Bulls And Bears

STI inches up on slow trading

Key regional markets fall into the red while employment data weighs on sentiment here

Singapore shares managed a marginal gain despite a sell-off on most key regional markets, but volumes here stayed stagnant, reflecting the persistently cautious mood.

The benchmark Straits Times Index (STI) closed 0.37 point or just 0.01 per cent up at 2,828.94, after a late rally recouped morning losses.

But with just 1.32 billion shares worth $658.4 million traded across the whole market, clearly investors did not harbour much optimism.

News that total employment here fell in the third quarter - only the second time since the global financial crisis - would hardly have buoyed sentiment.

The subdued mood was more visible elsewhere. Shanghai pared 0.13 per cent, Hong Kong 0.83 per cent and Tokyo 0.32 per cent. Greater China markets were hit by fresh data showing mainland industrial profit growth slowed sharply last month.

Of the 30 STI constituents, 13 rose. Golden Agri-Resources was the top gainer and a top active, with 41.4 million shares traded. But it was up only one cent or 2.6 per cent at 39.5 cents.

Wilmar International shed two cents or 0.6 per cent to $3.32. Malaysia's palm oil futures - a key indicator - fell yesterday, and face volatility in the coming months.

"With weather extremes behind us, prices might rally into end-2016 given seasonally lower production, but subsequently normalise lower into 2017,'' OCBC analyst Barnabas Gan said in a recent note.

Sembcorp Industries closed three cents or 1.22 per cent up at $2.48 before the firm announced a 55.9 per cent plunge in third-quarter net profit. Keppel Corp rose one cent or 0.19 per cent to $5.28.

The outlook for both conglomerates is mixed, given volatile oil prices. But a hefty share price correction has left the two stocks at an affordable level, and some investors might feel their dividend yield of over 4 per cent is worth the risk.

In the telco sector, Singtel fell two cents or 0.51 per cent to $3.88, while StarHub ended flat at $3.36 amid bad press over cyber attacks that crippled its Internet services.

CapitaLand Mall Trust was the heaviest loser of eight STI counters that fell. It closed four cents or 1.88 per cent lower at $2.09. Ascendas Real Estate Investment Trust shed one cent or 0.42 per cent to $2.39.

More excitement was on offer away from blue chips, with analysts citing some options to buy in.

One of them, Sheng Siong, closed flat at $1.07, but Wednesday's news of an 8.2 per cent rise in quarterly net profit and further profit margin improvement impressed DBS analysts. DBS liked the supermarket operator's "earnings growth traction, efficient operations, strong return on equity and net cash balance sheet", giving it a $1.19 target price.

Maybank analyst Gregory Yap gave Innovalues a buy call with a $1.15 target price. The precision engineering firm has had a $1.01 a share buyout offer from Northstar, but Mr Yap feels the offer is not attractive and could face a competing bid.

A version of this article appeared in the print edition of The Straits Times on October 28, 2016, with the headline 'STI inches up on slow trading'. Print Edition | Subscribe