Business

Trading remains lacklustre

Local bourse's turnover at 1.5 billion units worth $890 million yesterday is weak by this year's standards

Trading yesterday remained as quiet as it was on Monday, with prices drifting with a downward bias in low volume.

The war of words between the United States and North Korea was cited as one reason for the insipid session, during which traders kept their eyes on the Dow futures and Hong Kong for direction.

While both also drifted with no real purpose, support here came from news that Singapore's industrial production rose by a stunning 19.1 per cent last year versus the same month last year. The nett result was that the Straits Times Index finished 3.87 points weaker at 3,212.04.

Turnover at 1.5 billion units worth $890 million was weak by this year's standards. Excluding warrants, there were 193 rises versus 223 falls.

In the electronics manufacturing sector, Venture Corp's shares have stood out with large gains in the past few months, drawing queries from the Singapore Exchange on Aug 2 and Sept 13.

In both cases, the company replied by saying essentially that it did not know of reasons for the activity in its shares.

RHB, in its "buy" recommendation yesterday on Venture, noted that its chief executive officer Wong Ngit Liong has been exercising his employee share option, which was granted to him in March to April.

"In addition, he also purchased shares on the open market multiple times - twice in July (worth up to $3.4 million, before its 2Q17 results announcement, which were exceptional)," said RHB.

"He purchased another block of shares worth $6.1 million in September, just before its 3Q17 results are scheduled to be announced in October. We view these transactions as a strong testament of the company's fundamentals and results ahead."

RHB set a target price of $19.70 for the stock.

In yesterday's trading, Venture was well supported, first sliding to an intraday low of $17.02 before bouncing up to close at $17.21 for a nett loss of just $0.08 on volume of 591,100.

STRENGTHEN

Maybank Kim Eng in its assessment of the latest industrial output figures said it expects gross domestic product (GDP) growth to strengthen significantly in the third quarter and is now pencilling in flash Q3 GDP at +3.8 per cent, up sharply from the +2.9 per cent in Q2.

Schroders' head of United Kingdom and European equities Rory Bateman in its latest Talking Point discussed the results of the German elections this week and the impact of a strong euro on growth.

"Overall, though, the European economy is recovering nicely. We see scope for further gains for European equities, driven by ongoing low interest rates and improving corporate profit margins," he said.

"In fact, we believe investors could potentially see a market appreciation of up to 30 per cent from current levels on a three-year view.''

Rabobank also discussed Germany's elections but noted that the Spanish government is threatening the leader of Catalonia's separatist regional government with prison, escalating the pressure - and tensions - further, and that he has responded with a public affirmation that a referendum on independence will be held on Oct 1.

"Accounting for one-fifth of Spain's GDP and tax income, and with a yearly net transfer of €10 billion (S$16 billion) to €15 billion to the central government, it is clear that Spain's economy and government stand to lose considerable funding if Catalonia separates from Spain," it said.

"Spain's budget deficit would increase by one percentage point to two percentage points, requiring significant budget cuts to comply with Europe's budget rules, among other things.

"Hence, it is no wonder that the central government is trying to do whatever lies in its power to prevent the referendum from taking place."

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