Business

STI plunges 27.55 points to 3,218.8

Wall Street's Monday hesitancy and dip in Dow futures weigh on market

Wall Street's unsure Monday session and an afternoon slide in the Dow futures were the main reasons behind the Straits Times Index's 27.55-point drop to 3,218.8 yesterday, a fall that was initially cushioned by a rise in the Dow futures.

However, at 5pm, the latter had surrendered a 30-point rise and was on the verge of sliding into the red.

Turnover was a relatively heavy 2.1 billion units worth $1.2 billion and, excluding warrants, the whole market recorded 198 rises versus 223 falls.

In the food and beverage sector, Thai Beverage ended $0.005 down at 91 cents with about 10 million shares traded.

PhillipCapital initiated coverage of Thai Beverage with an "accumulate" recommendation and a sum-of-the-parts target price of $1.05.

The broker said among the reasons for its recommendation was that the company's "ongoing premiumisation efforts have paid off and that "Chang beer gained about 10 per cent market share to about 40 per cent within three months". It thinks the positive momentum would continue such that Chang beer will become the leading beer in Thailand with at least 45 per cent of market share by FY20.

Also in the food and beverage sector, shares of Del Monte Pacific ended $0.005 weaker at 31 cents on volume of 656,900.

In a July 3 report titled "Still needs more time for cultivation", DBS Vickers maintained its "hold" on the stock with a revised target price of 32 cents.

"Given the headwinds facing Del Monte Foods, Inc (DMFI) and the planned higher investments behind innovation and current core operations, we believe it could take longer than earlier anticipated for DMFI to show substantial contributions," said the broker.

"As a result, we have cut our revenue and gross profit projections, particularly for its US operations, coupled with higher operating expenditure. We have cut our FY18/19F earnings by 38/43 per cent and, accordingly, reduced our target price."

In the real estate investment trusts sector, units of Mapletree Logistics Trust (MLT) ended $0.005 down at $1.185 on volume of five million shares.

OCBC Investment Research noted that the trust recently announced the proposed divestment of two of its freehold properties in Japan at attractive prices and that the divestment gains will be distributed to MLT's unit-holders.

"We factor in MLT's Japan divestments in our model, and also lower our cost of equity assumption from 8.2 per cent to 8 per cent which results in a slightly higher fair value estimate of $1.15 (previously $1.14)," said the broker.

"Nevertheless, we are maintaining our 'hold' rating on MLT as we believe its solid execution capabilities as highlighted earlier and positives have already been priced in by the market."

Second board Catalist saw a new entrant yesterday, Y Ventures Group, a data analytics driven e-commerce retailer and distributor.

It has three business segments: e-commerce retail and distribution; logistics and freight forwarding services; and waste management services.

Its shares were offered at 22 cents and touched an intraday high of 28 cents before closing at 25.5 cents on volume of 6.1 million shares.

CMC Markets in its morning commentary said investors are waiting for US Federal Reserve chair Janet Yellen's congressional testimony tomorrow to paint a clearer picture of the market outlook.

"Key focus includes her assessment of the US economy, and how this might affect Federal's future monetary policy - in particular the timing of the central bank's plans to cut the balance sheet," said CMC.

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