STI surpasses peers, penny punting continues

Even though the Straits Times Index (STI) gained 59 points, or 1.9 per cent, over the course of this week to a 17-month high of 3,100.39, the real story has been the resurgence of penny punting and the stunning rise of Catalist, whose index gained 4.5 per cent this week and has risen 16 per cent for the year so far.

Unit volume has stayed above three billion every day this week - yesterday, when the STI rose 20.43 points, turnover amounted to 3.3 billion worth $1.75 billion. It was the highest dollar value done since Nov 30.

The average value per unit traded yesterday was $0.53, versus around $0.35 to $0.45 from Monday to Thursday.

Interior design and furniture maker Serrano was by far the week's best performer when it rocketed up from $0.002 to $0.07 in just two days after announcing the entry of a group of new investors.

Also leaping into the picture was International Healthway Corp, which in recent weeks has experienced boardroom upheaval and the entry of new shareholders that are providing the company with fresh credit lines.

The market's outperformance is probably because it has lagged regional peers, such as Thailand and Indonesia, over the past couple of years.

Both those markets are now underperforming Singapore - as of yesterday's close and using US dollars, the Jakarta Composite is up 3 per cent for the year, Thailand's SET Index has gained 5 per cent, while the STI's rise is 9.1 per cent.

Externally, the most significant development was Thursday's Wall Street rally to new highs that came after the Trump administration said it would announce a "phenomenal" tax overhaul soon.

Closer to home, the Committee on the Future Economy (CFE) released its much-awaited report on how to ensure Singapore's competitiveness and relevance in an age of disruption. It focused on the identification of new sectors, retraining of workers and digitalisation.

... Singapore can leverage on its large and dynamic neighbours in Asean, and beyond, by helping its firms expand overseas. Deutsche Bank

In response, Maybank Kim Eng's economist Chua Hak Bin said the CFE's report shifts the focus back to growth, compared to the previous strategic review in 2010 that looked at restructuring, managing foreign worker dependence and strengthening support for low-wage workers.

Deutsche Bank, in its Asia Economics Monthly yesterday, said over time, it thinks Singapore would do better by also loosening its immigration policy to expand its domestic base and counter the drag from an anaemic external environment.

"Likewise, Singapore can leverage on its large and dynamic neighbours in Asean, and beyond, by helping its firms expand overseas," said Deutsche.

As for expected tax cuts in the US, Rabobank said the regressive nature of US President Donald Trump's income tax plans do not provide confidence as they will benefit those with the lowest marginal propensity to consume (and further increase inequality).

"As a historical precedent, US$312 billion (S$443.3 million) was repatriated post the 2004 American Jobs Creation Act," said the bank.

"A subsequent US Senate report concluded these funds did not generate jobs/investment but were instead used to buy back shares, pay dividends, fund M&A and boost executive pay."

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