Bulls And Bears

STI follows positive lead from Wall Street

Investors remain optimistic that US economy will grow under Trump

Singapore shares continued to gain ground following the positive lead from Wall Street as United States President Donald Trump began his tenure in the White House.

Despite the eventful inauguration, investors in the US have kept faith in Mr Trump's ability to grow the domestic economy.

Wall Street rose 0.48 per cent last Friday, the first time in over 50 years that a US president was welcomed on his first day by a rising stock market, according to Reuters.

Singapore's benchmark Straits Times Index (STI) rose in tandem, up 14.4 points, or 0.48 per cent, to 3,025.48. The entire market volume was 1.47 billion shares, worth about $911.4 million.

Shanghai rose 0.44 per cent, partly on news that the central bank is ready to provide liquidity relief to several major banks.

Tokyo, however, dropped 1.29 per cent and Sydney slid 0.77 per cent after Mr Trump moved to block the Trans-Pacific Partnership, from which Japan and Australia would have benefited.

All eyes are now on how Mr Trump will perform in the first 100 days, particularly in the realm of foreign trade, CMC market analyst Margaret Yang said. "How (Mr Trump) can strike the right balance between reviving US manufacturing without triggering a detrimental trade war with countries like China and Mexico will be critical."

There were 18 gainers on the STI yesterday, led by Sembcorp Industries, which rose eight cents, or 2.56 per cent, to $3.20. Rival Keppel Corp was not far behind, up 11 cents, or 1.78 per cent, to $6.28.

Oil has remained mixed since the start of the year and lagged below US$55 a barrel yesterday.

While Keppel Corp and Sembcorp Industries are regularly viewed in the context of weak oil prices, they have much more than offshore and marine businesses going for them.

OCBC analyst Low Pei Han recently gave Sembcorp Industries a buy call with a $3.36 fair value, adding: "Though its marine segment is facing headwinds, the longer-term outlook for the utilities segment remains positive."

Genting Singapore rose two cents, or 2.16 per cent, to 94.5 cents. Developer City Developments (CDL) rose 10 cents, or 1.12 per cent, to $9.04, while CapitaLand was flat at $3.19. CDL and CapitaLand have had a solid month, rising between 7 per cent and 12 per cent, but still sport low price-to-earnings ratios.

On the other end of the spectrum, CapitaLand Mall Trust was the top loser among the 10 STI stocks that ended in the red. It closed down 2.5 cents, or 1.26 per cent, at $1.96 after announcing last Friday a 1.1 per cent drop in full-year distribution per unit. Still, DBS analysts believe it is worth a buy with a target price of $2.17, as the marginal drop was expected, given the challenging retail landscape, but the trust's plan to redevelop the Funan mall into a mixed-use site is a positive.

A version of this article appeared in the print edition of The Straits Times on January 24, 2017, with the headline 'STI follows positive lead from Wall Street'. Print Edition | Subscribe