Business

STI slips but bull market rages on

Venture Corporation soars 91 cents to $22.48, contract manufacturer trading at a high not seen since March 2000

The weather might be rather sloppy, and many regional indices wilted in the damp. Singapore's benchmark Straits Times Index similarly ended down 4.2 points, or 0.1 per cent, to 3,520.45.

But the bull market rages on. Just look at contract manufacturer Venture Corporation, which soared 91 cents to $22.48. The contract manufacturer is now trading at a high not seen since March 2000.

Meanwhile, Brent crude traded above US$69 a barrel as hedge funds piled on their bets and United States inventories tumbled. At home, rig builders such as Keppel Corp and Sembcorp Marine rose.

Property counters remain favourites. In Hong Kong, Country Garden - China's largest developer by sales and a component of the Hang Seng Index since December last year - continued its startling rally by rising 6.7 per cent.

Mr Ben Luk, global macro strategist at State Street Global Markets, told The Business Times that sheer liquidity, along with earnings growth, explains the various rallies. The market is expecting loose monetary policies due to low inflation.

"Money itself does not have the same intrinsic value as it did 10 years ago," he said.

Analysts are talking up the property sector in Singapore - developers such as City Developments and UOL rose.

Credit Suisse said Singapore is at the "beginning of a residential upcycle", noting that property prices have fallen in recent years while household incomes continue to rise.

It likes developer UOL and raised its target price from $9.40 to $10.80.

Across the tech and manufacturing sector, the picture was mixed.

WORTHWHILE

In Japan, robotics firm Fanuc smashed past the 30,000 yen (S$358) mark to another historical high. Investors figured out that paying almost 40 times historical earnings was still worthwhile for a company consistently growing profits at more than 20 per cent year on year.

But Apple supplier TSMC fell in Taiwan. Samsung Electronics shares also fell in South Korea after its profit guidance for the fourth quarter disappointed expectations.

The market has been worried about the memory chip boom fading, and fund managers have been cutting their exposure on the sidelines.

Among the small caps in Singapore, the breakout in precision machining firm JEP Holdings continued for a second day.

On Tuesday, JEP, which supplies aerospace-related components, soared to $0.041 from $0.035, up 17 per cent, on 29.5 million shares traded.

Yesterday, JEP rose another 12 per cent to $0.046.

As is common with penny stocks, people are left, in the absence of news, to speculate on what is causing the rally.

It will have to make significantly better profits. After all, for the half year ended June 30, 2017, JEP had barely broken even with net profit of $10,000, up from losses of $236,000 a year ago. Revenue rose 11 per cent to $39.5 million.

It highlighted that its equipment manufacturing segment - not its largest by revenue but one of the most profitable - will continue to contribute to the group, given a strong and broad-based upswing in the semiconductor sector.

The only other disclosed development of note was in September last year, when JEP announced the setting up of a joint venture company in China, with a focus on expanding its core aerospace business.

Meanwhile, crane supplier Hiap Tong sprang to life after it said it was awarded a five-year extension to its contract with oil supermajor ExxonMobil. Hiap Tong soared 31 per cent to $0.145.

For full listings of SGX prices, go to http://btd.sg/BTmkts