Mixed session despite another US high

There is a growing feeling among market watchers that the Straits Times Index's (STI) best days for the year came in the first half, and for the remaining three months, a slow downward drift is all that can be expected.

This view has formed over the past few weeks as the STI traded within a tight band, relatively immune to Wall Street's consecutive all-time highs though reacting to the downside whenever North Korea launched a missile test.

Yesterday, STI failed to react positively to another all-time US high, which came after the Federal Reserve left interest rates unchanged and announced a relatively tame programme to unwind its bloated balance sheet.

In relatively quiet trading, the STI drifted to a 4.25-point loss at 3,213.82.

Although volume of 1.8 billion units worth $1.1 billion bettered Wednesday's $824.4 million, it was only just above the industry's unofficial breakeven of $1 billion. Excluding warrants, there were 215 rises versus 211 falls, so trading was more mixed than weak.

Jardine stocks were the STI's biggest losers, led by Jardine Matheson, which lost US$1.59 (S$2.15) at US$63.65 on volume of 374,600.

OCBC Bank ended seven cents higher at $11.08 with about 3 million traded. There has been speculation its insurance subsidiary, Great Eastern, will have to sell its stake in its Malaysian unit for $1.35 billion to comply with new laws. RHB Bank said its analysis points to minimal impact on OCBC's profitability, that is less than 2 per cent, if such a sale takes place.

It said: "Assuming the sale takes place at the price quoted by the media, the excess of sale price over embedded value works out to 13 cents per OCBC share, which is a positive but not significant."

Its target for OCBC is $10.96.

Shares of media and property firm Singapore Press Holdings (SPH) have been under pressure lately but have in the past few days staged a rebound, yesterday rising eight cents to $2.71 with about 10 million done.

OCBC Investment Research said while residual uncertainties continue to hang over the group's core media business, it believes the price correction is likely overdone at this point.

"We note that the 45.2 per cent year-on-year decline in the group's last reported Q3 FY17 Patmi (profit after tax and minority interests) was primarily due to a sizeable one-time impairment ($37.8 million) related to the magazine business, without which the group's recurring earnings would have declined only 19.2 per cent year-on-year," it said.

"We leave our fair value estimate unchanged at $3.25; upgrade the stock to 'Buy' on valuation grounds."

Another index component that has been weak lately is ComfortDelGro, which had bid for the Thomson-East Coast train line but saw the contract awarded to SMRT instead.

Daiwa Securities said in a Sept 19 report that this loss to SMRT greatly diminishes Daiwa's original expectation that ComfortDelGro would be a key beneficiary of greater use of public transport in Singapore.

The broker said this prompted it to lower its discounted cash flow-based 12-month target price for ComfortDelGro from $3.19 to $2.09 and downgrade the stock from "buy" to "hold". The counter ended two cents weaker at $1.965 on volume of 13.8 million.

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