Business

STI up 1.1% after window dressing

Straits Times Index gains 36 points to close at 3,175.44 for the month

Even as worries over France's presidential election faded, there was a replacement to keep the market occupied - the Trump administration's tax plans.

Details have been sketchy so far, resulting in the US and other markets unsure of what the next move should be.

Yesterday, the Straits Times Index (STI) finished with a 4.08-point gain at 3,175.44, which took its gain for the week to 36 points, or 1.1 per cent.

Turnover yesterday, the last trading day of the month, came to two billion units worth $1.6 billion - the highest since March 31, when $1.6 billion was also done. Excluding warrants there were 218 rises versus 258 falls.

Both days likely beneficiaries of window dressing.

Blue chips in play during the week included those that reported their latest earnings, such as CapitaLand, various real estate investment trusts and Sembcorp Marine.

Sembcorp Marine on Thursday reported a 28 per cent drop in its Q1 net profit to $39.5 million. Yesterday, its shares lost $0.10 at $1.63 with 17 million traded.

On April 20, Keppel Corp reported a 23 per cent rise in its Q1 net profit to $260 million as lower profit in the Offshore & Marine division was offset by improved earnings from the Infrastructure and Investments divisions, as well as steady contributions from Property.

...indeed, employment growth in the manufacturing sector extended its streak of negative readings to 11 quarters. Nomura, in its note yesterday

Macquarie Warrants (MW) yesterday said Keppel Corp has been under-performing the STI in the last two weeks, dropping 4.9 per cent since April 17, while STI gained 0.1 per cent over the same period.

"Keppel Corp's share price drop came on the back of a 7.9 per cent pullback in crude oil prices, as well as its first quarter results on April 20, which were below market expectations," said MW.

It said Macquarie Equities Research is "neutral" on Keppel Corp with a $5.80 target price.

Keppel Corp, which is now trading ex-a $0.12 dividend, yesterday fell $0.06 to $6.51 on volume of 6.83 million traded.

Nomura, in its note yesterday, said the weak labour market continues to diverge from the recent pick-up in headline gross domestic product (GDP) growth.

"The acceleration in economic growth is narrowly-based, mainly on the surge in semiconductor manufacturing, which is more capital intensive," said Nomura.

"The rest of the economy remains weak and, indeed, employment growth in the manufacturing sector extended its streak of negative readings to 11 quarters.

"While we recently raised our 2017 GDP growth forecast to 2.5 per cent from 1.7 per cent due to the semiconductor surge, our view of weak domestic demand remains unchanged.

"We remain cautious of the longer-term growth outlook because of structural factors."

As for US President Donald Trump's tax plan, newspaper Barron's quoted Commonwealth Financial Network's Brad McMillan as saying that "as presented, the plan allocates much of the tax relief to the wealthy, which means it will be difficult to get votes from Democrats".

Another analyst was quoted as saying they are not policy strategists but investment strategists. "As such, at our core, we believe stocks are defined by fundamentals, not noise and certainly not drama.

"Yes, lower taxes will likely boost earnings. But the costs associated and the actual implementation of any plan need to be clearer, in our view."

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

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