Bulls And Bears

STI reverses after seven days of gains

Investors spooked by negative cues from US and Hong Kong; local banks among key drags

Local shares peeled back from seven consecutive sessions of gains yesterday as investors chewed on negative cues from the United States and Hong Kong.

The pessimism sent the Straits Times Index (STI) down 0.45 per cent to 3,334.67, after the Dow, Nasdaq and S&P 500 all fell away from record highs overnight.

In Asia, Japan's Nikkei 225 extended gains to rise 0.5 per cent as the market continued to smile on Japanese Prime Minister Shinzo Abe's election victory.

But shares in China lacked direction as a "wait-and-see" approach defined trading in the lead-up to the conclusion of the 19th Chinese Communist Party Congress. Hang Seng lost 0.53 per cent but Shanghai Composite closed 0.22 per cent higher.

The STI here declined 15.13 points, with United Overseas Bank (UOB) knocking 1.85 points off the index. UOB fell 13 cents, or 0.53 per cent, to $24.25 on a volume of 950,100. OCBC Bank, Hongkong Land, Thai Beverage and DBS Group Holdings were also key drags on the index.

DBS Research analyst Lim Sue Lin upgraded UOB from "hold" to "buy" yesterday with a 12-month target price of $26.90, noting that it has lagged its peers so far this year.

Ms Lim noted: "The property market recovery bodes well for UOB as it is perceived to be a proxy for the bank's share price movement. UOB has the largest proportion of property-related loans versus peers; this should see loan growth improve as early as in the third quarter this year."

UOB announces third-quarter results on Nov 3 while OCBC reports earnings tomorrow.

In the broader Singapore market, turnover reached $1.09 billion on a volume of 1.73 billion. Losers outnumbered gainers 222 to 202.

Yesterday's top active counters were Nico Steel, HPH Trust USD, Rowsley, Disa and KrisEnergy.

The Reits most in play were CapitaLand Mall Trust (CMT) and CapitaLand Commercial Trust (CCT). CMT fell one cent, or 0.48 per cent, to $2.05 on a volume of 14.7 million.

PhillipCapital analyst Tan Dehong, who has a $2.01 target price - the lowest among analysts here - for CMT, said on Monday that although net property income margins improved in the third quarter, there was no sign yet of a recovery in tenant sales, which came in flat from a year earlier.

CCT gained half a cent, or 0.3 per cent, to $1.675, with 14.7 million units changing hands.

Mr Tan, one of the most bullish on CCT with a $1.80 target price, said on Monday that a rebound in office rents would cut pressure of negative rent reversions next year. He is forecasting a 3 per cent rise in distribution per unit next year, factoring in Asia Square Tower 2's acquisition.

Frasers Centrepoint Trust announces its results before the market opens today. The Singapore Exchange, Mapletree Commercial Trust and Ascendas India Trust will report results after close of trading.

A version of this article appeared in the print edition of The Straits Times on October 25, 2017, with the headline 'STI reverses after seven days of gains'. Print Edition | Subscribe