ST Index ends flat despite heavy trading

Market still in a rut as investors look for direction; tech stocks decline across region

There was a bit more action on the bourse yesterday but the market is still stuck in a rut, with investors looking for direction.

Like much of this week, the benchmark Straits Times Index ended up about where it started the day, but not until it endured a fall by as much as 20 points earlier.

It did manage to claw its way back to close at 3,433.54 points, down 5.45 points or 0.16 per cent.

The broader market continues to decline, with losers outnumbering gainers 287 to 17, but significantly heavy trading was seen, with about 2.9 billion shares worth $2.7 billion changing hands.

Across the region, tech stocks declined after an overnight fall in counters like Facebook, Amazon, Alphabet and Apple.

Some market players said selling in tech shares had more to do with profit-taking ahead of the end of the year, and described the slide as a healthy correction.

"Tech shares have done so well over the past year. There are many shares that saw their prices doubling. So investors have been on guard. They have been looking for an opportune time to sell," Morgan Stanley senior investment analyst Norihiro Fujito told Reuters.

Contract manufacturers and precision engineering firms here fell in sympathy. Apple supplier Hi-P International was down 5.9 per cent to $1.75, semiconductor components play UMS fell 5.6 per cent to $1.01 and Intel test handling machine supplier AEM retreated 4.8 per cent to $3.16.

Even contract manufacturing giant Venture Corp fell to as low as $20.37 before closing at $21, up 1 per cent.

Significant trading activity also occurred in some favourite dividend stocks like the three banks and Singtel, ComfortDelGro, NetLink NBN Trust and blue-chip real estate investment trusts (Reits) CapitaLand Mall Trust, CapitaLand Commercial Trust and Ascendas Reit. The nine counters alone accounted for a whopping $1.1 billion of trades.

These yield stocks are significant because United States 10-year Treasury yields went from 2.33 per cent to 2.39 per cent overnight after outgoing Federal Reserve chair Janet Yellen sounded an optimistic note on the American economy.

If you can get higher yields on safer government bonds, you probably will not need to take that much additional risk on dividend stocks.

CapitaLand Commercial Trust added three cents to $1.89 on 65 million shares traded. It is now trading well above its adjusted net asset value of $1.82, a far cry from the last two years where it was trading at a 10 per cent to 20 per cent discount.

Investors seem to be optimistic that prime office rents are finally going up, due to an improving economy and limited new supply coming online.

A version of this article appeared in the print edition of The Straits Times on December 01, 2017, with the headline 'ST Index ends flat despite heavy trading'. Print Edition | Subscribe