Business

STI slips while investors stay wary

Benchmark index falls 0.5% as worries about US-China trade remain

Cautious investors with an eye on the progress of US-China trade talks stayed on the sidelines and let Singapore shares head into the week downcast yesterday.

The Straits Times Index (STI) opened slightly lower by 1.23 points, but slipped steadily over the session to close at 3,143.24, lower by 0.52 per cent or 16.44 points. Losers outnumbered gainers 230 to 135, or about two stocks down for every one up.

It was a quiet start to the week, with only 744.74 million shares worth $736.12 million changing hands.

"Markets tend to get themselves tied up in knots chasing headlines and by the week's end, one tends to find that playing the range or staying out altogether was probably the best strategy," said Mr Jeffrey Halley, an Asia-Pacific senior market analyst at Oanda.

On the trade front, China's Ministry of Commerce had said over the weekend that economic and trade teams from the US and China held "constructive" discussions in Washington late last week. They said both the US and China agreed to stay in contact.

But the Chinese delegation later cancelled a visit to US farms in Montana and Beijing officials headed back to China earlier than planned, reviving worries over whether a trade deal could be reached soon.

"Markets are walking on a tightrope now, with the fundamental outlook continuing to deteriorate globally," said CMC Markets analyst Margaret Yang.

Financial stocks dragged the local bourse, with declines led by heavyweight index constituents DBS Bank and United Overseas Bank (UOB).

Some Jardine stocks also contributed to the slump. For instance, Jardine Cycle & Carriage finished 1.43 per cent or 44 cents lower at $30.43.

Likewise, Jardine Strategic Holdings saw losses. The counter closed at US$31.59 (S$44), shedding 0.28 per cent or nine US cents.

DBS finished the day at $24.91, down 0.95 per cent or 24 cents. UOB pared 0.78 per cent or 20 cents to close at $25.56.

In Singapore, a defensive theme is likely to play out this week, added Ms Yang, with utilities, consumer staples and Reits outperforming cyclical industrials, banks and technologies.

Singtel was one of the most active index stocks, with over nine million shares traded. It closed unchanged at $3.17.

Another telco, StarHub, closed at $1.33, up 0.76 per cent or one cent on trade of close to 1.8 million shares.

Meanwhile, Jardine-linked Dairy Farm added 2.41 per cent or 16 US cents to close at US$6.81 - it was one of the bourse's top gainers.

However, RHB Research Institute is staying cautious on the outlook for Dairy Farm's earnings given the ongoing protests in Hong Kong.

About 70 per cent of the retailer's FY2018 operating profit was derived from the city, RHB estimated.

The brokerage is maintaining its "neutral" call on the counter with a US$6.63 target price.

Another hot stock was industrial real estate solutions provider Boustead Singapore, which shot up 5.44 per cent or four cents to 77.5 cents.

This came as CGS-CIMB yesterday initiated coverage on the counter with an "add" call and target price of $1.

Mainboard-listed Boustead is "firing on all cylinders", with its real estate and energy-related engineering order book backlog at a five-year high, while its geospatial segment continues to expand steadily, according to analysts Ong Khang Chuen and Caleb Pang.

In yesterday's note, they also said Boustead's industrial real estate unit, Boustead Projects, could be on track for a Reit listing as early as 2020.

The real estate arm, also on the mainboard, ended up 0.53 per cent or $0.005 to 94.5 cents.

For full listings of SGX prices, go to https://www2.sgx.com

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