Bulls And Bears

Late rally takes STI back into the black

Mixed bag elsewhere as growth concerns weigh on global market sentiment

It was looking like another day in the red for local shares amid a general regional pullback on souring sentiment until an afternoon rally saved the day.

That late boost yesterday lifted the Straits Times Index (STI) 12.92 points or 0.4 per cent to 3,220.66 points, with real estate and technology counters doing much of the heavy lifting.

It was a mixed bag elsewhere. Hong Kong, which is embroiled in protests over the extradition Bill, managed to close slightly lower after falling by up to 1.8 per cent.

Japan and Malaysia also fell, Australia was flat and China posted a modest gain.

Growth concerns continue to weigh on global sentiment as do the ever-present trade issues. Until recently, market watchers had hoped the United States and China would agree to a trade deal at the G-20 summit in Osaka on June 28 and 29, but both sides are no closer to an agreement, let alone even setting a timetable for a formal meeting.

US President Donald Trump also turned up the offensive on Germany for its lack of spending on defence and is considering slapping sanctions to block pipelines that would increase natural gas flow from Russia to Germany.

One bright spot was news that US inflation clocked in below expectations on Wednesday, raising hopes for a rate cut. Oanda senior market analyst Edward Moya noted that the "question is no longer will they (the Fed) cut, but by how much".

Trading volumes here clocked in at 1.08 billion shares worth $1.02 billion, with gainers trumping losers 214 to 154. Six of the 30 STI components ended in the red.

Property developers and real estate investment trusts (Reits) remained in vogue, thanks to a dovish interest rate outlook.

City Developments Limited advanced 2.5 per cent to $9.42, while Oxley Holdings added 3.2 per cent to 32 cents.

RHB Research Institute initiated coverage on Oxley with a "buy" call and a target price of 41 cents.

RHB analyst Jerrick Seet said concerns over Oxley's gearing level were overdone and would be lowered by sales of key assets.

Among Reits, CapitaLand Commercial Trust units added 1.5 per cent to $2.08.

The banks were mixed: DBS Bank edged down 0.1 per cent to $24.68; OCBC Bank dropped 0.3 per cent to $10.77; but UOB added 0.6 per cent at $24.75.

Yangzijiang Shipbuilding was the STI's most traded stock. The shipbuilder gained 1.4 per cent to $1.47 on trade of 37.7 million shares.

A version of this article appeared in the print edition of The Straits Times on June 14, 2019, with the headline 'Late rally takes STI back into the black'. Print Edition | Subscribe