Business

Last-minute push drives STI up 6 points

Trading sentiments buoyed by data that China's factory activity grew at steady pace

The local bourse's key Straits Times Index (STI) finished May's last trading day on a higher note although it had stayed flat to lower for much of the last couple of hours, snapping out of a three-day dour run.

An eleventh-hour push led the key STI to close 6.03 points up at 3,210.82 on healthy trading volume of $2 billion yesterday, snubbing Wall Street's lower close overnight on Tuesday.

Trading sentiments were buoyed by positive data that China's factory activity grew at a steady pace, signalling further stabilisation in the world's second largest economy.

Other key Asian markets closed mixed with Hong Kong's Hang Seng down 0.2 per cent, China's Shanghai Composite up marginally by 0.2 per cent, Japan's Nikkei 225 closing lower by 0.1 per cent and Australia's ASX 200 rising 0.1 per cent.

Singapore shares have spent the second half of May on consolidation mode due to lack of fresh catalysts and profit-taking activities after nearly four months of rallying, said CMC Markets Singapore analyst Margaret Yang.

The STI has slid to around 3,200 points, down from recent peaks of 3,275 and if it breaks below the psychological support level of 3,200, she expects it to open the floor to the next support at 3,156.

June may not be vastly different, if track record is anything to go by.

"The turn of the page to a new month reminds us that June had historically found softness on a monthly basis, though the recent powering up of Asian economies could lead us to seeing otherwise," said IG Markets' Jingyi Pan.

The turn of the page to a new month reminds us that June had historically found softness on a monthly basis... IG Markets' Jingyi Pan

CIMB Research in its latest strategy report said the worst could be over for Singapore after two straight years of earnings contraction with the FSSTI's core earnings per share falling 6.3 per cent and 8.1 per cent in financial years 2015 and 2016 respectively.

But lately, it said there appeared to be "decent upgrades" for the first time since the second quarter of 2014 led by the banking and gaming sectors.

Fundamentals may not be as bad as the market had initially expected while gross domestic product growth for this year is on track to reach the higher end of its 2.5 per cent to 3 per cent forecast range, it said.

CIMB's latest target for the FSSTI is 3,248 points based on 14 times earnings multiples for calendar year 2018.

OCBC Bank, one of the day's big gainers, was up 8 cents or 0.8 per cent at $10.49.

GOOD NEWS

The banking sector received some good news with Moody's Investors Service yesterday revising its outlook for Singapore's banks to stable from negative on the back of improving growth, asset quality and profitability.

The other two banks fell, with DBS Bank retreating 13 cents or 0.6 per cent to $20.47 and United Overseas Bank slipping 11 cents or 0.5 per cent to $22.98.

Leading the gains in the local bourse was Thai Beverage, which climbed 3.5 cents or 4 per cent to 87.5 cents.

CapitaLand gained 5 cents or 1.4 per cent to $3.56, while City Developments jumped 17 cents or 1.6 per cent to$10.65.

The gains in these counters plus OCBC added nearly 10 index points to the STI.

Telco stock M1 climbed 2 cents or 0.9 per cent to $2.26. Bloomberg reported that Singapore's Internet provider MyRepublic was seeking a private equity partner to bid for the telco.

It also reported that Warburg Pincus was no longer pursuing M1.

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