Bulls And Bears

STI rebounds as sentiment improves

US bid to ease fears of drawn-out trade war helps but analysts advise some caution

Local shares rebounded yesterday after two days of bloodletting, following efforts by the United States to quell worries over a protracted trade war.

The local benchmark added 0.11 per cent in the morning and climbed during the session to finish at 3,184.69, 0.45 per cent or 14.22 points ahead.

Trade activity picked up in the later half to a total of 994.44 million shares worth $1.14 billion.

Gainers edged losers 222 to 203, led by benchmark heavyweights such as Jardine Strategic Holdings and DBS Group, which recovered from Tuesday's bruising.

Jardine Strategic added 1.39 per cent to US$33.48 while DBS rose 0.8 per cent to $25.08.

Hong Kong-based retailer Dairy Farm fell 0.99 per cent to US$7.01 in the wake of ongoing protests in the territory.

The most actively traded was Yangzijiang Shipbuilding, which slumped 5.11 per cent to $1.30 on a volume of 51.6 million shares.

The firm posted net profit of 936 million yuan (S$184 million) for the second quarter on Monday, down 6 per cent from a year earlier.

But while markets are in temporary relief, investors would do well to remain wary, said analysts.

Credit Suisse research analysts are watching for slowing growth and have turned even more cautious on the local market.

"While we were previously cautious, we had expected attractive valuation and dividend yield to provide support to the market," the analysts noted yesterday.

"However, we now expect slowing economic growth to drive deeper earnings cuts, with potential downside risk to dividends as a result."

Credit Suisse chose ComfortDelgro, Wilmar and UOL as its top picks, in line with the more defensive positioning. Its least preferred are Sats, CapitaLand Commercial Trust (CCT) and Venture Corp. It also prefers UOB to DBS and OCBC.

ComfortDelGro gained 1.87 per cent to $2.72. News emerged earlier this week that the company is moving into the heavy vehicle leasing business with the addition of five prime movers to its rental fleet.

The five prime movers have been leased out to Haulio, a logistics tech start-up that ComfortDelGro invested in through its US$100 million (S$138.4 million) corporate venture capital fund.

Wilmar rose 0.76 per cent to $3.98, but UOL was down 0.83 per cent to $7.16. Sats rose 1.28 per cent to $4.74, while Venture climbed 1.04 per cent to $14.52.

CCT closed unchanged at $2.03.

A version of this article appeared in the print edition of The Straits Times on August 08, 2019, with the headline 'STI rebounds as sentiment improves'. Print Edition | Subscribe