New SGX mid-cap index slips in debut week; JP Morgan raises STI target to 6,000

SINGAPORE – A new Singapore Exchange (SGX) mid-cap index, aimed at giving investors broader exposure to the local stock market, ended lower in the first week of its launch last week amid greater market volatility.

The iEdge Singapore Next 50 Index, which tracks the 50 largest mainboard companies by market capitalisation after excluding the 30 blue chips on the Straits Times Index (STI), closed on Sept 26 at 1,419.86 points, down from the 1,428.66 points when it officially launched on Sept 22.

The index includes many names that have benefited from better liquidity and analyst coverage since the Monetary Authority of Singapore (MAS) announced measures to boost the stock market in August 2024, such as Sheng Siong and ComfortDelGro, as well as 16 real estate investment trusts (Reits).

Food Empire, a constituent of the Next 50, was among those that traded well last week. The instant coffee maker on Sept 24 announced a placement of 17 million treasury shares priced at $2.52 per share to raise $42 million for further expansion.

The move, which increases Food Empire’s share base to 547 million shares, will have a dilutive effect on earnings per share for 2025 and 2026, analysts said. Shares of Food Empire closed on Sept 26 at $2.39 each, down by more than 8 per cent through the week.

Other crowd favourites lost steam, with Frencken Group and UMS Integration falling 6.8 per cent and 4.1 per cent through the week to close on Sept 26 at $1.40 and $1.38 respectively. Nanofilm Technologies fell 6.6 per cent to close the week at 78 cents, while PropNex was down 6.1 per cent to $2.29.

SIA Engineering bucked the trend, rising more than 6 per cent through the week to close on Sept 26 at $3.48.

STI projected to hit 6,000 points

US investment bank JP Morgan on Sept 21 raised its 12-month bull target for the STI to 6,000 points, from 5,000 previously, citing the ongoing efforts to boost liquidity and visibility in the Republic’s equities market, including measures by the MAS-led Equities Market Review Group.

The bank’s economists expect the US Federal Reserve to cut interest rates by 75 basis points over the next six months, which would expand liquidity and support fund flows into Singapore stocks, they said.

The benchmark STI edged lower despite the forecast though, closing at 4,265.98 points on Sept 26 compared with 4,301.68 points when the market opened on Sept 22.

Shares of all three Singapore banks fell over the week. OCBC led the decline, slipping 1.28 per cent to $16.25 on Sept 26, followed by UOB, which fell 0.75 per cent to $34.39. DBS edged down 0.47 per cent to $50.29.

Shares of local telco Singtel fell nearly 3 per cent over the week to close at $4.26 on Sept 26.

The Australian government launched an investigation into a Sept 18 incident where emergency call services through the Optus network were disrupted for 13 hours during a network upgrade. Optus is Singtel’s subsidiary.

Optus chief executive Stephen Rue said at a press conference on Sept 19 that three people were found dead after welfare checks were carried out on households that had attempted to make emergency calls through the 000 hotline.

In response to queries from The Straits Times, Singtel said its group CEO Yuen Kuan Moon will attend a meeting with Australian Communications Minister Anika Wells in Sydney on Sept 29 in his capacity as an Optus board member, and as Singtel supports the company’s management through the incident.

Singtel has invested more than A$9.3 billion (S$7.9 billion) into Optus – Australia’s second-largest telco – in the last five years. Optus now contributes about half of Singtel’s annual revenue.

Meanwhile, another STI-constituent, palm oil major Wilmar International, has been convicted of corruption after Indonesia’s Supreme Court reversed an earlier acquittal in a case involving cooking oil export permits in 2021 and 2022.

In a bourse filing on Sept 26, Wilmar said five of its subsidiaries – Multimas Nabati Asahan, Multi Nabati Sulawesi, Sinar Alam Permai, Wilmar Bioenergi Indonesia and Wilmar Nabati Indonesia – have each been fined one billion rupiah (S$77,500). Wilmar is also to pay 11.9 trillion rupiah in penalties over the corruption charges.

The firm expects to post a net loss for the third quarter ending Sept 30 due to the penalties, but is still maintaining its forecast for a full-year profit.

Shares of Wilmar slipped 1.38 per cent on Sept 26 to close at $2.85.

Other market movers

Units of Centurion Accommodation Reit closed at 96.5 cents on Sept 26, 8.5 cents above its initial public offering price (IPO) of 88 cents a unit.

The Reit, which made its debut on the SGX on Sept 25, was spun off from mainboard-listed Centurion Corp, the owner and operator of international worker and student accommodation.

Its IPO of 262.2 million units had been 16.6 times subscribed.

Shares of Centurion Corp fell nearly 11 per cent over the week to close at $1.48 on Sept 26, after the listing.

Keppel DC Reit said on Sept 22 it will buy a newly built data centre in Japan with parent company Keppel for 82.1 billion yen (S$709.6 million).

Keppel DC Reit will own a 98.47 per cent effective interest stake in Tokyo Data Centre 3, with Keppel holding the balance.

The acquisition, expected to be completed by end-2025, will lift Keppel DC Reit’s portfolio occupancy from 95.8 per cent to 95.9 per cent, and extend its weighted average lease expiry from 6.92 years to 7.2 years.

Units of Keppel DC Reit crept up 0.4 per cent over the week to close at $2.37 on Sept 26. Shares of Keppel edged up 1.38 per cent over the week to close at $8.82.

Analysts at CGS International reiterated their positive view on CSE Global, naming the engineering firm one of their top Singapore picks for its role in supplying power infrastructure to data centres.

“We expect CSE to expand its electrification orders to more hyperscaler customers... (It) is well positioned to leverage the US hyperscale power boom and accelerate order wins in the second half of FY2025,” they said in a Sept 19 note, in which they kept their target price of 88 cents.

Shares of CSE Global slipped 3.4 per cent over the week to 71 cents on Sept 26.

What to look out for this week

Markets could see more volatility this week after US President Donald Trump on Sept 26 announced 100 per cent tariffs on imports of branded pharmaceuticals.

Mr Trump also said he will start charging a 50 per cent tariff on kitchen cabinets and bathroom vanities, and a 30 per cent tariff on upholstered furniture, with all the new duties to take effect from Oct 1.