The Straits Times / The Business Times News on AsiaPharm

No soccer but still a sleepy session

Indecisiveness over US interest rate outlook, Wall St holiday lead to dull session

JUDGING by the way trading went yesterday, one might have thought there were lengthy World Cup matches televised on Sunday night or early Monday morning, such was the soporific session that observers had to endure during which prices hardly budged and volume tapered off sharply from the totals enjoyed at the end of last week.

Alas, the market's stupor had nothing to do with football and was entirely due to indecisiveness over what the US interest rate outlook might be, last week's Wall Street rally notwithstanding.

Also a factor was the fact that the US market is closed for Fourth of July holidays, thus robbing markets everywhere of direction. Furthermore, Wall Street could undergo a volatile week when it reopens tomorrow because of various earnings reports, plus economic reports like Friday's June employment data. As such, dealers found themselves struggling to stay awake while simultaneously trying to find decent trading themes to keep themselves occupied.

Still, though dealers hadn't stayed up all night watching football, certain parallels were possible. For example, the England's failure to build on their pre-World Cup hype was mirrored by the market's inability to build on last week's bounce - turnover, excluding foreign currency issues, was 770 million worth $675 million versus Friday's $1.4 billion, while the advance-decline score, excluding warrants, was an unspectacular 153-172.

If Brazil's exit at the hands of a rejuvenated France was unexpected, so was the day's top gainer - SIA Engineering surged 28 cents to $3.96 on volume of 1.7 million. There was a difference though - pundits explained Brazil's loss as being due to poor tactics and underperforming big name stars, while dealers could not put their finger on specific reasons for the interest in SIA Engineering, especially since parent SIA's shares ended 10 cents down at $12.60.

Elsewhere, AsiaPharm enjoyed the greatest demand in the China segment after unveiling a new treatment for chronic diarrhoea - it ended five cents stronger at 77.5 cents on volume of 17 million units. Meanwhile, Parkway Holdings' 11-cent rise to $2.58 and Sino-Environment's 8-cent rise to 88.5 cents also caught the eye.

On Wall Street, DBS's Economics unit said: 'There are plenty of major numbers to chew on this week, starting with the manufacturing ISM yesterday and ending with the employment report on Friday.'

'These releases should keep the bond market volatile now that the Fed has repeatedly made number watching the main feature for making its rates decision going forward. Hence, over the coming week, it pays to stay nimble. The 2-year/10-year Treasury spread has been flat since the FOMC meeting last week, with yields falling on short-covering. We continue to believe that the US economy is en route to a slowdown in the coming months and the Fed would have to finetune interest rates lower, probably in 1Q07. That would result in lower bond yields and a steeper curve.'