STI ends lower in another muted session

Wikipedia defines Chinese water torture as "water slowly dripped onto a person's forehead, allegedly making the restrained victim insane".

Traders point out that they have been undergoing a worse fate - slow death by boredom for more months than they care to remember.

Yesterday's session provided a good example of this, when the Straits Times Index (STI) hardly twitched before sliding in the afternoon to a net loss of 8.67 points at 3,280.28.

That the STI did not react to the 47th all-time high for the Dow Jones Industrial Average on Tuesday did not raise any eyebrows, because the correlation between movements in the United States and stocks here the next day has ceased to exist for many weeks now.

But the afternoon selling that picked up speed from around 3pm was likely in response to a sudden slide in the Dow futures that started at that time, a slide that suggested a weak Wednesday for the US market.

The turnover figures here reinforced the view that yesterday should have been cancelled due to a lack of interest - some two billion units worth $1.1 billion were traded. Excluding warrants, there were 221 rises versus 235 falls.

Singapore is not alone - trading in China and Hong Kong are said to be also quiet.

All local banks weakened, led by DBS and UOB, which both ended $0.15 down at $21.35 and $24.07 on volume of 1.9 million and 1.1 million respectively.

In the property sector, the re-rating of City Developments (CDL) continued, with the stock rising $0.07 to $11.92 with 3.2 million traded. The company has announced a bid to take its London-listed hotel subsidiary Millennium & Copthorne private, a deal brokers have said is positive for CDL.

As for the rest of the sector, Maybank Kim Eng in an Oct 6 report said it has refreshed its models to take into account the latest collective sale deals and land acquisitions.

"The recent uptick in the Urban Redevelopment Authority property price index has marked a turning point in Singapore's property market, and we expect RNAV (revalued net asset value) discounts for Singapore proxies to narrow," it said.

On hopes on Wall Street that the Trump administration will be able to push through its tax reforms, Bank of Singapore's chief investment officer Johan Jooste noted that the process is complex and controversial and passage will be difficult.

"Primarily the current proposals will increase the deficit by far more than US$1.5 trillion (S$2.03 trillion). That means the proposed 20 per cent corporate tax rate is more likely to end as 25 per cent, but it also means that lawmakers will need to be aggressive in granting exemptions. It looks like the probability of tax reform passing is around 50-50," he said.

US newspaper Barron's said Credit Suisse strategist Jonathan Golub and team forecast the S&P 500 hitting 2,875 by the end of next year, which is 12.7 per cent more than Tuesday's close of 2,550.64.

"Our S&P 500 price targets for year-end 2017 and 2018 imply a 10 per cent to 11 per cent annualised return over the next 15 months. These targets are the result of separate underlying estimates for earnings per share (EPS) and multiples," said Mr Golub.

"EPS estimates are in turn based upon revenue, margin and share count (buyback) forecasts... Our market views are predicated on a supportive economic backdrop, with benign recessionary risks and a pickup in near-term indicators."

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