Possible Outcomes of Tonight's EU Summit

kimeng

Publish date: Fri, 29 Jun 2012, 11:07 AM

Warrants Highlight

Possible Outcomes of Tonight's EU Summit

Code	Name	Type	Expiry	Exercise Price
QP9W	STI 2750MBeCW120831	Call	31-Aug-12	2750
QE8W	STI 2950MBeCW120831	Call	31-Aug-12	2950
QN3W	CN7800MBeCW120730	Call	30-Jul-12	7800
QN5W	CN8000MBePW120730	Put	30-Jul-12	8000
QG3W	HSI19600MBeCW120730	Call	30-Jul-12	19600
QG5W	HSI19200MBePW120730	Put	30-Jul-12	19200

Starting yesterday, European Union leaders gathered in Brussels for another summit to discuss how to “save” the Eurozone. So far, nothing much has come out of these summits other than the usual rhetoric of “closer collaboration”, “economic stimulus”, etc

Well, this is the 19th European summit since 2010 and by the look of it, we could be expecting the 20th, 21st, 22nd and so on. A trader once jokingly commented that the only beneficiary of these summits is the hotel industry.

However, here are some of possible outcomes of tonight's summit:

1. Eurobond a reality
The French, Spanish and Italians have openly voiced their support on a jointly issued Euro-bond. The move may lower Spanish and Italian debt yields to a more manageable level by leveraging on the strong credit of Germany. This is also widely seen as the best way to prevent the crisis from dragging on. However, the loudest dissent is Germany's Chancellor Angela Merkel, who blatantly said this is "the wrong way" and Eurobond will not happen "as long as I (Merkel) live".

2. The birth of another big fund
They started with the European Financial Stability Facility (EFSF) back in 2010, then they created the European Stability Mechanism (ESM). Europeans have pooled billions of Euros into these so called "firewalls" to ring fence the crisis. However, the effectiveness of these funds could be gauged by the one-following-another bail out of Greece, Ireland, Portugal, Spain and the latest victim, Cyprus.

3. Just kick the can further
Most of the Europeans are currently in the summer holiday mood. With the London Olympics starting in less than 30 days, it is possible that the leaders may try to delay making tough decisions to later part of the year. If they are able to kick the can far enough, it may land only after the US presidential elections in November, hoping that the Americans may launch other big scale stimulus package to boost the global investor confidence or find a solution to their “fiscal cliff”.

Singapore Market Wrap

Excitement fizzled toward end of day

Asian markets failed to hang onto its mid week reinvigoration yesterday, fizzling out toward the end of the day after an enterprising start. In Singapore, the STI had traded up more than one percent to a high of 2,869.29, but eventually finished up just 0.2% day-on-day (dod) at 2,846.82 yesterday.

Call STI 2750MBeCW120831 (QP9W) exercise level 2,750.*
Call STI 2950MBeCW120831 (QE8W) exercise level 2,950.*
Put STI 2850MBePW120831 (QE9W) exercise level 2,850.*
Put STI 2650MBePW120831 (QQ0W) exercise level 2,650.*

Palm oil names rallying ahead of Ramadan?
Defending their gains however, was the palm oil sector, of which constituents such as Wilmar (+1.4% dod, $3.59), IndoFood Agri (+3.0% dod, $1.395), Bumitama Agri (+0.5% dod, $0.945) and Golden Agri (+0.8% dod, $0.660) all outperformed the benchmark bourse. A poll by Bloomberg reveals that palm oil exports from Indonesia, may climb 9.5 percent in June from a month before on sustained demand before the Muslim fasting month of Ramadan.

Call Wilmar MBeCW121203 (QP2W) exercise price $4.00.*
Call INDOFMBECW121203 (QR7W) exercise price $1.30.*
Call IndoAgriMBeCW121101 (QD6W) exercise price $1.50.*
Call Bumitama MBeCW120903 (P9FW) exercise price $1.00.*

DBS expands U.S commercial paper program
In news, DBS said this morning that it has tripled the expansion of its U.S commercial paper program from US$5 billion to US$15 billion.

On Wednesday, the bank's business in India reported its full-year figures, which saw record revenues and profits. DBS is the largest Singaporean bank in India.

DBS was also the only bank that finished in the green yesterday after gaining another 0.3% dod to $13.84.

Call DBS MB eCW120802 (P1CW) exercise price $12.70.*
Call DBS MB eCW120904 (QC6W) exercise price $14.00.*
Put DBS MB ePW121001 (QO9W) exercise price $13.00.*

Overnight Market Wrap

Did someone's fat finger save the day?

The S&P 500 fell to an intraday low of almost 1.4% before a last-hour rally reversed most of its losses. The index ended the day 0.2% lower at 1,329.04. Some financial websites including FXstreet.com reported that there was a 60,000 E-mini S&P futures fat finger order which may have moved the market.

The US Labour Department reported that the number of new claims for unemployment benefits fell to 386,000 in the week ending 23rd June, compared to previous week's revised number of 392,000. Crude oil tumbled 3.1% yesterday.

Overnight Markets

Indices	Last	Change
STI	2846.82	0.2%
HSI	19025.27	-0.8%
DJIA	12602.26	-0.2%
S&P 500	1329.04	-0.2%
Nasdaq	2849.49	-0.9%
China A50	7671.69	-0.6%

Corporate Announcements

DBS Group has expanded its U.S commercial paper program from US$15 billion from US$5 billion.

Discussions

Be the first to like this. Showing 0 of 0 comments

Featured Posts

MQ Chat

New Update. Discover investment communities that resonate with your ideas

VCPlus

Trade Confidently & Analyze Charts Conveniently - Download VCPlus IOS & Android App Now!

Latest Videos