BullsAndBears

STI bounces to new 12-month high

SGX Centre 1 at Shenton Way Road in the Raffles Place District.
SGX Centre 1 at Shenton Way Road in the Raffles Place District.PHOTO: ST FILE

Local shares end in the black for 4th straight day although trading not particularly bullish

Singapore shares were range- bound yesterday but still managed to end in the black for the fourth straight day and wrap up the best week in months.

The benchmark Straits Times Index (STI) closed at 2,962.63 - a new 12-month high - up 8.49 points or 0.29 per cent, and 2.84 per cent ahead for the week. This was the best five-day performance since July.

Still, the trading was not particularly bullish, and the overall market volume, with 1.46 billion shares worth $1.08 billion traded, showed that not all investors were expectant.

Remisier Alvin Yong said: "Just for the sake of comparison - in 2006, our daily turnover value was over $3 billion. Clearly, many are still looking from the sidelines. While it is good and indeed quite rare to see a multi-day STI run, where the index will go next is anyone's guess."

Part of the concern is whether the new employment data out yesterday after market hours in the United States would pave the way for the Federal Reserve to speed up rate hikes. This clearly bothered Wall Street, where the Dow Jones Industrial Average dropped 0.21 per cent.

Half of the 30 STI component stocks were up yesterday, including Global Logistic Properties amid ongoing speculation about a potential buyout offer. Its shares jumped six cents or 2.5 per cent to $2.46, with 42.3 million shares traded.

Hongkong Land Holdings was the top gainer, up 25 US cents or 3.78 per cent to US$6.86. Singapore Press Holdings put on three cents or 0.83 per cent to $3.63.

The property and real estate investment trust (Reit) sector stayed hot, reflecting investor preference for the attractive valuations or good yields there.

Ascendas Reit gained five cents or 2.15 per cent to $2.38 on 13.7 million shares traded, CapitaLand Commercial Trust added 2.5 cents or 1.66 per cent to $1.535, and City Developments put on 10 cents or 1.19 per cent to $8.47.

The outlook of Reits is dependent on not only interest rates and rental movements, but also lease profiles. The ones with a longer lease expiry can typically count on locked-in occupancy and hence stable earnings.

OCBC analyst Andy Wong reiterated OCBC's buy call on Ascendas Reit, noting that the Reit's recent move to acquire more Science Park properties was positive in this regard.

"This acquisition would boost Ascendas Reit portfolio's weighted average lease expiry to 4.4 years from 3.7 years," he said, giving the counter a fair value of $2.72.

Meanwhile, Wilmar International led the eight STI losers, dropping six cents or 1.63 per cent to $3.62.

Thai Beverage also slipped, easing half a cent or 0.58 per cent to 85 cents.

Overseas markets had a mixed showing. Hong Kong was up 0.21 per cent, but Shanghai pared 0.35 per cent and Tokyo dropped 0.34 per cent.

A version of this article appeared in the print edition of The Straits Times on January 07, 2017, with the headline 'STI bounces to new 12-month high '. Print Edition | Subscribe