Business

Shares down ahead of Trump speech

But ST Index stays just above the 3,000 level; losers outnumber gainers at a ratio of nine to eight

Happiness is reality minus expectation, as they say.

And after weeks of elevated optimism in the market about how US President-elect Donald Trump's plans to cut taxes and spend on infrastructure - that wall, for instance - will likely give a fillip to the world's biggest economy, Wednesday may have seemed a good day to recalibrate those hopes.

Some hours ahead of Mr Trump's first press conference since before the November election, scheduled for late yesterday Singapore time, local stocks ended the day 0.2 per cent lower, with the benchmark Straits Times Index (STI) dropping 5.08 points to 3,000.94.

The index mirrored the broad market. Losers outnumbered gainers 233 to 206, or about nine down for every eight up.

Still, slightly reassuringly, the index remained a whisker above the psychologically significant 3,000-point threshold.

It had broken above that level on Tuesday for the first time in 14 months, making the local bourse one of the best-performing markets worldwide so far this year.

Trading volume was also fairly decent, and most of the interest centred on smaller stocks.

About 1.75 billion shares worth S$1.19 billion in total changed hands, which worked out to an average unit price of S$0.68 per share.

The most actively traded counter was Catalist-listed air-conditioning firm Natural Cool, which rose S$0.041 to S$0.164 with 122.7 million shares changing hands. Other actives included Noble Group and Equation Summit.

Among large caps, gainers in the STI basket included Singtel, DBS and Singapore Press Holdings, while losers included Hongkong Land, OCBC and UOB.

Outside the basket, postal and e-commerce group Singapore Post (SingPost) ended the session flat at S$1.525 despite a report from Deutsche Bank Markets Research on Wednesday with a "buy" call and a 12-month target price of S$1.70.

Saying that the stock's current price was "at floor valuation of circa S$1.50 per share", Deutsche Bank analyst Joshua Lee estimated that the company's postal segment was worth S$1.16 per share and its investment properties including its SPC mall were together worth S$0.32 per share.

SingPost's capital expenditure is forecast to "ease off with rising FCF (free cash flow) yields" from about 1 per cent in FY2017 to about 5 per cent in FY2019, he said.

He added that from FY2017 to FY2020, he expects its e-commerce division will post a revenue compounded annual growth rate (CAGR) of about 27 per cent, while its logistics segment will have an earnings before interest and tax CAGR of about 25 per cent "due to a lower base in FY17E and from Alibaba/US-APEC flows".

"Such growth would prove that the concept of a regional e-commerce logistics player is viable... Significant impairments are unlikely, unless assumptions vetted by auditors are wrong or business deteriorates significantly."

In the second-liner space, building maintenance company ISOTeam dropped half a cent to close at S$0.405, even though brokerage RHB said in a Wednesday morning note that it kept its "buy" call on the stock and raised its target price from S$0.54 to S$0.59.

Noting that ISOTeam is acquiring Rong Shun Engineering for S$6.45 million and bagged S$22.7 million worth of new contracts, RHB said ISOTeam's orderbook would likely be boosted to a "record high of S$101 million". "We expect more projects wins to come from home improvement programme projects as well as solar installation works."

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