Business

Market continues winning streak

Strong local earnings, Abe's landslide win and renewed optimism over US tax-cut plan behind upbeat sentiment

Singapore shares started out strong yesterday, hitting an intraday record high for the first time in over two years before shedding some gains, but it managed to extend the rally for the seventh straight session.

In the first 30 minutes of trading, the benchmark Straits Times Index (STI) hit 3,360.95 before erasing some of the gains.

Still, the STI added 9.07 points, or 0.27 per cent, to close at 3,349.80.

This was buoyed by strong local earnings, the upbeat sentiment from the landslide win by Japanese Prime Minister Shinzo Abe's Liberal Democratic Party and renewed optimism over US President Donald Trump's tax-cut plan.

CMC Markets Singapore analyst Margaret Yang said: "Four STI component companies have announced their Q3 earnings, with all of them meeting or exceeding expectations.

"Improvements in the macro-economic environment over the last four quarters have gradually translated to favourable corporate earnings, and this is the fundamental driver of a bull run."

Turnover came in at two billion units worth over $1 billion. Excluding warrants, the advance-decline score was 228 to 196, an indication that trading is weak.

Of the index heavyweights, shares of Keppel Corporation continued to chalk up gains yesterday, adding 11 cents to finish at $7.41 on a volume of 8.2 million units.

The three banks - DBS, OCBC and UOB - added a combined 4.2 points to the STI, with DBS leading the pack.

Among the most active counters was Thai Beverage, whose shares rose one and a half cents to $0.975 on volume of almost 18 million units.

Topping the actives list was Magnus Energy, which ended the day unchanged at $0.001, with more than 175 million units changing hands.

Coming in second was the shares of plastics product manufacturer Fu Yu. More than 81.6 million units were traded yesterday, and the stock added two cents to finish at $0.21.

STI's rally came amid news that Singapore's inflation numbers last month were in line with analyst expectations.

Maybank Kim Eng yesterday said in its report that based on year-to-date numbers, headline inflation will likely come in lower than expected this year, posing downside risks to its forecast of +0.9 per cent.

"The Monetary Authority of Singapore recently reduced its headline and core consumer price index forecast for 2017 to +0.5 per cent and +1.5 per cent respectively," it said.

"For 2018, we expect headline and core inflation to rise to +1.2 per cent and +1.7 per cent respectively, driven by a cyclical economic recovery and rising services and commodity prices."

Trading across the region was mixed, with Tokyo's Nikkei posting its longest winning streak in its nearly 70-year history and Seoul's Kospi ending at another record high.

Malaysian shares also closed higher but Hong Kong's Hang Seng ended the day down, dragged by banking and property shares.

IG analyst Jingyi Pan said in her note yesterday that the crucial step of delivering the US Budget resolution would be one of many in the tax overhaul journey, ahead of the year-end deadline previously determined by Republican officials.

"For the nearer term, I am inclined to believe that the market would allot their attention to the data drivers this week including the US Q3 gross domestic product due Friday.

"A mixed set of economic indicators arriving of late certainly provides the potential for growth to surprise, one to follow," she said.

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