Business

STI breaks four-day losing streak

Banking stocks help offset losses by telcos, offshore and marine counters

Singapore equities finally broke the four-day losing streak to close higher yesterday, led by a rally in banking stocks, even as uncertainties remained.

The benchmark Straits Times Index (STI) pulled back from a late intraday high of 3,144.05 but managed to end the session 11.6 points or 0.37 per cent higher at 3,137.88.

Turnover was 2.5 billion units valued at $1.2 billion, comparable to 2017 averages.

Trading within the broader market was mixed though, with 230 risers versus 225 losers, excluding warrants.

Across Asia, markets were mostly higher, save for Japan, which ended nearly flat for a second day on the back of uncertainties driven by the first round of French presidential elections at the weekend and mounting tensions over North Korea.

Back home, the gains from the banking stocks, Jardine Matheson and Wilmar International helped offset losses made by the telco trio Singtel, StarHub and M1, property player City Developments, and offshore and marine counters including Keppel Corporation and Sembcorp Marine.

Combined, DBS, OCBC and UOB chalked up an eight-point gain in the index.

Leading the pack was UOB's counter which closed up 21 cents at $21.75, with 1.8 million shares traded.

This was followed by OCBC, whose shares added seven cents to end the day at $9.60, where 3.5 million units changed hands. Shares of DBS went up 12 cents to close at $18.91, with 3.3 million units traded.

On Wednesday, Morgan Stanley had topped Wall Street's expectations to post solid first-quarter earnings that were driven by its fixed-income trading revenue, which doubled year over year. Morgan Stanley's results were in contrast to Goldman Sachs's shocking earnings miss earlier that had led the Dow to close lower.

Also among the leaders and in the actives list was ComfortDelGro, whose shares added more than a point to the index.

OCBC Investment Research's Mr Eugene Chua yesterday reiterated a "buy" call on the stock with a target price of $2.95.

"Singapore's LTA announced on Wednesday that ComfortDelGro's (CDG) 75 per cent-owned subsidiary, SBS Transit (SBST), has been awarded the Seletar Bus package, which is the third package that was put up for tender. The five-year contract's estimated total fee is $480.3 million, and can be extended by another two years depending on performance.

"SBST will progressively from Q1 2018 operate 26 bus services, of which it is already currently operating 13."

Of the laggers, Singtel took prime spot, losing 1.7 points. Its shares continued its downward trend, losing two cents to finish at $3.74.

It was also on the actives list, with more than 20 million units traded. The other two telcos, M1 and StarHub, also swung into the red.

Offshore and marine counters also sank yesterday. Keppel Corporation lost nine cents to close at $6.55 before the release of its Q1 results, while Sembcorp Marine fell 2.5 cents to end at $1.715.

Mr Sim Moh Siong, currency strategist at Bank of Singapore, warned yesterday that investors should avoid chasing the pound rally, given that the aggressive pound movement may be premature.

This, as the initial bullish reaction to an early United Kingdom election continues to look "outsized".

"Our view remains that GBP (British pound) is cheap. GBP's cheap valuation would make GBP a compelling buy if talks between UK and EU get tough and result in GBP/USD dipping to 1.20 and below sometime over the next six months."

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