Local shares rise amid subdued trading

Rally extends across region but analysts remain cautious as uncertainties linger

Local shares found their footing yesterday, joining the rest of Asia in a region-wide rally to end the week on a positive note.

But market watchers are not betting on any firm rebound in the coming days as economic and interest rate uncertainties continue to dampen risk appetite.

The benchmark Straits Times Index (STI) put on 23.71 points or 0.87 per cent to 2,763.82. But the session was somewhat subdued, with only 835.1 million shares changing hands in the overall market. The market rose 1.06 per cent for the week.

Sentiment in Asia was not overly affected by the 0.52 per cent drop on Wall Street, where talk of a rate rise by the Federal Reserve provoked a sell-off. Shanghai was up 0.66 per cent yesterday but still stretched its losing streak to a fifth week of decline. Hong Kong closed up 0.8 per cent and Tokyo rose 0.54 per cent.

Remisier Alvin Yong advised caution: "The outlook hasn't changed. From the global front, there is still a lack of positive news and little catalyst for markets to latch on to. I'm still expecting the STI to remain range-bound between 2,730 and 2,820 next week."

IG market analyst Bernard Aw said that discussions at the G-7 meetings in Japan will reveal the direction of monetary policies of the major central banks, potentially throwing up more uncertainties on currencies and risk assets.

Still, 21 of the 30 STI constituent stocks were up yesterday, with Sembcorp Industries rising the most. It put on nine cents or 3.31 per cent to $2.81, while its offshore and marine unit Sembcorp Marine closed up four cents or 2.58 per cent at $1.59. Keppel Corp also ended in the black, gaining 14 cents or 2.68 per cent to $5.36.

Oil prices remained steady with crude oil futures Brent staying above US$48 per barrel.

Golden Agri-Resources rose half a cent or 1.41 per cent to 36 cents and was one of yesterday's top actives, with 48.6 million shares traded.

Among the six STI stocks that dropped, Global Logistic Properties (GLP) dipped two cents or 1.08 per cent to $1.825. But the firm remains well regarded by broker firms, with CIMB and DBS both giving it a buy call. "Given its position as market leader in China and vast land bank, we believe GLP will continue to set the pace of activity and pricing in China. Key catalysts are acceleration in fund management activity and stabilisation in rental income base," CIMB analyst Lock Mun Yee said, giving GLP a $2.72 target price.

Outside the STI, Manulife US Real Estate Investment Trust had a slow debut, closing at 79 US cents on 42.7 million traded units after opening at 82 US cents. Noble Group slid one cent or 3.12 per cent to 31 cents.

The commodity firm pared 4.62 per cent for the week amid news that it had lost its investment-grade rating with a third rating house, in this case, Fitch Rating.

A version of this article appeared in the print edition of The Straits Times on May 21, 2016, with the headline 'Local shares rise amid subdued trading'. Print Edition | Subscribe