Business

Banks, window dressing lift STI

The STI adds 25.14 points at 3,235.96, helped by gains in the banks, Singtel, Jardine Matheson and Cycle & Carriage

Wednesday's window dressing push that saw the Straits Times Index jump higher in the final seconds and volume hit $2 billion continued yesterday, albeit with much less intensity - the index gained 25.14 points at 3,235.96 but volume dropped sharply to 2.1 billion units worth $1.3 billion.

Spurred by the index's gains, the broad market followed suit, eventually recording 269 rises versus 181 falls excluding warrants.

Probably also helping were rises in Hong Kong and the Dow futures, the latter indicating a firm opening for Wall Street yesterday.

Rises in the banks were the main contributors to the STI, with gains in Singtel, Jardine Matheson and Cycle & Carriage also notable.

In the second line, shares of Loyz Energy topped the actives list when they rose $0.002 to $0.021 on volume of 113 million.

The company in the early afternoon said it noted the high volume in its shares, adding that it "reviews strategic options on an ongoing basis and, in connection with this, holds discussions with a range of parties regarding possible transactions in relation to, among others, including mergers and acquisitions", adding that no deal has yet been reached.

Elsewhere, shares of property developer and manager Perennial Real Estate jumped $0.045 or 5.3 per cent to $0.90 on volume of 1.2 million, drawing a query from the Singapore Exchange.

The company responded by pointing to a May 31 story by Bloomberg which said United Engineers' (UE) largest shareholders appear to be selling the company to Perennial, which was one of UE's suitors. Perennial added that although it had submitted a bid for UE, there is no assurance that a deal will be reached.

SGX's investor education portal My Gateway reported that share buybacks last month were conducted by 20 companies and amounted to 18.5 million shares worth $48.6 million, an eight-month high that was 160 per cent more than the $19 million for April.

"The five stocks with the largest buyback consideration value last month were OCBC, Japfa, Singapore Exchange, SIA Engineering Company and Singapore Press Holdings," reported My Gateway.

"For a third consecutive month, OCBC had the highest buyback consideration in the month, taking the total number of shares purchased on to the 12 month mandate effective 28 April to 3 million."

Natixis Global Asset Management's chief market strategist David Lafferty, in his latest Capital Market Notes titled "Too Late for Stocks?", said global stocks are in their ninth year of a rally that started at the March 2009 bottom, and that "how long can the rally last?" is the most frequently asked question among clients.

"Investors should be cautious on equities not because stocks are likely to go down, but simply because the return per unit of risk deteriorates as valuations become extended," said Mr Lafferty, referring to the fact that although the expansions in Europe and the US are gaining traction, prices have become very elevated.

"As a result, the outlook for equities is a balancing act between improving fundamentals and extended valuations."

Meanwhile, Rabobank's Global Daily offered its own take on the meaning of the new word invented by US President Donald Trump in a recent tweet - "covfefe".

"The new adjective singularly captures the concept of arrogantly proceeding with an action even when its actual effects are almost entirely opposite to those that one wished to achieve,'' said the bank.

For the US, Rabobank said the Fed looks set to raise rates this month and run down its balance sheet despite no signs of inflation.

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