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UNLESS Shanghai displays signs of more destabilisation, local blue chips may well end on a high note for the month of August, as its last trading day draws to a close today.
Despite earlier fears of a ferocious correction after the run-up last month, August has turned out to be a fairly decent month for traders.
Last week, the benchmark Straits Times Index rose 3.9 per cent to 2,642.8 points, as it recovered from the wobbles triggered by a sharp correction in the red-hot Shanghai market which sent tremors across the globe.
Here, hopes of an early economic recovery enabled investors to shrug off the Shanghai blues, luring bargain-hunters from the sidelines to snap up blue chips as their prices corrected.
Even Wall Street was well-behaved. The violent price swings experienced during August in the past two years were largely absent, as trading volumes dwindled and traders went on their summer holidays.
In Singapore, property counters were in hot demand, as investors salivated over the earnings which developers might enjoy, as HDB upgraders snapped up mass-market condos like hot cakes.
This, in turn, triggered a demand for other counters such as banks, which might benefit from an increase in demand for home loans.
Gaming counters such as Genting Singapore and Star Cruises also got a big boost, as investors positioned themselves for the opening of the two integrated resorts next year.
This spawned buying interest in a host of blue chips such as Singapore Press Holdings, SingTel and StarHub, which might benefit from any rise in tourist arrivals because of the new attractions.
Over the past fortnight, even penny stocks and China plays roared back to life. This enabled daily traded volumes to surpass three billion shares for three straight days last week.
Yet, some stock pundits doubted that the stock market was back in the pink of health following the shock it suffered when the global financial system almost collapsed last year.
UBS warned last week that a sizeable correction might take place. 'The speed and magnitude of the market collapse and the subsequent rally are reminiscent of the Asian financial crisis,' it said.
Others voiced concern that the manner in which speculative counters are now commanding investors' attention was reminiscent of the last leg in previous run-ups when penny stocks attracted similar adoration.
Disquiet was also expressed on Wall Street where 'wounded' stocks such as AIG and Citigroup, which had enjoyed huge US government infusion of funds, had dominated market action of late.
This has led to worries the global stock market rally might go off the rails, as the summer holidays draw to an end and fund managers return to trim their portfolios.
September has always been a bountiful time, as farmers harvest their crops. For investors, profit-taking may also be on the cards, as they cast a wary eye on the coming month - traditionally the most turbulent trading period of the year.
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