Markets Insights

Profit-taking likely after global markets' bull run

Keppel Corporation's offshore and marine unit has been taken to task over a former agent's corrupt payments to officials of Brazilian oil company Petrobras.
Keppel Corporation's offshore and marine unit has been taken to task over a former agent's corrupt payments to officials of Brazilian oil company Petrobras.PHOTO: KEPPEL CORP

Interest expected in Keppel counters this week after O&M unit fined $567m over corrupt payments case

If you were expecting the Queen's Christmas Message, this is not it.

Although it might as well be, because today is Christmas Day.

Exchanges around the world have drawn their shutters and traders are probably relaxing with a drink (or two). Markets in places such as Australia, Britain and Hong Kong will remain closed tomorrow, which is Boxing Day.

Still, IG Asia market strategist Pan Jingyi said: "A week that contains little from the Western world may find seasonal factors taking the reins, particularly the likelihood of profit-taking as the quarter and the year come to an end.

"With the spectacular performance we have seen for global equity markets thus far, it would be of little surprise to find the market choosing to lock in the gains."

But guess what does not follow the laws of formal exchanges?

Did someone say "bitcoin"?

Indeed, its price volatility will be something to watch out for as the year draws to a close.

Bitcoin and several other cryptocurrencies, such as ethereum and litecoin, posted one-day plunges of 20 per cent or more at the end of last week.

The sell-offs came amid reports that Goldman Sachs will join Cboe Global Markets and CME Group in the bitcoin trading business.

So bitcoin bulls and bitcoin bears alike will want to keep a close eye on developments for vindication's sake, if nothing else.

When the markets reopen, traders will have time to react to the events that have taken place while stocks lay fallow.

These developments include reports of regulators' probes into shady corporate business.

The Swiss financial markets authority has rapped JPMorgan for breaching anti-laundering regulations in its handling of money related to Malaysia's 1MDB fund, while United States federal prosecutors are said to have sought Deutsche Bank records pertaining to the family business of Mr Jared Kushner, US President Donald Trump's son-in-law and adviser.

Closer to home, Keppel Corporation's offshore and marine unit has been taken to task - to the tune of US$422.2 million (S$567 million) in fines - over a former agent's corrupt payments to officials of Brazilian oil company Petrobras.

Given the unprecedented nature of such an issue for a Singapore company, traders may be forgiven for having no end of interest in the conglomerate's counters this week.

But with the week ahead also the last one of 2017, DBS economists looked a little further ahead in their weekly commentary and were cautiously optimistic.

"We find the last available data points so strong that for both developed and emerging economies, a strong start to next year looks quite likely," they wrote.

"We see ample electronics orders in the pipeline, a healthy inventory dynamic, long dormant indicators like freight rates coming back to life, and early indications of a capex cycle."

Last month's inflation and factory output data for Singapore are due for release tomorrow afternoon.

A version of this article appeared in the print edition of The Straits Times on December 25, 2017, with the headline 'Profit-taking likely after global markets' bull run'. Print Edition | Subscribe