STI hits 2-year high with corporate help
External support for stocks came from upbeat assessment of US economy, internal support came from corporate deals
Externally, support for stocks this week came from Wall Street, or to be more specific, from a reportedly upbeat assessment of the US economy and interest rates from Federal Reserve chair Janet Yellen in her mid-week Congressional testimony.
Internally, support came from corporate deals: the $1.82 billion redevelopment of Golden Shoe Car Park; the potential takeover of United Engineers by a consortium comprising Perennial Real Estate and Yanlord Land; and perhaps most notably from the viewpoint of the Straits Times Index (STI), the offer-cum-privatisation bid for Global Logistic Properties (GLP) at $3.38 a share.
GLP jumped 59 cents or 22 per cent to $3.29 on volume of 153.6 million, adding 21 points to the STI and $507 million to turnover.
As a result, the index posted a 51.76-point or 1.6 per cent rise to a two-year high of 3,287.43, bringing its rise for the week to 58 points or 1.8 per cent.
Business done yesterday was 2.7 billion units worth $1.84 billion, the highest since $2.7 billion was traded on Feb 28.
There was also the upcoming listing of Singtel's broadband infrastructure unit Netlink NBN Trust, which aims to raise about $2.3 billion and thus helped support the telco's shares.
On this count, Macquarie Warrants (MW) in its news daily noted that "with telco giant Singtel rallying 3.5 per cent over the past month, far outperforming the benchmark STI which is down 1.2 per cent across the same period, warrant investors have increased their demand for Singtel calls in July, accumulating 1.8 million call warrants of the $3.90 strike, October 2017 expiry".
MW also noted that Macquarie Equities Research has a "buy" on Singtel with a $4.32 target price, noting that after floating 75 per cent and retaining 25 per cent, "street analysts think the Netlink listing would bring room for higher dividends for Singtel.
"There could be a possibility that Singtel may return additional cash from the sell-down of Netlink". Yesterday, Singtel rose 5 cents to $3.91 with 28.7 million shares traded.
Ms Yellen's testimony has widely been interpreted as 'dovish' or positive for stocks as she spoke of a decently growing US economy, no inflation threat and therefore no need for many more interest rate hikes.
In the second line, trading in shares of social media firm YuuZoo was subdued as the company grapples with governance and accounting issues raised by prominent corporate governance advocate Mak Yuen Teen in a series of articles published by The Business Times. Penny stocks continued to enjoy rotational interest, and perhaps less noticed was the suspension of Hong Kong data storage company Swing Media Technology, which has received statutory demands from various banks.
In its Tuesday announcement that requested its trading halt be changed to a suspension, Swing Media said the change was "in view of the material uncertainty and doubt on the group's and the company's ability to continue as going concerns ..."
Ms Yellen's testimony has widely been interpreted as "dovish" or positive for stocks as she spoke of a decently growing US economy, no inflation threat and therefore no need for many more interest rate hikes.
Rabobank in its "The world's worst poker players?" report on Thursday noted that only a few days before Ms Yellen spoke, equities were rocked by hawkish statements from Fed officials.
"So we are left with a dovish Fed hawkishness that appears to mean something and yet nothing," said the bank.
This article appears in The Business Times today. For full listings of SGX prices, go to btd.sg/BTmkts