Expect the STI to rise and led by banks, in line with US financials after Bank of America’s CEO said the company is profitable and needs no more aid from the US government. US lawmakers are pressing for changes to mark-to-market accounting rules as soon as possible. The rule required companies to market their assets to current value, forcing many banks to write-down billions of dollars on their books that have made it tough for some of them to meet capital regulatory requirements.
Changes to these rules in US could affect the way that investors’ look at bank valuations here. Mark-to-market available for sales losses for UOB amounts to $2/share of book value over the year while that for OCBC is only 28cts/share.Looking at the technical oscillators and percentage below 2008 lows that both stocks have fallen to; UOB shares are more oversold compared to OCBC. The 8-wk RSI for UOB is 20 while OCBC is 27. The weekly stochastics for UOB is 5 while that for OCBC is 12. Technically, we see UOB shares going to $8.80 followed by $9.20.
The STI should head for 1555 followed by 1600.
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