Bulls And Bears

Small caps dominate play on S'pore bourse

STI up although overall market volume limited; strong showing in China lifts Asia

A strong showing on China's bourses led most Asian markets higher.

The Straits Times Index (STI) rose 25.62 points or 0.9 per cent to 2,856.68. Shanghai put on a healthy 1.21 per cent, and the buoyant mood lifted Hong Kong by 0.98 per cent. Tokyo added 0.29 per cent, and Kuala Lumpur closed up 0.47 per cent.

China's markets were helped by growing confidence in the energy and commodity sectors, where prices seem to be stabilising due to supply tightening by the government.

Oil held steady, with global crude futures Brent at just below US$52 a barrel despite the strength of the United States dollar, which has stayed above 1.38 against the Singapore dollar and at the highest level since March.

Twenty-four of the 30 STI component stocks rose. Golden Agri-Resources was among the top gainers, up one cent or 2.7 per cent to 38 cents, while another agricultural firm, Wilmar International, put on five cents or 1.52 per cent to $3.35.

Singapore Airlines rose 20 cents or 1.96 per cent to $10.38, and CapitaLand Mall Trust (CMT) closed up four cents or 1.90 per cent at $2.15.

CMT, with a portfolio of 16 shopping malls in Singapore, last week announced a 6.7 per cent drop in third-quarter distribution per unit, but DBS analysts believe it is still worth a buy, due partly to its move to revamp Funan DigitaLife Mall.

Other rising blue chips included Singapore Press Holdings, up six cents or 1.6 per cent to $3.80, and Keppel Corp, up seven cents or 1.32 per cent to $5.38 despite last week's news of a 38 per cent net profit drop and massive job cuts.

DBS analyst Ho Pei Hwa gave Keppel a hold call with a $5.25 target price, saying: "We believe Opec's recent change in production stance could accelerate oil rebalancing and drive a recovery in rig market."

Three blue chips fell: Sembcorp Industries fell two cents or 0.78 per cent to $2.56; Thai Beverage pared half a cent or 0.52 per cent to 96.5 cents; and ComfortDelGro was off one cent or 0.37 per cent to $2.69.

Still, overall market volume was limited. Some 1.5 billion shares worth only $724.6 million were traded. Most of the activity was in small caps, remisier Alvin Yong said. As a result, the Catalist index hit its highest level since late March.

"Traders are flocking to the penny stocks because they are less costly - and hence more profitable - to trade. But investors should be aware that pennies are inherently risky. The general rule is get out after you've made money and not to push your chips too far," Mr Yong told The Straits Times.

One penny stock in focus is Equation Summit, which rose 0.3 cent or 42.86 per cent to one cent on 104.4 million shares done. It was up from just half a cent at the start of October. The construction material and electronic product supplier yesterday announced the issue of 600 million new shares, to be subscribed at 0.7 cent each, for some $4.2 million in proceeds.

A version of this article appeared in the print edition of The Straits Times on October 25, 2016, with the headline 'Small caps dominate play on S'pore bourse'. Print Edition | Subscribe