Bulls And Bears

STI stumbles but bull market far from over

Venture Corp soars to levels last seen in 2000 while property counters retain allure

Local shares dipped yesterday but there were still plenty of signs that the bull market rages on.

Take contract manufacturer Venture Corporation, which soared 91 cents to $22.48, levels not seen since March 2000.

Brent crude, meanwhile, traded above US$69 a barrel as hedge funds piled on their bets and United States inventories tumbled, boosting rig-builders Keppel Corp and Sembcorp Marine in the process.

The end result was a fall of 4.2 points or 0.1 per cent on the Straits Times Index (STI) to 3,520.45.

Mr Ben Luk, global macro strategist at State Street Global Markets, said sheer liquidity, along with earnings growth, explains the various rallies.

The market is expecting loose monetary policies due to low inflation, he noted, adding: "Money itself doesn't have the same intrinsic value as it did 10 years ago."

Property counters remain favourites among analysts, with developers City Developments and UOL up yesterday.

Credit Suisse said Singapore is at the "beginning of a residential upcycle", that property prices have fallen in recent years while household incomes continue to rise.

It likes UOL, and raised its target price from $9.40 to $10.80.

Among small-caps, the breakout in precision machining firm JEP Holdings continued for a second consecutive day.

JEP, which supplies aerospace-related components, soared from 3.5 cents to 4.1 cents on Tuesday, a rise of 17 per cent with 29.5 million shares traded. It rose a further 12 per cent yesterday to 4.6 cents.

As is common with penny stocks, the absence of news means investors are left to speculate on what is causing the rally.

It will have to make significantly better profits. After all, for the half year ended last June 30, JEP barely broke even with net profit of $10,000, up from losses of $236,000 a year earlier. Revenue rose 11 per cent to $39.5 million.

It noted that its equipment manufacturing segment - not its largest by revenue but one of the most profitable - will continue to contribute to the group, given a strong and broad-based upswing in the semiconductor sector.

The only other disclosed development of note was in September last year, when JEP announced the setting up of a joint venture company in China with a focus on expanding its core aerospace business.

Separately, crane supplier Hiap Tong sprang to life after it said it had been awarded a five-year extension to its contract with oil supermajor ExxonMobil. Hiap Tong soared 31 per cent to 14.5.

A version of this article appeared in the print edition of The Straits Times on January 11, 2018, with the headline 'STI stumbles but bull market far from over'. Print Edition | Subscribe