Business

Banks, Jardine stocks drag STI lower

Singapore index down 16.76 points to 3,230.42 yesterday despite all-time high on Wall Street on Monday

Wall Street's new all-time high on Monday failed to lift sentiment here yesterday, with the Straits Times Indexsliding to a 16.76 point loss at 3,230.42 on volume of 2.7 billion units worth $1.07 billion, compared with $765 million on Monday.

The STI's fall was in line with movements in the Dow futures, where the contract first rose 25 points but drifted lower by 5 pm.

Within the index, losses in Jardine Matheson, Hongkong Land and the three banks were the biggest drags. Excluding warrants, there were 215 rises versus 214 falls. The average value per unit traded was $0.39.

Activity in the second line was focused mainly in low-priced issues, some for speculative purposes but others because of recent announcements.

In the latter category was construction and engineering firm Ley Choon whose shares ended $0.003 higher at $0.045 on volume of 91.8 million.

The company on Monday announced that it has clinched five new contracts worth a total of $51.4 million from various parties for the execution of underground utility infrastructure and construction works.

Also notable was Noble Group, which rebounded sharply for the second consecutive day, this time by $0.03 at $0.505 on volume of 161.4 million.

The company has announced that it has been granted a four-month credit facility extension and that it continues to be in talks with potential investors concerning the sale of an interest in the company or its subsidiaries or parts of its business.

"While no assurance can be given that these discussions will result in a transaction, they are ongoing and constructive," said Noble.

Rubber glove-maker Top Glove's shares managed a $0.03 rise to $1.78 on volume of 7,600.

The Singapore Exchange's investor education portal, My Gateway, reported that Asia's healthcare sector is benefiting from structural growth trends such as ageing populations and rising disposable incomes.

"The global rubber glove industry is a direct beneficiary of an expanding healthcare sector as rubber gloves are often seen as an indispensable item for hygiene purposes," said My Gateway, adding that there are three rubber glove plays with a combined market capitalisation of $3 billion listed on SGX, of which Top Glove Corporation is the largest at $2 billion.

In other news, Fitch Ratings said that the recovery in global growth is strengthening and is expected to pick up to 2.9 per cent this year and peak at 3.1 per cent next year, the highest rate since 2010.

"Faster growth this year reflects a synchronised improvement across both advanced and emerging market economies.

"Macro policies and tightening labour markets are supporting demand growth in advanced countries, while the turnaround in China's housing market since 2015 and the recovery in commodity prices from early 2016 have fuelled a rebound in emerging market demand," said Mr Brian Coulton, Fitch's chief economist, in its Global Economic Outlook.

As for Wall Street's rise, few commentators have been able to provide plausible reasons.

Rabobank in its Global Daily report pondered the question without success, other than noting that the Monday's rally came despite comments from United States Federal Reserve officials that "it is full speed ahead with rate hikes and the start of a Fed quantitative easing unwind even before we get rates back to normal, let alone the whole economy".

US newspaper Barron's was also unable to account for Monday's jump but quoted analysts who noted that the rise has been led by financial and technology stocks which is somewhat similar to late last year.

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