Bulls And Bears

Investors stay cautious, turn to profit-taking

Muted activity on last trading day of first half; uncertainty around G-20 summit

Investors stayed cautious on the last trading day of the first half and turned to profit-taking ahead of G-20 this weekend.

The muted activity sent the Straits Times Index (STI) down 6.99 points or 0.2 per cent to end at 3,321.61 - almost the same level as last Friday's close of 3,321.40.

Today's meeting in Osaka is the key focus for investors. While recent news reports suggest that Washington and Beijing have worked out a temporary trade truce, there is no certain outcome, especially when it concerns United States President Donald Trump.

Bank of Singapore investment strategy head Eli Lee noted that "the odds of having a... trade agreement seem low, and we expect that the... G-20 will not provide full clarity on whether President Trump is finished with tariff escalation or whether both sides will eventually reach a trade agreement".

Last month, the adage of "sell in May and go away" definitely held up but markets fared better in June, spurred by friendly valuations following May's sell-off and the rush to real estate investment trusts as soon as expectations of US rate cuts came to light.

Unlike May, when Mr Trump's trade offensive on China hit markets, the STI gained 6.5 per cent in June and is up 8.2 per cent this year.

Trading volume yesterday clocked in at 1.09 billion shares worth $1.44 billion with losers pipping gainers 185 to 161. There were 18 of the 30 STI stocks in the red.

Financials, among the big gainers in June, were mixed. DBS added 0.5 per cent to $25.96, UOB was unchanged at $26.13 while OCBC Bank fell 0.2 per cent to $11.40.

Koufu Group shares added 2.2 per cent to 69 cents after DBS Equity Research upgraded its recommendation of the company to "buy" and raised the target price to 85 cents.

DBS analysts expect the food court and coffee shop operator to post higher earnings growth, driven by the turnaround of its food court and kiosk businesses.

There was a hive of activity around two agri-business counters yesterday. Golden Agri-Resources was sold off, closing 6.5 per cent down to 29 cents with 65.8 million shares traded but BlackGold Natural Resources added 23.1 per cent to 1.6 cents after trading resumed following a placement at 1.5 cents a share.

UOB Kay Hian trading representative Brandon Leu said: "The placement price, which was higher than the prior closing price of 1.2 cents is likely the trigger for Friday's performance giving investors confidence on the company's valuation."

A version of this article appeared in the print edition of The Straits Times on June 29, 2019, with the headline 'Investors stay cautious, turn to profit-taking'. Print Edition | Subscribe