Window dressing spices up thin trading

Local stocks advanced in thin trading yesterday, leaving the Straits Times Index up 0.43 per cent or 12.54 points to 2,898.30.
Local stocks advanced in thin trading yesterday, leaving the Straits Times Index up 0.43 per cent or 12.54 points to 2,898.30.ST PHOTO: SEAH KWANG PENG

STI is up 12.54 points on low turnover of only $542.4 million, with many players on holiday

Local stocks advanced in thin trading yesterday, thanks to a nudge from a rise on Wall Street and a bout of window dressing by funds ahead of the year end.

That left the Straits Times Index up 0.43 per cent or 12.54 points to 2,898.30.

Window dressing or portfolio rebalancing involves fund managers buying well-performing stocks and selling those that have fared poorly to make their portfolio look better in their annual reports.

Two Jardine companies appeared to be a target of window dressing yesterday. Jardine Cycle & Carriage rose 2.8 per cent or $1.12 to $40.76.

Jardine Matheson gained 2.3 per cent or US$1.25 to US$55.90.

The market was also buoyed by Thai Beverage, which edged up 0.6 per cent or 0.5 cent to 85 cents, while Keppel climbed 0.9 per cent or five cents to $5.84.

"Although we are seeing a technical rebound, volumes haven't picked up," CMC Markets Singapore analyst Margaret Yang Yan said.

"Turnover was only about $542.4 million, which is half the average daily turnover of $1 billion in November." However, she noted that it is not unusual for volumes to dip towards the year end, as many traders and participants are on holiday.

"The extremely low trading volume suggests that this could be a technical rebound, or temporary rally," Ms Yang added.

"If we can close the year above 2,900, that will help boost confidence."

Singapore stocks have been trading in a range between 2,800 and 2,900 points for most of this year, due to low oil prices and a pessimistic economic outlook.

"We will need to see a turnaround in the fundamental elements before expecting a strong rebound in local stocks," Ms Yang said.

On the flip side, valuations in the Singapore market are at one of the lowest levels in about 10 years, OCBC Investment Research said.

"The STI is hovering in a tight band, and this range-bound trading over the past six months is an indication of the current lacklustre trading environment," it added.

Singtel, which has a buy call from OCBC, was up one cent or 0.3 per cent at $3.68.

OCBC cited Singtel's investments in regional dominant telecommunications players to be one of the key growth drivers ahead.

"Given the limited growth outlook... in Singapore and Australia, we believe Singtel's exposure in developing economies will help drive growth, as mobile penetration rates in these countries continue to increase alongside data usage," it said.

Pennies continued to hog the most actively traded list.

These included commodities trader Noble Group, which gained 4.3 per cent or 0.7 cent to 16.9 cents, with 121.2 million shares traded.

Oil play Ezra Holdings was another target, rising 2 per cent or 0.1 cent to five cents, on trade of 57.1 million shares.

A version of this article appeared in the print edition of The Straits Times on December 29, 2016, with the headline 'Window dressing spices up thin trading'. Print Edition | Subscribe