STI rebounds but investors still wary

Having plunged almost 47 points on Monday after North Korea's nuclear test over the weekend, the Straits Times Index (STI) yesterday rebounded 20.29 points to 3,251.26.

However, a 40-point drop in the Dow futures and an indifferent session in Hong Kong suggested markets were still concerned over how the situation will play out.

The low volume of 1.7 billion units worth $840.1 million traded on the local bourse points to the absence of players.

Excluding warrants, there were 237 rises versus 174 falls. The average value per unit traded was about 49 cents.

Of the 20 most active stocks, 16 cost under 20 cents. Rowsley topped the list, ending $0.003 higher at 11.2 cents on volume of 122.8 million while semiconductor firm Jadason Enterprises' shares were also active, ending $0.002 firmer at $0.097 on turnover of 20.3 million.

RHB, in a Sept 4 report, said it visited Jadason's China factory in Dongguan.

"The company has been operating with 150 to 160 machines, up from 120 in Q2 2017.

"Nevertheless, due to a shortage of workers and the delay in delivery of upgrading parts, Jadason has had to drop several existing customers and allocate their resources to the new mobile project which enjoys higher margins," said the broker.

Although it lowered the target price from 15 cents to 12 cents, it still rated Jadason a "buy".

As for blue chips, it came as no surprise that the banks contributed the most towards the index's rise. DBS Bank's 34-cent jump to $20.69 came with 2.5 million traded, and added about seven points to the STI.

Shares of Singapore Airlines rose three cents to $10.28, with 713,000 traded.

REROUTING

OCBC Investment Research yesterday referred to Qantas' announcement last week that it was rerouting its daily Sydney-London service via Singapore rather than Dubai, and upgrading one existing daily Melbourne-Singapore flight to a larger aircraft.

It said: "In essence, there will be increased capacity on these routes... For SIA's domestic market, its customers now have an additional airline, Qantas, to choose from when flying between Singapore and London/Sydney/Melbourne.

"Hence, we expect pressure on yields on these routes to increase ahead," said the broker as it maintained its 'hold' on SIA with $10.10 fair value."

Bamboo and mushroom producer Yamada Green Resources, which on Aug 25 announced it was applying for more time to release its 2017 results and to hold its annual general meeting, on Monday said that on Aug 30, a lorry carrying many financial documents of its subsidiaries was involved in an accident that resulted in the documents being destroyed by fire.

It was travelling from the company's research and development centre in the Houyu Food Industry Zone in Minhou County, Fuzhou City in China to the company's base in Tie Ling Economic and Technological Development Zone, also in Minhou County. Trading in the Yamada Green's shares was halted on Aug 31.

Rabobank in its Global Daily report said it was surprising that Chinese markets have managed to display optimism, given threats by US President Donald Trump to stop all trade with any country doing business with North Korea.

It was an indirect threat to China, which accounts for about 90 per cent of the North's foreign trade.

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