Bulls And Bears

Traders shake off fears over Korea tensions

Local bourse picks up after slow start, with its firm showing backed by OCBC and DBS gains

Singapore equities moved solidly higher yesterday despite starting the day on a weak note.

The benchmark Straits Times Index (STI) advanced 28.97 points, or 0.88 per cent, to 3,308.69. A total of 1.43 billion shares worth $1.17 billion changed hands across the bourse.

The gains were helped by Wall Street's 0.07 per cent rise last Friday, while jitters over tensions in the Korean peninsula abated.

Hong Kong rose strongly by 1.36 per cent and Shanghai put on 0.9 per cent. But Tokyo lost 0.98 per cent on the back of a stronger yen, despite better-than-expected second-quarter numbers for economic growth.

KGI Securities (Singapore) trading strategist Nicholas Teo noted that the latest stand-off between North Korea and its neighbours has given funds and investors an excuse to take profits off the table.

"While geopolitical risks are ever present in this diverse world we live in, what can really fracture the market's forward march is the withdrawal of central banks' life support," he said, referring to both the United States Federal Reserve and the European Central Bank, which have been "softening the market" with talk of winding back their quantitative easing balance sheets.

The STI's firm showing was supported by two of the three local banks: OCBC Bank rose 1.6 per cent or 18 cents to $11.38 while DBS Group Holdings added 1.2 per cent or 25 cents to $21.05. United Overseas Bank, on the other hand, eased 0.4 per cent or 10 cents to $24.10.

Property plays racked up stellar gains, with City Developments jumping 3.5 per cent or 39 cents to $11.53. Hongkong Land Holdings advanced 3.4 per cent or 25 US cents to US$7.59, and UOL leapt 2.8 per cent or 22 cents to $8.20.

Analysts have been positive about prospects for real estate stocks, given the growing signs of improvement in the market.

On the other side of the ledger, laggards included Sembcorp Industries, which dropped 1 per cent or three cents to $3.05, and ST Engineering, down 0.5 per cent or two cents to $3.68.

ST Engineering on Friday posted a 12.3 per cent fall in second-quarter earnings to $111.5 million.

DBS Equity Research in a report downgraded its call on the stock to "hold", with a target price of $3.80, citing the lack of near-term growth momentum.

"While we had previously expected the high order book, smart city leverage as well as a turnaround at the land systems segment to help ST Engineering push past its previous valuation highs, we now believe it could be time for a breather as earnings momentum stalled in the second quarter," it said.

The day's most heavily traded stock was mDR, an after-market service provider for mobile phones and various consumer electronic products. It plummeted 16.7 per cent or 0.1 cent to 0.5 cent on 181.9 million shares done.

A version of this article appeared in the print edition of The Straits Times on August 15, 2017, with the headline 'Traders shake off fears over Korea tensions'. Print Edition | Subscribe