BullsAndBears

High fliers galore as STI tops 3,500 points

Local banks keep hitting new highs; markets await US jobs report due today

Local shares made it look easy yesterday with yet another rise that took the Singapore index to the heady heights above 3,500 points.

The benchmark Straits Times Index (STI) added 1.1 per cent or 36.88 points to 3,501.16 - the sixth consecutive rise. Its next target is 3,549.85, the post-financial crisis high achieved in 2015.

There were high fliers in all directions. The three local banks continued to hit new highs, pricier oil boosted energy stocks while Mandarin Oriental, a luxury hotel stock sensitive to economic growth, soared 9.4 per cent to US$2.22.

Another winner was aviation services firm Sats. It surged past a resistance point of around $5.30 to close at $5.50, up 3.8 per cent. UOB Kay Hian removed Sats from its list of "top alpha" picks meant for short-term trades of one to three months. It said yesterday that the stock has already outperformed solidly.

Markets are watching the United States monthly jobs report due out later today. Signs of more significant wage growth, which would fuel expectations of faster rate hikes, might in turn cause the greenback to strengthen, strategists said.

On the penny front, one hotly traded small-cap stock was retailer FJ Benjamin, which initially rose from 8.2 cents to as high as 9.2 cents before coming back down to close at 7.8 cents after replying to an exchange query with a standard reply that it "doesn't know anything unusual".

Then there was Midas Holdings, whose activity rivals any blue chip. The aluminium profile maker is the top small-cap play of the year so far. It rose 43 per cent or 4.8 cents to 15.9 cents on Wednesday while its illiquid shares in Hong Kong more than quintupled.

This was after a train-making associate, NPRT, reported its first contract win of the year, of about 2.68 billion yuan (S$550 million).

Midas initially rose yesterday to as high as 18 cents, then came down to close at 15.7 cents. Perhaps traders were debating how big a deal the contract win was.

But beyond the dollars and cents, contract wins restore some confidence in a company. Investors have worried that China is slowing down its infrastructure spending.

However, a sustained recovery in Midas stock will take place only if it shows it can make serious money from other higher-margin projects: High-speed rail, plates and sheets, and other aluminium products, for example. That remains to be seen after many years of trying.

Ultimately, the fundamentals matter.

A version of this article appeared in the print edition of The Straits Times on January 05, 2018, with the headline 'High fliers galore as STI tops 3,500 points '. Print Edition | Subscribe