STI edges 15.7-point higher in thin trading

Volume last Friday surged to $1.5 billion compared to a Monday-Thursday average of $1 billion, but there was no follow-through yesterday, with turnover dropping back to 1.9 billion units worth $765 million, the lowest dollar value in three weeks.

As for the Straits Times Index (STI), it spent the day tracking movements in the Dow futures - which rose 70 points at 5pm - and the Hang Seng Index, the latter rising in anticipation of China "A" shares being included in MSCI emerging market indices this week.

As a result, the STI finished 15.74 points higher at 3,247.18. Excluding warrants, there were 274 rises versus 160 falls.

Banks were again the STI's main drivers, gains in UOB and DBS adding a total of nine points to the index. The average value per unit traded was $0.40. Among the actives was Hutchison Port Holdings Trust (HPHT), which ended unchanged at US$0.445 (S$0.62) on volume of 25.5 million.

OCBC Investment Research noted that the counter saw a spike in trading volumes and unit prices late last week, perhaps due to upward revisions in forecasts for global throughput volume by industry watchers such as Drewry and Alphaliner.

"The unit price rallied 5.9 per cent last Thursday alone, and last week's trading volume stands at 161.5 million units, compared to an average of 50.1 million units/week in the prior 10 weeks," said the broker.

"After looking closer at Hong Kong and Shenzhen throughput data points and keeping tariff pressure in mind, we keep our forecasts for HPHT. We maintain 'hold' with a fair value estimate of US$0.42 and see a better entry point below US$0.40."

Following the release of the non-oil domestic export numbers, RHB said it is maintaining its forecast for total NODX to climb 3.9 per cent this year.

"Machinery exports will likely recover in the coming months on increased global capex, but the growth is expected to be more moderate in H2 17," said RHB.

"Similarly, demand for semiconductors is projected to remain positive ahead of the new iPhone launch in Q4 17, but overall growth is expected to be slower in H2 17 after the strong pick-up in H1 17."

Ms Jing Ning, portfolio manager at Fidelity International, said China's inclusion of "A" shares in MSCI indices would help institutionalise the domestic China A-share market.

"This would potentially increase the liquidity levels, introduce comparatively stable flows into the market and overall, it would be a positive development for the smooth functioning of the market," said Ms Jing, noting that China's domestic A-share market is the second largest stock market in the world.

"Across the Shanghai Stock Exchange, Shenzhen Stock Exchange and ChiNext, it is home to a range of blue-chip stocks representing well-established business models with strong pricing power and robust cash flows...

"So far, this market is dominated by retail investors, who are influenced by short-term swings in sentiment and willing to overpay for growth levels that are not sustainable over an economic cycle."

Rabobank in its Global Daily noted that "clouds are gathering over the United States economic expansion" because of a string of soft data.

"May's housing starts dropped 5.5 per cent month-on-month on Friday, building permits sank 4.9 per cent and Michigan consumer confidence dropped back to 94.5, the lowest since November."

The Atlanta Federal Reserve's GDPNow model is forecasting Q2 US GDP growth to be 2.9 per cent, down from 3.2 per cent last week and from 4.2 per cent in May.

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