Business

Banks dominate in mixed session

Turnover below post-Nov 8 levels at $1.1 billion, with 74 per cent coming from trading in the ST Index components

A continued push on the banks helped add 6.07 points to the Straits Times Index (STI) at 2,949.12 yesterday, though volume continued to dwindle and the broad market ended mixed.

A new all-time high for Wall Street on Monday helped prop up sentiment, at least as far as the index was concerned.

As for the rest of the market, the advance-decline score of 218 to 209 pointed to a broadly even rather than firm finish.

Turnover amounted to 1.75 billion units worth $1.1 billion, more in line with pre-US election totals than the $1.3 billion average seen since President-elect Donald Trump won on Nov 8.

Of the total dollar value done, $817 million or 74 per cent came from trading in the 30 STI components.

Trading in DBS contributed the most towards value; the stock's $0.19 rise to $18.16 on volume of 8.7 million was worth $157.5 million.

UOB's trades were worth $66.3 million and OCBC's $71 million.

In total, trading in the three banks accounted for $295 million or 27 per cent of the entire market's dollar business.

Despite the index's rise and slight improvement in volume, trading representatives were less than flattering in their assessment of market conditions.

"The index is being supported by people whose bonus depends on it," said one cynic. "The rest of the market is neglected."

For the property sector, Maybank Kim Eng said with another challenging year ahead for the physical market, it finds it difficult to turn more positive on property counters despite cheap valuations.

"We expect almost every property asset class to remain oversupplied in 2017. Occupier market remains weak as population growth and job creation slows," said the broker.

"Residential: We see limited downside to home prices but expect sales volumes to stay weak, as we doubt cooling measures will be lifted anytime soon."

The FTSE ST Real Estate Index ended 0.5 per cent higher.

In the oil and gas sector, shares of offshore subsea vessel operator Pacific Radiance ended $0.009 weaker at $0.146 on volume of 161,000. The company in the morning announced that one of its executive directors, Mok Weng Vai, had been arrested by the Corrupt Practices Investigation Bureau on suspicion of an offence under section 6c of the Prevention of Corruption Act.

Macquarie Warrants (MW) in its daily newsletter said Macquarie Equities Research (MQ) is recommending an "underweight" on Singapore for 2017 as it expects markets in the region to be caught between a stagflationary and disinflationary backdrop.

"MQ thinks Singapore fits with its Asia ex-Japan strategist's 'Twilight Zone' market view for 2017: The outlook for key macro drivers remains lacklustre, and this places continued downside risk on consensus growth expectations for the STI," said MW.

"STI earnings are flirting with a -10 per cent contraction for 2016. Looking ahead to 2017E, consensus is pencilling in a 4-5 per cent growth rebound. But despite the low starting base, this may be a tall order: MQ's top down model signals EPS contraction of 1 per cent for FSSTI in 2017, driven by the weak outlooks for key leading indicators like NODX (non-oil domestic exports) retail (ex motor) sales, and the S$." Its target for the STI in 2017 is 2,930.

DBS's chief investment officer Lim Say Boon, in his latest Investment Insights, said the "Trump Trade" - which is essentially a US reflation trade - is likely to come back after a brief pause.

"Last week's US jobs' data further strengthened market conviction that a Dec 14 Federal Reserve rate hike is a done deal," said Mr Lim.

"Indeed, the Organization of the Petroleum Exporting Countries' announcement last week of production cuts strengthened market conviction on higher inflation feeding into rates and yields."

This article appears in The Business Times today. For full listings of SGX prices, go to http://btd.sg/BTmkts