STI turnover lowest in at least a month
Index drops after Hang Seng Index and Dow futures losses
The Straits Times Index (STI) yesterday slipped marginally into the red for 2016 when it lost 19.66 points at 2,882.04 in response to a 0.8 per cent loss in Hong Kong's Hang Seng Index, and a 25 point drop in the Dow futures.
Turnover at 1.3 billion units worth $758 million was the lowest in at least a month, though it was not unexpected. Excluding warrants, there were 141 rises versus 276 falls.
Throughout the year, the STI has struggled to stay above 2,882.73, the level at which it ended last year. On the three or four previous occasions when it managed to rise above this level, the stay did not last long.
This time round, the index rose above 2,882 on Nov 30 and it spent three weeks in the black for the year.
Yesterday, history repeated itself when selling of mainly bank shares dragged the STI down to an intraday low of 2,874 before a late bounce cut its loss to just 0.69 of a point for 2016 so far.
Of the top 20 most actively traded counters, 13 ended weaker. Spackman Entertainment's shares again topped the list, finishing $0.007 down at $0.189 on volume of 71 million.
The most active counter was a structured call on the Hang Seng Index issued by UBS with an exercise price of 22,400 and March 30, 2017 expiry that fell $0.02 or 14 per cent to $0.122 on volume of 101 million.
Among the few broking firm reports in circulation was CIMB's "buy" on ComfortDelGro, in which it said that overseas acquisition was driving growth.
"ComfortDelGro has announced the acquisition of the remaining 49 per cent stake in its Australian bus business, CDC. The acquisition price of A$186 million (S$196 million), based on 4.6x 2015 Ebitda, is palatable and should not be a stretch to the group's balance sheet, in our view," it said.
"We raise our FY17-18F EPS by 3.9-5 per cent to reflect the positive impact on the group's net profit from the additional stake in CDC. We maintain our 'add' call on ComfortDelGro, with a slightly higher target price of $2.91, based on CY17F DCF (discounted cash flow)."
RHB in the meantime, reiterated a "buy" on ComfortDelGro. It increased its FY17-18F profit by 3-3.3 per cent and raised its target price to $3.24.
"We remain positive on ComfortDelGro's well-diversified business that offers growth avenues even in a weak economic environment," said RHB.
ComfortDelGro shares ended $0.04 weaker at $2.51 with 6 million traded.
Elsewhere, shares of satellite broadcasting solutions firm Global Invacom fell $0.019 to $0.141 on volume of 2.7 million after the company said that it expects to report a loss for the year ending Dec 31. It added that "the consolidation will translate into improved gross margins and operational cost efficiencies in FY2017 and beyond".
Natixis Asset Management's latest Allocation Perspective on "Trumpian Tropism" said that the most surprising aspect of the recent US rally is that euphoria on Wall Street completely ignores the possibility that certain campaign promises will be implemented - promises that would have an incredibly damaging impact on the US cycle, particularly the major shift towards protectionism (trade barriers) and massive deportations of undocumented residents.
"These moves would clearly have a stagflationary impact on the US economy," said Natixis' multi-asset strategist Raphael Gallardo. Secondly, we may well raise questions on the extent and timeframe for economic stimulus. The infrastructure and defence investment programmes look likely to have a virtually neutral cyclical impact on an economy that is close to full employment."
This article appears in The Business Times today. For full listings of SGX prices, go to http://btd.sg/BTmkts