Business

STI hits new 12-month high after Dow's peak

Dow's crossing of the historic 20,000 mark spurs strong sessions in Asian markets

Buoyant market sentiments led by Wall Street and gains in blue chip stocks helped the benchmark Straits Times Index (STI) hit a fresh record yesterday - the highest in the past 12 months.

The STI finished on a broadly firm note, closing 11.84 points or 0.39 per cent higher at 3,051.78, after retreating from an intraday high of 3,058.98 in the late afternoon.

Turnover came in at 2.3 billion units worth S$1.3 billion, better than last week's S$1.1 billion daily average.

Excluding warrants, gainers outnumbered losers 245 to 183.

In the region yesterday, markets continued to rally, with Japan's Nikkei, Hong Kong's Hang Seng, South Korea's Composite Stock Price Index and Malaysia's Kuala Lumpur Composite Index all finishing higher.

The strong sessions in Asian markets came after the Dow Jones Industrial Average hit a historic high on Wednesday by crossing the 20,000-point mark.

Along with the Dow, S&P 500 and Nasdaq also closed at all-time highs as investors shifted back to higher-yielding investments and away from safe bets such as bonds.

US stocks had risen sharply following the presidential election, spurred by hopes that President Donald Trump would usher in pro-growth policies including tax cuts and ramping up infrastructure.

Already on Tuesday, Mr Trump announced that the two major pipeline projects that had been blocked by former president Barack Obama were to be advanced.

Still, concerns remain.

Ms Camilia Goh, senior analyst of equity research at the Bank of Singapore, noted that risks of tariffs on Chinese trade with the US looks likely to persist through the next four years of Mr Trump's era, "which has negative implications for Asia given the inter-connected production chain in the region that feeds into China's final goods exports to the US".

Back home, financial stocks, some of the biggest gainers since the US election, continued to lead the markets.

Together, DBS and OCBC added more than seven points to the STI, while UOB lagged behind in the red. DBS's counter ended the day at S$19.03 after rising 18 cents and OCBC shares climbed nine cents to S$9.43. Shares of UOB slid one cent to S$20.98.

Among the top movers was CapitaLand, which also made it into the most active list.

The stock closed up six cents at S$3.27, with nearly 15.7 million units traded.

But the counter that was the most actively traded yesterday was Equation Summit Limited, which had more than 508 million shares changing hands, ending the day's session S$0.007 lower at S$0.025.

Its wholly-owned subsidiary, Disa Digital Safety (DiSa), had on the same day retracted earlier statements that said DiSa had rolled-out point-of-sale activation technology to all Walmart stores.

DiSa clarified that it is working with selected product manufacturers that produce items with such technology and that might be available in Walmart stores in the upcoming months.

On the broader term, Ms Goh said: "We start the year maintaining a cautious stance on Asian equities ahead of externally driven variables that will unfold in the coming months.

While our base case expects economic growth momentum for most of Asia to continue in 2017, Trump's continued protectionist rhetoric has increased risks for trade conflicts with foreign trade partners, which may negatively impact both economic growth and corporate earnings forecasts for Asia."

That said, she added that there are emerging opportunities to accumulate Asian domestic demand growth plays for the longer term investor.

In Singapore, domestic consumption plays such as Sheng Siong and Singtel are favoured.

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