain.
Stocks will be putting
the second quarter to bed
tomorrow and starting the
second half of the year on
Wednesday with several im-
portant economic reports
cession could end as soon
as the third quarter, econo-
mists said.
“Investors seem to be
getting impatient and uncer- By LEE U-WEN
Speaking at the ceremo- will feature 1,400 teenage terwards, he said he was
tain about the economy’s re-
[SINGAPORE] Several sen- ny, Deputy Prime Minister athletes from 43 countries, “confident and happy” with
covery, but these numbers
ior members of Singapore’s Teo Chee Hean, who is also will be officially declared the organisation of the
tell me we are solidly on
Cabinet, including Prime president of the Singapore open tonight by Prime Min- event so far, despite a tight
track to see a positive
Minister Lee Hsien Loong, National Olympic Council, ister Lee during a gala cere- schedule, limited resources
number for GDP for the
were up and about early said he hoped that all torch- mony at the Singapore In- and having to deal with the
third quarter,” said Citi-
yesterday morning to kick bearers and participants of door Stadium. Influenza A (H1N1) virus in-
group economist Steven
off the torch relay of the in- the relay and other AYG-re- Mr Lee, incidentally, fecting a number of ath-
Weiting.
augural Asian Youth lated activities would “pass was the first torch-bearer letes.
Tomorrow will bring the
Games (AYG). on the important values for the Central District Other ministers who
release of the S&P/Case
The AYG flame began its and theme of this torch re- route, which saw the flame took part at various stages
Shiller home price index,
two-day journey across the lay”. pass through Orchard in yesterday’s relay inclu-
the Chicago purchasing
island after a flame-lighting The theme is “Igniting Road. He was handed the ded Law Minister K Shan-
managers report and con-
ceremony at the Kallang Sporting Passion in Asia’s torch by AYG chef-de-mis- mugam and Manpower
sumer confidence num-
Waterfront, which was at- Youth”, while the three sion James Wong, an Minister Gan Kim Yong.
bers. Pending home sales
tended by a 500-strong routes the flame is travel- eight-time Southeast Asian Today’s relay will see a
are due on Wednesday,
crowd including AYG Or- ling on are named after the Games discus gold medal- flame-lighting ceremony at
along with the ADP employ-
ment report, construction ganising Committee steer- Olympic values of friend- list. the village, before the three
spending and monthly auto ing committee chairman ship, excellence and re- The last leg of yester- torches make their way to
sales. Ng Ser Miang. spect. day’s torch relay saw Com- 45 schools and then, final-
After the tech sector got A total of three torches “l pass on the important munity Development, ly, the Indoor Stadium.
a boost last week from will be carried by 180 peo- values and theme of this Youth and Sports Minister There, three Singapore ath-
Palm’s estimate-walloping ple across three different torch relay. Now is the time Vivian Balakrishnan take letes – swimmer Tao Li,
numbers, it’s a quiet week routes. The flame is regard- for Singapore to unite be- the flame from Marina bowler Remy Ong and
for earnings, with only Gen- ed as a symbol of the en- hind the Asian Youth Square to its resting place shooter Jasmine Ser – will
eral Mills and H&R Block deavour for perfection and Games and all who will par- at the AYG Games Village be the final torch-bearers
scheduled to report quarter- the struggle for victory, ticipate in it,” said Mr Teo. at Swissotel The Stamford. to ignite the AYG flame dur-
ly numbers. peace and friendship. The nine-day AYG, which Speaking to reporters af- ing the opening ceremony.

S’pore investors halve US stock purchases in Q1 Still buying

By CHUANG PECK MING
[SINGAPORE] Cash-rich Singa-
pore investors, who have been
picking up bargains on Wall
Street after the crash in stock
prices, are showing signs of fa-
tigue along with other Asian buy-
ers – especially the Japanese.
During the first three months
of this year , net purchases of US
corporate stocks by Singapore in-
vestors were slashed more than
half to US$2.24 billion, com-
pared with the final quarter of
2008 (Q4/08), according to the
latest figures released by the Unit-
ed States Treasury Department.
As the fallout from the
sub-prime crisis set off more pan-
ic, leading to more sell-offs and
sinking US stock prices, Singa-
pore investors had sniffed bar-
gains and shifted from a “sell” to
a “buy” position in Q4/08.
They mopped up a net US$5.5
billion of shares listed on the
New York Stock Exchange, after
Foreign net purchases of US
offloading a whopping net Except for the Canadians, Aus- from a net US$17.59 billion in corporate stocks
US$10.3 billion in the previous tralians and Africans, global in- Q4/08.
quarter. vestors generally were on a shop- The Japanese accounted for Q1 ‘09 Q4 ‘08
Japanese investments in US ping spree in the US in Q1/09, the bulk of the purchases, or (US$million)
shares plunged from a net raising their net purchases from US$58.46 billion, up sharply All countries 9,418 2,091
US$12.69 billion in Q4/08 to US$2.09 billion in Q4/08 to from US$5.62 billion in Q4/08. Asia 11,516 21,532
US$7.26 billion in Q1/09, the US$9.42 billion in Q1/09. Mainland Chinese were also big
Japan 7,259 12,691
worst quarter for the Dow Jones Among Asians, every major investors in T bonds, piling up a
Industrial Average in percentage net US$14.49 billion in Q1/09, Singapore 2,239 5,513
player continued to pick up US
terms since 1939. up from US$4.23 billion. Hong Kong 918 3,005
stocks in Q1/09 – though in small-
Measured by change in index But Singapore investors sold South Korea 267 39
er amounts. Hong Kong inves-
level, the Standard & Poor’s 500 tors made the biggest cut-back, a net US$418 million in T bonds Taiwan 200 -315
dropped 12 per cent, making the reducing their purchases by over in Q1/09, reversing a net buy of China 121 268
first quarter of 2009 the fifth US$1.69 billion in Q4/08. The In- Malaysia 16 138
two-thirds from Q4/08 to
worst in the past 80 years, ac- donesians also dumped a net
US$918 million. Philippines -3 -33
cording to figures compiled by US$2.4 billion in T bonds, while
Bloomberg and BusinessWeek. The Japanese remained the the Thais off-loaded a net Thailand -3 -15
biggest Asian investors on Wall US$2.19 billion. Indonesia -11 -21
Asian investors on the whole
slashed their purchases on Wall Street, followed by Singapore- European investors also di- India -58 -14
Street from US$21.53 billion in ans. vested in T bonds, letting go of a Europe 6,117 -3,532
Q4/08 to US$11.52 billion in But while Asian investors be- net US$12.04 billion in Q1/09 af- Caribbean 547 -14,320
Q1/09, just as their European came less active buyers in US ter they bought US$22.96 billion New Zealand 176 -102
counterparts started to play stocks in Q1/09, they stepped up in the previous quarter.
Latin America 47 -804
catch up. their stakes in US Treasury Globally, thanks to the Japa-
bonds. Led by the Japanese, Australia -735 -1,382
The Europeans reversed gear nese, investors purchased a net
to pick up a net US$6.12 billion Asians on the whole snapped up US$88.16 billion in T bonds in Africa -998 35
in US stocks, after dumping a net a net US$83.87 billion in the Q1/09, up from a net US$22.69 Canada -6,882 691
US$3.53 billion in Q4/08. debt instruments in Q1/09, up billion in Q4/08. Source: US Treaasury

F1 chief: You’re dancing on my grave too soon

[LONDON] Motor racing
chief Max Mosley claims he
is under pressure to stay on
as head of Formula One’s
(F1) governing body after
opponents rushed to write
his obituary following a
peace deal last week.
“They made the mistake
of dancing on my grave
before I was buried,” the
69-year-old Briton told the
Mail on Sunday newspaper
in an interview.
The International Auto-
mobile Federation (FIA)
president suggested the For-
mula One Teams Associa-
tion (Fota), led by Ferrari
president Luca di Mon-
tezemolo, had made a seri-
ous miscalculation.
“It’s no good the teams
getting a PR agency to claim
I am dead and buried when
I am standing here as large
as life. I am under pressure
now from all over the world
to stand for re-election,” he
said.
“I do genuinely want to
stop. But if there is going to
be a big conflict with the
car industry, for example,
with the Fota teams, then I
won’t stop,” he added. “I
will do whatever I have to
do. It’s not in my nature to
walk away from a fight.”
Mr Montezemolo and
Fota came to an agreement
with the FIA last Wednes-
day to scrap Mr Mosley’s
planned budget cap and
avert a breakaway series.
Mr Mosley said he would
not stand for re-election in
October and looked for-
ward to a quiet summer. It
was understood that the
FIA Senate, under Mona-
co’s Michel Boeri, would
handle F1 matters in the in-
terim.
A day later, the FIA pres-
ident suggested that the
deal could collapse unless
Mr Montezemolo apolo-
gised for likening him to a
dictator. Mr Mosley also
wrote to FIA members urg-
ing them to stand up to the
teams and manufacturers.
While expressing anger
and astonishment at Mr
Montezemolo’s comments,
although he himself la-
belled some team bosses
loonies (lunatics) at the Brit-
ish Grand Prix, Mr Mosley
also dismissed the Italian.
“I don’t really expect
Luca will apologise or with-
draw in the way that he
should,” he said of a foe,
who has largely ignored the
Briton’s recent statements.
“Yet, on the other hand,
within the motor sport
world nobody takes him se-
riously.
“He’s seen as what the
Italians call a bella figura
(beautiful figure). He’s
chairman of Fiat but the se-
rious individual who runs it
is Sergio Marchionne, and I
don’t suppose he takes
much notice of Luca.”
Mr Mosley said it was
“business as usual” for him
otherwise.
“I do not want to leave
the president’s office in a
way where it was suggested
that people from the car in-
dustry had pushed me out.
If that impression is not
completely dispelled, the
clubs are going to insist
that I stand again,” he said.
“So I hope very much
that it will be dispelled be- AFP
fore we get to that point.” – Mr Mosley: The FIA president says he is under
Reuters pressure from all over the world to stand for re-election