ADX is falling, and the DIs are neutral, indicating that the index may continue to trend within a sideways range. On Jan 8, the STI made a new high of 3,886 and this is likely to be the resistance level for some weeks.
Elsewhere, China’s GDP growth in 4Q2024 of 5.4% y-o-y was above expections. Robert Gilhooly, senior emerging markets economist, abrdn, says this could imply that the whole-economy price deflation has ended, reducing the risk that rising real rates offset some of the policy easing.
“We may need to see another positive print or two before markets are convinced that deflationary risks have receded – the surprise rebound in the deflator is somewhat at odds with ongoing weakness in consumer, producer and export prices,” Gilhooly mulls.
“Given the likely lag in transmission between the end-September policy pivot and the impact on the economy, this could imply that the bulk of the policy loosening is still to work its way into activity — this should help provide much needed momentum into 2025 as the question of a trade war with the US is one of scale and magnitude,” he adds.
See also: STI may retreat on strong overbought pressures but REIT Index may break out
The most liquid proxy for China is the Lion-OCBC Securities HSTECH ETF which mirrors the movement of the Hang Seng Tech Index. The ETF has built a secondary base around 72 cents and resistance appears at 76.7 cents.
Short-term RSI has managed to rebound above its equilibrium line suggesting that this move could have legs. In this event, the HSTECH ETF may attempt to challenge its resistance at 76.7 cents.
A breakout may not materialise in the week of Jan 20-24, but there could be a more successful attempt at a breakout when the year of the snake begins.
See also: Can the STI hold above 4,000?
Finally, RHB Bank’s acting group chief economist, Barnabas Gan, has a “counter-consensus” view on the direction of interest rates. He believes that that there will be three US Fed Funds Rate cuts this year with the earliest cut to materialise in 2Q2025.
If so, the S-REITs would benefit. For the time being, the REITs are not acting like they will be swept up in the euphoria of a tailwind of cuts.
