Bulls And Bears

STI back in the red as US plans tax overhaul

Some other regional bourses also decline amid Trump's proposal for sweeping cuts

Local shares reversed into the red yesterday as investors assessed the implications of United States President Donald Trump's ambitious tax reform plan.

The benchmark Straits Times Index (STI) eased 9.01 points, or 0.28 per cent, to 3,227.14, with a total of 987.2 million shares worth $1.14 billion traded across the bourse.

The decline was in line with Hong Kong's 0.8 per cent drop. Shanghai slipped 0.17 per cent and Jakarta lost 0.37 per cent.

Tokyo, however, added 0.47 per cent on a weaker yen, while Sydney inched up 0.11 per cent.

Wall Street advanced 0.25 per cent overnight after Mr Trump proposed sweeping tax cuts for individuals and corporates in what would be the biggest tax overhaul in the US in three decades.

Still, a number of analysts believe it may be a long way before the changes can be approved.

"While the impact from the new framework on Asian markets remains debatable with repatriation of offshore earnings... investors will likely look to the improvement it may bring to US companies and in turn, the stock market in the near term," Ms Jingyi Pan, market strategist at IG, said in a note.

At home, the telcos were among the biggest blue-chip laggards: StarHub dropped 1.5 per cent or four cents to $2.61 and Singtel fell 1.1 per cent or four cents to $3.67.

Banks were mixed, with United Overseas Bank down 0.8 per cent or 18 cents to $23.66 and OCBC retreating 0.5 per cent or six cents to $11.22. DBS Group Holdings put on 0.1 per cent or two cents to $20.91.

Transport group ComfortDelGro, which has been on a downward trajectory in recent weeks, performed well with a 2.3 per cent or 4.5 cent gain to $2.04. CIMB said in a report that its share price implies that traders have priced in a reduction of its taxi margins, but the stock still lacks longer-term catalysts.

"Headwinds in the taxi segment could persist but a successful Uber tie-up could breathe new life into ComfortDelGro's small divisions and level the industry's playing field," said the brokerage, keeping a "hold" call on the stock.

Elsewhere, Mencast Holdings received a trading query from the Singapore Exchange (SGX) after it shot up to as high as 19.8 cents in the morning. The firm later called for a trading halt, pending an announcement. The counter was last seen at 19.3 cents, 17.8 per cent or 2.9 cents up from the previous day's close.

Falcon Energy, which surged 67.4 per cent or 2.9 cents to 7.2 cents, was similarly queried by the SGX.

Rowsley was the day's most heavily traded stock, falling 2.3 per cent or 0.3 cent to 12.8 cents on 82.4 million shares done.

Other actives included ASTI Holdings, surging 5.9 per cent or half a cent to nine cents, and Apac Realty, which closed at 76 cents on its first day of trading - up by a solid 15.2 per cent on its initial public offering price of 66 cents per share.

A version of this article appeared in the print edition of The Straits Times on September 29, 2017, with the headline 'STI back in the red as US plans tax overhaul'. Print Edition | Subscribe