Business

Market a hive of activity as month ends

Fall of STI ahead of Trump address within expectations but spurt in volume suggests month-end portfolio rebalancing

The last day of February saw the Straits Times Index (STI) fall 12.01 points to 3,096.61, very much within expectations as markets wait to hear US President Donald Trump's address to Congress.

The broad market sagged with 166 rises against 348 falls excluding warrants but it was the spurt in volume which caught the eye as it suggested month-end portfolio rebalancing.

More than 2.7 billion units worth $2.65 billion was done, more than twice the $1.1 billion done on Monday and the highest one-day total this year.

Most of the loss came in mid-afternoon, when the Dow futures fell into the red and selling picked up pace in Hong Kong that dragged it to a 0.8 per cent loss. At 5pm, the Dow futures stood almost flat for the day.

Noble Group was the day's most active stock, dropping to an intraday low of $0.22 before closing unchanged for the day at $0.23 on volume of 298.7 million shares.

The firm on Monday announced a net profit of US$8.7 million (S$12.2m) for 2016, a reversal from a net loss of US$1.67 billion in the previous year.

Also active was Global Logistics Properties, which ended $0.08 down at $2.66 with 84 million shares done.

The company on Monday provided an update on a strategic review that it had announced earlier, emphasising that non-binding proposals which may or may not lead to a takeover have been received and that it is evaluating them.

Bank of America-Merrill Lynch in its Feb 27 World at a Glance report said markets are still very much focused on US fiscal policy, as President Trump and the Republican Congress have been a bit slower than expected in laying out their ambitious agenda.

"Indeed, attempts to follow through with immediate 'Repeal and Replace' of the Affordable Care Act have faded as of late." said BoA-ML.

TRUMP ADDRESS

"However, President Trump is set to lay out additional policy specifics at a speech to Congress on Feb 28, and of course his priorities will ultimately be communicated in his initial budget."

DBS chief investment officer Lim Say Boon in his Feb 27 Investment Insights said the "feel good" sentiment in the US was boosted by US Treasury Secretary Steven Mnuchin's claim that taxation cuts and deregulation could bring US economic growth back to about 3 per cent.

"Stay three-month overweight on the US market. But beyond this rally, we advocate a more cautious stance on a 12-month perspective," said Mr Lim.

"First, given the current political realities, policies proposed by the Trump administration may take longer than expected to implement.

"Second, the political situation in Europe remains a risk that the market may not have sufficiently priced in.

"German bund yields have been trending south in light of rising uncertainties in the French presidential election.

"Should far-right candidate Marine Le Pen of the National Front eventually win, France's membership in the Euro Area will be thrown into disarray."

Bank of Singapore's chief investment officer Johan Jooste in his Feb 28 "Will Mr Trump Deliver?" said that while there has been a lot of talk about policy, unless an actual bill has been drafted and submitted to legislative process, it doesn't count as an actual policy proposal.

"Thus far we have not had any policy proposals from Trump, just tweets and speeches. Strictly speaking, neither of these count," said Mr Jooste.

"The pressure is beginning to build on Trump to put actions to words. In the meantime, we hold fire on changing any position in portfolios: We prefer to wait for more substance before deciding whether the Trump rally is here to stay."

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

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