STI rises 14.73 points after boost from banks

Elevated penny stock punting and a push on United Overseas Bank and OCBC Bank provided the main features of yesterday's trading, in which the Straits Times Index (STI) rose 14.73 points to 3,071.64.

Turnover amounted to a healthy 3.67 billion units worth $1.3 billion and, excluding warrants, there were 252 rises versus 207 falls.

More than two-thirds of the STI's rise came from gains in OCBC and UOB, with notable contributions from Keppel Corp and City Developments.

There was some speculation that funds were switching out of 2016's regional outperformers Thailand and Indonesia and into the Republic's market due to the latter's softness last year.

The average value per unit traded was $0.35, indicating that hectic punting of low-priced issues was very much present - 18 of the 20 most actively traded stocks were priced below $0.50, with 17 below $0.20.

Shares of interior design and furniture firm Serrano stood out with a massive $0.027 or 1,350 per cent jump to $0.029 on volume of 111 million shares.

The company has announced a placement of 3.8 billion new shares to a group of investors at $0.002 a share and will call for an extraordinary general meeting to secure shareholder approval.

Shares of logistics and property firm Vibrant Group rose $0.03 to $0.38 on volume of 2.7 million shares.

The company is expected to enjoy a $28 million profit from sale of its share in Plaza Ventures, a vehicle that owns GSH Plaza, to Hong Kong-listed Fullshare Holdings.

GSH Corp, which is also expected to benefit from the sale of its stake in Plaza Ventures, rose $0.035 to $0.57.

Elsewhere, the Singapore Exchange (SGX) queried two companies for reasons behind unusual activity in their shares - Hu An Cable gained $0.002 at $0.008 on volume of 60.8 million while Best World plunged $0.195 or almost 10 per cent to $1.76 with 11.2 million shares traded.

SUPPORT

Goldman Sachs Asset Management (GSAM) in its Feb 3 Global Fixed Income Weekly said recent volatility in the US dollar had occurred because of comments from US President Donald Trump and members of the administration suggesting support for a weaker currency.

"These statements come amid a trend toward protectionist policies that would bolster the currency," said GSAM.

"We are positioned for US dollar strength for two key reasons: We believe the market is under-pricing the extent to which the Fed will raise interest rates this year, and we believe protectionist measures such as a border-adjusted tax and import tariffs would lead to US dollar strength."

Bank of America-Merrill Lynch, however, differs.

In its Feb 3 Global Economic Weekly "So Far, So Good", it said it has revised its US forecasts to show a more constructive outlook in the near-term, and now expects growth of 2 per cent quarter-on-quarter in the first three quarters of the year.

"We also bumped up our Fed call to two hikes this year - in June and December. That said, we think one hike is more likely than three hikes," it said.

Mr Christian Nolting, Deutsche Bank's Wealth Management's chief investment officer, said he remains cautious on equities as most indices remain near record highs.

"Mr Trump has been active in office, but there has been limited discussion regarding US corporate tax reform and infrastructure spending - the pro-growth policies investors are hoping for," said Mr Nolting.

"These items need Congressional approval, and the popular reaction to the new president has left investors nervous about the timing and likelihood of their implementation.

"History also suggests that US equities can suffer reversals in the February following the inauguration of a president from a different party."

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