Investors wary due to Trump probe

A fall in oil prices, an expected US interest rate hike and news that US President Donald Trump is under investigation for possible obstruction of justice were the main external events that impacted stock markets this week.

Closer to home, upbeat economic numbers and signs of a revival in the property market were the main features.

Perhaps not surprisingly, banks, which have been the prime movers of the Straits Times Index (STI) this year, were again the central drivers of the index every day.

Meanwhile, in the second line, rotational playing was the order of the day.

Yesterday, the STI slipped 0.65 of a point to 3,231.44, bringing its loss for the week to 22 points or about 0.7 per cent.

Trading was listless, with the index initially rising about 11 points before drifting lower.

Of some concern should be volume, which has been steadily declining since the start of the year when it regularly stood above $1 billion a day and now barely crosses $1 billion.

The tech upswing is not showing any signs of moderating and appears to be strengthening... Maybank Kim Eng economists Chua Hak Bin and Lee Ju Ye

However, a late flurry helped elevate volume to 2.3 billion units worth $1.5 billion, the highest for the week. There were 238 rises versus 190 falls excluding warrants.

CAUTION

Possible reasons for the apparent caution are: the US Federal Reserve has raised rates twice so far this year and has signalled a third hike before year-end; the index has already gained about 14 per cent since the start of the year, suggesting limited upside; and geopolitical concerns from the shock UK election result to developments in Washington surrounding Mr Trump and Russia's alleged meddling in last year's US elections.

During the week, the Singapore Exchange (SGX) queried brand development company Lifebrandz. It replied that it did not know of reasons for the interest.

Property company World Class Global (WCG) listed on Catalist on Thursday at an offer price of 26 cents, while recruitment agency HRnetGroup listed on the mainboard yesterday at an offer price of 90 cents a share.

WCG finished the week at 27 cents and HRnetGroup at 92.5 cents with 17.5 million traded.

The latest trade figures showed that non-oil domestic exports (NODX) contracted 1.2 per cent from a year ago.

Maybank Kim Eng said notwithstanding the headline number, the picture is still bullish.

"(The contraction) is largely due to the high base effect from non-electronic exports (May 2016 levels were a 14-month high)," said its economists Chua Hak Bin and Lee Ju Ye.

"But electronics export growth, a more reliable gauge of global demand, accelerated to 23.3 per cent in May (from 4.8 per cent in April).

"The tech upswing is not showing any signs of moderating and appears to be strengthening...

"We expect the gross domestic product recovery to continue to broaden, forecasting 3 per cent for 2017."

DBS Bank senior economist Irvin Seah, on the other hand, said that while it is possible to attribute the decline in the headline NODX figure to non-electronics exports' high base, he preferred to see it as another clear sign that the export rally is losing steam.

"This is consistent with our view that export demand may be peaking," said Mr Seah.

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