Market firmer with STI up 8.55 points

The Straits Times Index yesterday tracked movements in overseas markets closely, first rising when the Dow futures bounced higher but sliding in the late afternoon when Europe opened in the red and the Dow futures started displaying weakness.

At 5pm, the index stood 8.55 points higher at 3,231.24. The broad market was relatively firm, recording 254 rises versus 194 falls, excluding warrants.

Turnover this year has shown improvement over last year's sub-$1 billion daily averages, though both unit and dollar values have been slipping lately.

Yesterday, volume was 2 billion units worth $994.2 million compared to $1.3 billion a week ago.

Overseas markets were relatively calm despite a terror attack in the UK and reports from the US that President Donald Trump asked intelligence chiefs to push back against the FBI's probe into suspected collusion with Russia.

The VIX Index, which measures the options market's assessment of future volatility and is often seen as a fear gauge, on Tuesday fell to historic lows.

Within the banking sector, UOB ended $0.16 higher at $23.46 on volume of two million. RHB maintained a "buy" on UOB with a $25.95 target price saying the latter's first quarter net interest income growth of 2.1 quarter-on-quarter outstripped that of its peers.

"Going forward, UOB's NIM (net interest margin) should widen with the expected hike in US FFR (federal funds rate), which would contribute to stronger net interest income." said RHB.

"UOB also has robust balance sheet strength. Its loan loss coverage of 117 per cent is higher than its two peers' average of 102 per cent, acting as a buffer, given asset quality uncertainties from a rising Sibor (Singapore Interbank Offer Rate) and weak domestic economy.''

In the property sector, shares of Wing Tai shot up $0.075 to $1.92 on volume of 3.4 million. The company on Tuesday announced a RM290.7 million (S$94 million) takeover offer for its Malaysian-listed counterpart Wing Tai Malaysia Berhad (WTM), a move seen as streamlining its business.

In response, OCBC Investment Research maintained a "buy" on Wing Tai with an unchanged fair value of $2.37.

"Given the benefits of a potential WTM privatisation and the reasonable offer price (the net asset value per WTM share was RM2.70 per share as at end June 2016), we see this development as a positive one," said the broker.

Elsewhere, shares of coal mining firm Geo Energy Resources ended $0.02 firmer at $0.26 with 13.2 million traded.

Phillip Capital said in a May 24 report that it is maintaining an unchanged forecast of 8.5 million tonnes of coal sales volume at an average selling price of US$37 (S$51) per tonne for the current financial year and has raised its net profit forecast from US$41 million to US$42 million.

"Based on unchanged PER of 11x, we maintain our target price of $0.45 for FY17," said Phillip.

Elsewhere in the second line, the Singapore Exchange despatched queries to Malaysian shipbuilder Nam Cheong and plastic injection moulding firm Sunningdale Tech.

Nam Cheong's shares ended $0.004 higher at $0.027 on volume of 46 million while Sunningdale's shares gained $0.145 or 8 per cent at $1.95 with 4.8 million traded.

As for Wall Street, traders are waiting for details of the US government's budget.

CMC Markets said that since there appear to be significant cuts to social welfare spending, the budget will likely face some dissent from Congress.

"On the other hand, if implemented, this proposal could encourage lower-income people to return to the jobs market and thus provide a sustainable, longer-term drive towards economic growth.

The surge in the US dollar (on Tuesday) was probably a reflection of this assumption," said CMC.

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