Business

STI rises after Trump's inauguration, oil report

Banks, Jardine Matheson and Keppel Corp help Straits Times Index gain 14.4 points

Stock markets don't seem to mind alternative facts all that much, at least for the time being.

The Singapore bourse finished 0.5 per cent up yesterday, with the Straits Times Index (STI) advancing 14.4 points to 3,025.48, after the inauguration of United States President Donald Trump.

The local blue-chip index got a lift after a higher close on Wall Street last Friday, the day Mr Trump was sworn in.

According to Reuters, that was the first time in more than 50 years that equities have risen on a new US president's first day in office.

The STI's climb was mainly driven by the three banks along with conglomerates, including Jardine Matheson and Keppel Corp.

It also came after Saudi Arabia's oil minister said over the weekend that the Opec oil producers were showing "very good" compliance with an agreement to cut crude output.

Trading volume was decent here, though emphasis was on second-liners. About 2.12 billion shares worth $973.6 million in total changed hands, which worked out to an average unit price of $0.46 per share.

The most actively traded counter was HLH Group, which fell $0.001 to $0.009 with 156.8 million shares changing hands.

Other actives included Equation Summit and AA Group. The field was quite evenly matched, with 210 gainers to 230 losers.

Yesterday also marked the start of another seasonal quarterly deluge of corporate earnings in Singapore, with the week set to be dominated by real estate investment trust (Reit) and business trust results releases, apart from an evident lull on Friday, which is the Chinese New Year Eve.

The early birds, however, have been a mixed bag thus far despite stronger economic output figures for the final three months of last year.

Shopping mall landlord CapitaLand Mall Trust (CMT), for instance, was downgraded yesterday by at least one research house amid headwinds for the local retail scene.

Bearish sentiments reigned for the counter, which fell 1.3 per cent or 2.5 Singapore cents to finish the session at $1.960.

Brokerage RHB downgraded its rating on CMT to "neutral" in a Monday note, saying that it expects tough market conditions to hurt rental growth.

It expects rental growth to slow down to 1 per cent this year, compared to a 10-year average of 6 per cent growth per year. It cut its target price from $2.36 to $2.07.

Though CMT is revamping Funan DigitaLife Mall, full contributions from the redevelopment will likely kick in from 2020, it added.

UOB Kay Hian also kept its "hold" call on CMT and its target price unchanged at a relatively low $1.95, saying that this valuation was based on a dividend discount model with required return of 6.3 per cent and terminal growth of 1.2 per cent.

It pointed out that if CMT had not propped up Q4 distribution per unit (DPU) by distributing some retained income from an earlier quarter, DPU would have fallen 11.8 per cent from the previous year.

However, UOB Kay Hian also maintained its "overweight" rating on Singapore's Reit sector in general.

Some other brokerages were more bullish on CMT. OCBC Investment Research and DBS Group Research both kept their "buy" calls on the Reit.

OCBC Investment Research said there were still "potential total returns of about 16 per cent", though it reduced its target price from $2.23 to $2.20.

DBS Group Research said it expected "flattish to marginal DPU growth for the next couple of years", and cut its discounted cash flow-based target price to $2.17 from $2.25.

svan@sph.com.sg

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

stock marketdonald trumpoil